Investors call for continuation of the Bangladesh Accord - Just Style
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Investors call for continuation of the Bangladesh Accord

By Patrick Scott 17 Sep 2018

A group of 153 investors representing US$2.8 trillion in assets has warned against the premature termination of the Bangladesh Accord for Fire and Building Safety – saying that lingering risks in the country’s garment factories threaten workers, brands and investors.

Investors call for continuation of the Bangladesh Accord

A group of 153 investors representing US$2.8 trillion in assets has warned against the premature termination of the Bangladesh Accord for Fire and Building Safety – saying that lingering risks in the country’s garment factories threaten workers, brands and investors.

The group wants the Accord to continue until it has completed its mandate and government agencies are able to assume its responsibilities going forward.

The statement is in response to a ruling in June by the High Court of the Supreme Court of Bangladesh that the Accord’s authority to operate will expire on 1 December 2018.

While Accord stakeholders agree significant progress has been made since 2013, they claim all of the original safety goals have not yet been fully achieved nor is the government of Bangladesh fully ready to take over the functions of the Accord.

The statement was organised by the Bangladesh Investor Initiative, a coalition of global investors from 12 countries set up following the collapse of the Rana Plaza building outside of Dhaka in 2013.

As shareholders in a number of the companies sourcing products from the Bangladesh garment sector, the investors are concerned that the termination of the Accord without careful consideration will not only put workers at great risk, but threatens brands and investors reliant on a secure, safe workforce.

In the investor statement, and in separate letters to the Ministry of Labor and Employment, Ministry of Commerce, and the Bangladesh Garment Manufacturers and Exporters Association (BGMA), investors advise that the government of Bangladesh should make a re-submission to the High Court to enable the Accord to operate until such time as a national safety regulatory body is established and fully prepared to assume control of the Accord’s mandate.

“Signatory companies partner with the Accord to root out worker health and safety issues,” explains Anna Pot of APG Asset Management, adding: “The Accord provides a level of assurance that their organisations will not be unduly exposed to human rights risks. Without the local activities of the Accord, brands would be under even more pressure to find alternative ways of gaining assurance that their suppliers operate responsibly.”

The government of Bangladesh, the Accord companies and unions and the BGMA agreed to form a Transition Monitoring Committee (TMC) to evaluate the government’s readiness to take on its duty to protect the safety of garment factory workers.

The parties agreed that only when the criteria established by the TMC were met would the Accord then initiate a six-month process of winding down its operations. The High Court’s decision pre-empts this collaborative TMC process, says the Bangladesh Investor Initiative, which is coordinated by the Interfaith Center on Corporate Responsibility.

“Investors have closely tracked the progress of the Accord in inspecting, remediating and training workers to be the ‘eyes’ on the factory floor to see and respond to safety issues as they emerge,” comments David Schilling, senior program director at ICCR.

“The success of the Accord model relies on the unprecedented collective action of brands, their suppliers and trade unions which has proven to be extremely effective in reforming the sector. The Accord must be allowed to finish its work if we are to prevent erosion of these hard-won gains.”

Representatives of the 180 brands that have signed the 2018 Transition Accord in July warned that a premature shut-down of the agreement would make them reconsider their sourcing in Bangladesh.

Investors are increasingly concerned about their exposure to the risks of poor workforce practices, as well as being aware that good employment practices contribute meaningfully to financial returns.

The call for disclosure also builds on growing momentum for corporate transparency on social issues, which have often taken a back seat to environmental and governance risks. Key pieces of legislation like the 2015 UK Modern Slavery Act and the 2014 EU Non-Financial Reporting Directive have also mandated companies to disclose more.

Apparel brands and retailers including Adidas, Gap, H&M, Inditex, Marks & Spencer, Next and Nike have recently been pressured by a group of institutional investors to provide more information about how they manage their global workforce – including those in the supply chain. The coalition of more than 100 institutional investors managing over $12 trillion of assets is backing a survey sent to 500 global companies from 11 sectors, asking for improved data on issues such as diversity, workers’ rights, and health and safety in supply chains.