How do the Bangladesh safety pacts measure up?
Unveiling a new five-year plan to improve worker safety at the factories in Bangladesh that produce their clothing, North American brands and retailers were keen to stress the similarities between their own initiative and a separate scheme backed by 70 mainly European companies.
Not only are there "many common elements" between the [North American] Alliance for Bangladesh Worker Safety with its Bangladesh Worker Safety Initiative and the [European] Accord on Fire and Building Safety in Bangladesh, they said yesterday (10 July) - but both serve as the basis for a "united approach to forging change."
That said, there are considerable differences too.
Certain elements of the Accord presented a major stumbling block to North American firms, including the way in which disputes are resolved.
Gap Inc has already expressed its concerns at the "potential risk of lawsuits in the US if anything goes wrong," while Wal-Mart argued the Accord "introduces requirements, including governance and dispute resolution mechanisms, on supply chain matters that are appropriately left to retailers, suppliers and government, and are unnecessary to achieve fire and safety goals."
This was again picked up by Jay Jorgensen, senior vice president, global chief compliance officer, Wal-Mart, speaking at the launch of the Alliance and action plan in Washington on Wednesday.
"The main difference, the reason we couldn't sign the Accord, is that Europe has a different legal environment than the US and Canada," he noted, "and the Accord has some provisions that, in the way the way the US and Canadian legal systems work, would subject us to potentially unlimited legal liability and litigation."
Noting that the companies in the Alliance have committed more than US$142m in funding and low interest loans to help improve factory safety conditions for garment workers in Bangladesh, he added: "We don't want $1 of that to go to lawyers. We want every cent of that to go to the factories."
Also, unlike the Accord, which is backed by global unions, the Alliance lacks union representation and will instead rely on Worker Participation Committees (WPC) at each factory to give workers a forum to raise safety and workplace concerns without fear of retaliation.
"A key part of the initiative will be the WPCs giving [workers] a voice that they can be heard," explained Tom Nelson, managing director and vice president of product procurement at VF Corporation.
"We want to push that forward, understand where their concerns are, let them have an avenue for sharing their voice back to the Alliance."
As far as legal recourse is concerned, Jorgensen added: "If a worker reports that a factory is not measuring up, then we [will] respond, investigate and if a factory is not meeting the standards, then under our agreement they're going to be terminated. And the ultimate pressure point on a factory to treat its workers well is the continuation of business."
The North American initiative requires no commitment from the brands to stay in Bangladesh - unlike the Accord, whose signatories must maintain sourcing volumes in Bangladesh for two years.
And according to Mike Flanagan, CEO at industry consultancy Clothesource, this has been a real sticking point for the North Americans' reluctance to join their European counterparts.
"We believe the real division is that, generally, for the next few years European buyers have no real alternative to including Bangladesh in the list of countries they source from. For most North Americans, leaving Bangladesh (which has no import duty advantage over China or Vietnam for Americans), or dramatically reducing buying from it, might well become the best commercial alternative.
"The real fear for Americans is being "forced" into staying in Bangladesh if they do not want to."
The result is that there are now two different, but overlapping, initiatives to help improve factory safety conditions for garment workers in Bangladesh. Below we outline how the Alliance for Bangladesh Worker Safety and the Accord on Fire and Building Safety in Bangladesh measure up.
|Accord on Fire and Building Safety in Bangladesh||Alliance for Bangladesh Worker Safety|
|Membership||75 mostly-European companies including Benetton, C&A, Carrefour, Debenhams, Esprit, H&M, Inditex,John Lewis, Kmart, Mango, Marks & Spencer, Mothercare, N Brown, New Look, Otto Group, Primark,Puma, PVH and Tesco. The full list also features PVH, Abercrombie & Fitch and Target Australia and can be viewed here in more detail.||17 North American apparel retailers and brands - Canadian Tire Corporation, Carter's Inc, The Children's Place Retail Stores, Gap Inc, Hudson’s Bay Company, IFG Corp, JC Penney Company, The Jones Group, Kohl’s Department Stores, LL Bean, Macy's, Nordstrom, Public Clothing Company, Sears Holdings Corporation, Target Corporation, VF Corporation, Wal-Mart Stores.|
|Legal structure||Legally binding structure that commits signatories to maintain sourcing volumes in Bangladesh for two years.||Essentially voluntary, with participating companies signing a member agreement and forming a non-profit corporation, The Alliance for Bangladesh Worker Safety, to oversee their activities.|
|Governance structure||A steering committee made up of half corporate members and half trade union officials; and an advisory board with broad representation in Bangladesh. The steering committee will be empowered to take decisions to resolve disputes, with the arbitration to be enforceable in a court of law in the company’s home country.||A nine-member board of directors consisting of four retailers, four stakeholders, and an independent board chair.|
|Factory inspections and safety commitment||All supplier factories in the country will be inspected in the nine months to 31 March 2014, with a focus on renovations and repairs covering emergency infrastructure and procedures such as fire exits, fire training and evacuation, as well as fundamental flaws that could lead to a structural failure of the building.||Within one year, 100% of all factories that conduct work with an alliance member will be inspected. Members have agreed to work only with factories that ensure a safe working environment, and as a result, all have committed to refusing to source from any factory the member determines is unsafe.|
|Establishing factory safety standards||Common safety standards will be developed and in place by October of this year, with members sharing inspection results anonymously through the Fair Factories Clearinghouse, so that factories with dangerous safety conditions are immediately identified; these findings are transparently communicated to factory owners, workers and the government; and problems quickly addressed.||Has started to review existing standards, engage experts and liaise with the Bangladeshi government to design and structure a program including standards, rating systems, review of existing inspection reports, forms of inspection report and protocols for renovation and other remediation actions necessary|
|Worker voice||Health and safety committees are required in all Bangladesh supplier factories, made up of workers and managers.||Worker Participation Committees at each factory to provide a forum for workers to raise safety and workplace concerns without fear of retaliation.To further empower workers, an anonymous worker hotline will be established by November of this year that will use mobile technology and be administered by a third party.|
|Progress reports||Quarterly reports summarising industry compliance data, findings, remedial recommendations, and progress on remediation for all factories inspected.||Semi-annual progress reports.|
|Funding||A sliding scale of minimum contributions based on revenues and annual volume in Bangladesh up to a maximum of $500,000 per year.||Each member contributes an amount based upon its production levels in the country, up to $1m a year for five years. The fund currently stands at $42m - 10% of which will be used to assist workers temporarily displaced by factory improvements or closure.|
|Supporting improvements at factories||Brands and retailers must ensure that sufficient funds are available to pay for safety improvements, and will negotiate commercial terms with suppliers to cover factory upgrades and remediation.||$100m has been committed for low-interest loans to support factory improvements.|
Not surprisingly, unions and labour activists have been more scathing in their assessment of the North American pact, describing it as a "sham," "toothless" and "full of flaws".
Having been involved in the Accord discussions from the outset, they claim the results of the Alliance audits won't be made public, so they can't be verified, unless there are plans to remediate; and that because the plan isn't legally binding, there is no guarantee that the commitments to inspect and improve garment factories will be carried out. Member companies can also leave at any time.
And they are concerned that the plan excludes trade unions, "who need to be at the heart of any plan to make factories safe," and instead relies on "worker committees" in factories.
They also say that unlike the Accord, where brands and retailers are obligated to ensure that all necessary funds are available to cover the cost of renovations and repairs at every covered factory, the Alliance makes its financial obligations voluntary.
Another criticism is levelled at the fact Alliance brands and retailers "control" the factory inspections, by proposing standards and choosing and paying the auditors who will carry out the task.
Companies: Wal-Mart Stores Inc, Gap Inc, VF Corporation, PVH Corporation, Benetton Group SpA, C&A, Carrefour SA, Debenhams Plc, Esprit Holdings, H&M Hennes & Mauritz AB, Inditex SA, John Lewis Partnership, Kmart, Mango, Marks & Spencer Group Plc, Mothercare Plc, N Brown Group Plc, New Look Retailers Ltd, Otto Group, Primark, Puma AG, Tesco Plc, Carter’s Inc, Children’s Place Retail Stores Inc, JC Penney Company Inc, Macy’s Inc, Nordstrom Inc, Sears Holdings Corporation, Target Corporation
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