The Walt Disney Company (WDC) is to phase out the sourcing of Disney-branded products from Bangladesh, Belarus, Ecuador, Pakistan and Venezuela over concerns the countries no longer meet its guidelines on working conditions.

In the case of Pakistan, sourcing will be phased out by March 2014 - and will lead to the loss of annual export orders worth an estimated US$150m.

The Walt Disney Company's International Labor Standards Program (ILS) uses the World Bank's worldwide governance index (WGI) as the main tool to assess relative country risk, along with data from the International Labour Organization's (ILO) Better Work programme and the International Finance Corporation (IFC).

"As part of an on-going review of our policies and procedures, we have made adjustments to our sourcing guidelines that will help us better manage the challenges associated with a complex global supply chain and meet our ILS objectives," the company said. 

"We have decided to consolidate production of Disney-branded products in a more limited number of Permitted Sourcing Countries and have instructed our licensees and vendors to transition the production of Disney-branded goods out of the highest-risk countries. 

"As a result of this refined approach, production of Disney-branded products will no longer be permitted in 44 countries where production has previously been allowed under very limited circumstances. This includes five countries where there may be current Disney-branded production: Bangladesh, Belarus, Ecuador, Pakistan, and Venezuela." 

The company claims to be the world's largest licensor, with Disney-branded consumer products being produced by thousands of independent licensees and vendors working with tens of thousands of manufacturing facilities around the world. 

The company's sourcing countries are based on three groupings: those with a WGI ranking of over 65%; those with a WGI ranking of 31% but with an acceptance of International Labour Standards (ILS) audit; and countries with a WGI ranking below 31% but implementing the ILO/IFC's Better Work programme.

Pakistan scored just 19 points in the WGI, six points below the threshold level. The decision could be reversed if the country joined the Better Work programme to prove compliance in factories, continuous improvement and stakeholder engagement including government, employers, workers, and buyers.

Rukhsana Shah, federal secretary of the textile industry division, says that a strategy is being compiled in coordination with the Ministry of Commerce to address the concerns of US companies, and that Pakistan will upgrade its WGI rankings by 2014.

Ejaz Khokhar, chief coordinator and former chairman of the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), told just-style that companies like H&M, Levi Strauss and Wal-Mart placed many orders in Pakistan after recent tragedies in Bangladesh.