The Alliance released its second annual report last week

The Alliance released its second annual report last week

The group of North American brands and retailers working to improve safety in Bangladesh's ready-made garment factories continued to make progress in their second year. But challenges remain in remediation and financing, and more work is needed if the Alliance for Bangladesh Worker Safety is to leave a legacy of safer factories in 2018.

Speaking on a call following the release of the group's second annual report last week, Alliance independent chair, Ellen Tauscher, said: “I'm very pleased to say that because of the work of the Alliance, the International Labour Organization (ILO), other initiatives, the government of Bangladesh [and] factory owners, factories in Bangladesh are safer today than when we began the work.

“This sector is a critical contributor to the economy of Bangladesh, providing employment and economic opportunity to millions of people, the majority of whom are women. It's in everyone's interest to see this sector grow and thrive."

But while the group, which is made up of 26 North American brands and retailers including Wal-Mart Stores, Gap Inc and VF Corporation, has “accomplished a great deal”, Tauscher admitted that “more work remains”, adding that “we are clear on the challenges we face”.

The Alliance shifted its focus from initial inspections to remediation in year two, working with all factories to address safety violations and improve capacity and knowledge on building and fire safety within the garment sector in Bangladesh.

Out of the 661 Alliance member supplier factories that have been inspected to date, just six have completed all remediation. In addition, eight have been closed, 12 partially closed, and two are operating on a reduced load, meaning they have cut the amount of business being done in the factory to a level that keeps it in margins of safety.

"Remediation of factories has taken longer than we first projected, and access to affordable long-term financing for remediation is a challenge for many factory owners in Bangladesh,” Tauscher explained.

To tackle this, the Alliance in July announced a "first of its kind" US$50m financing facility with the International Finance Corporation (IFC), to enable five Bangldeshi banks to offer low-cost loans to garment factories as they undertake remediation.

And by the end of September, a second facility should be in place with the US Agency for International Development's (USAID) Development Credit Authority (DCA) to provide an additional $18m to owners of small and medium-sized factories. 

This is aimed at factories which may not be eligible for the IFC programme, and will mark the first time that a DCA credit facility was established directly with an industry coalition. The DCA will work with two local banks to extend credit to factories, and loans will only be available to Alliance member factories that have already undergone an inspection and have a corrective action plan (CAP) in place.

Alliance Ambassador James Moriarty suggested that overall, remediation is having a positive effect: “Rather than being a drag on the business, undertaking and completing necessary remediation can provide new opportunities and new buyers for a garment factory.”

And although he believes the Bangladesh government is serious about undertaking reforms and working to ensure the readymade garment sector is safe, he expressed concern about the government's capacity to implement such reforms.

“[The government] clearly needs additional resources to be able to build the necessary capacity. In that regard, the donor community, the private sector, and NGOs should share information of programmes and activities to attempt to align efforts to help the government build that capacity."

He added: "There is admittedly a great deal of work ahead, but I think we all can be very proud of what we have achieved to date."

Remediation “slow”

After receiving their inspection results, the Alliance requires each factory to develop a CAP to address safety violations. Once a CAP is approved during meetings with factory owners and Alliance staff, factories can begin remediation. The Alliance conducts up to three verification visits to ensure remediation is progressing as reported by factories.

Once a factory reports that all safety issues have been remediated, the factory undergoes a final inspection by an independent contractor. If it passes the final inspection, the factory is considered substantially remediated and approved for production.

On its own, this process can be a long one, but progress has also been slowed by the lack of remediation capacity in Bangladesh, political unrest and aftershocks of the Nepal earthquake.

The major stumbling block in finishing the remediation process, Tauscher said, has been access to financing. That said, she noted: "We find a problem, we identify it, we analyse it, and we do our best to fix it. We work with the international community, the country of Bangladesh, the ILO, and obviously the factory owners to get these remediations done as best we can, as quickly as we can."

The Alliance's goal, she said, is to be able to hand over remediated factories to the Bangladesh government at the end of its five-year tenure, adding that “it is then their responsibility to do annual inspections and to do the things necessary to keep the programme sustainable”.

What next?

Highlighting companies' commitment to the five-year programme, Tauscher said: “I think it's safe to say member companies are staying the course, that they are very happy we've been able to make the progress we've been able to make.

"I think that two years in, there's lots of lessons learned and I think we're surprised at how naive we were in the beginning, but at the same time, I think that as far the business mission and vision of the Alliance [is concerned], everybody is fully committed.

Of course, there will have to be further inspections in the future, Moriarty highlighted, adding: “It is about changing the culture, establishing [a] process where inspections continue.”

And this is one of the challenges the Alliance is considering: how does it work on the transition to make sure that there are systems in pace to continue inspections, remediation and training after year five.

“We're confident we're going to leave in place a structure to continue that,” he noted, adding: “Right now, I think everybody realises the seriousness of the situation, the need to get all these mechanisms in place, but it is still a work in progress.”

Tauscher added: "The truth of the matter is that we are hoping the ILO and Bangladesh government are moving expeditiously to get their factories inspected."

With that, Moriarty stressed the need for all stakeholders to work together. "We have to work with all the concerned parties to make sure there [are] systems in place.”

Alliance two-year milestones

Inspections/remediation:

  • Completed first remediation verification visit (RVV) at 528 factories, second RVV at 17 factories, and final inspection process at eight factories, of which six were passed
  • Collaborated with the Accord to press the Bangladesh government to release long-overdue regulations to implement the amendments to the Bangladesh Labor Act
  • Added a pre-approval policy that requires members to register all new factories in Bangladesh with the Alliance for inspection before adding them to their supply chains

Finance:

  • Average estimated cost of remediation is between $250,000 and $350,000
  • Members have made available $100m to factories in their supply chain
  • Helped to establish two credit facilities: $50m IFC facility and $18m USAID facility so that all factories from which Alliance members source have access to affordable financing

Training:

  • Worker training completed in 597 factories, and 47 have working training in progress
  • Trained more than 1.1m workers in fire safety
  • Implemented a new fire safety training programme for factory security guards, with 13,800 in 650 factories trained to date
  • Contracted with the University of Texas-Houston and Dhaka University to conduct an impact assessment of the Alliance's core training programming

Worker empowerment:

  • Expanded Alliance worker helpline, with 414 member factories now trained on how to use it, and 21,010 calls have been made since its inception. By the end of July 2016, the Alliance expects 100% of its member factories to be trained on the helpline
  • Launched an occupational safety and health committee pilot in 12 Alliance factories to support democratically elected worker structures

“Significant” progress

Indeed, both the National Retail Federation (NRF) and the Retail Council of Canada (RCC) have praised the work that has been done to make garment factories safer.

“We saw first-hand in the past few days that significant progress has been made to improve conditions at factories in Bangladesh and that work is on track to see more improvements in the future,” said NRF senior vice president for government relations, David French.

NRF vice president for supply chain and customs policy, Jonathan Gold, added: “Worker safety is a top priority for US retailers whether those workers are here in our stores or in a factory on the other side of the world.”

While RCC president and CEO Diane Brisebois said both the Alliance and Accord have made “significant strides” over the last two years to improve worker safety in Bangladesh, he too recognises that much work remains to be done”.

“We hope never again to see a tragedy like the 2012 Tazreen factory fire and 2013 Rana factory collapse in Bangladesh,” he added.