May 18, 2013
Investors Call on Corporations to Ensure Worker Safety in Bangladesh
by Robert Kropp
Two coalitions of investors pressure clothing retailers to join the Accord on Fire and Building
Safety in Bangladesh, whose 40 signatories include only two companies headquartered in the US.
In April, the collapse of a garment factory in Bangladesh caused the deaths of more than 1,100
workers. Months earlier, a fire at the Tazreen garment factory killed more than 100 workers and
stood as the worst loss of life for the industry in Bangladesh, until the building collapse in Rana
Survivors of the Tazreen factory fire reported that exit doors were locked
and bystanders reported that workers were forced to jump from the windows of an eight-story
building to escape. News reports compiled by
RepRisk linked Tazreen with such major corporations as Wal-Mart, Disney, Sears, Enyce, Teddy
Smith, and Edinburgh Woollen Mill.
Then, in May, another fire killed another eight
Only China exports more clothing that Bangladesh, and most of the major clothing
retailers in developed nations source clothing they sell from factories in Bangladesh. The recent
tragedies have convinced many of them to commit to the Accord on Fire and Building Safety in
Bangladesh, which "commits the signatories to finance and implement a program" of safety
inspections, transparency and reporting, and remediation.
Some 40 companies have become
signatories to the Accord. However, only two based in the US—Abercrombie and Fitch and PVH, the
parent company of Tommy Hilfiger and Calvin Klein—have joined. Another 14 North American companies
have declined to commit to the Accord. In a press release, Wal-mart made no mention of the Accord
but stated that it would independently conduct safety reviews of the 289 factories in Bangladesh
that produce clothing for the world's largest retailer.
Two coalitions of sustainable
investment organizations have emerged to challenge corporations on their responsibility to address
worker safety issues in their supply chains. Led by the Interfaith Center on Corporate Responsibility (ICCR), 170
investors representing more than $1 trillion in assets under management called for the
implementation of "systemic reforms that will ensure worker safety and welfare, and to adopt zero
tolerance policies on global supply chain abuses."
The coalition urges companies to sign
the Accord, commit to ensuring living wages for all workers, publicly disclose their suppliers
located in Bangladesh, and ensure that grievance mechanisms and effective remedies are in place.
Perhaps referring to Wal-mart's decision not to sign the Accord, the investors stated,
"Acting alone, companies can and do bring about meaningful and positive changes in human rights in
the countries where they source and manufacture…But when faced with intransigence of the type we
have historically seen in Bangladesh on worker safety issues, we are convinced that systemic change
will only occur when companies take action together."
A second coalition of investors,
consisting primarily of pension funds and representing $1.35 trillion in assets, sent a letter to the companies, stating that the recent tragedies
"poignantly illustrate the significant reputational, operational, and legal risks that are
ubiquitous in global supply chains and underscore the urgent need for companies to know their
suppliers, ensure compliance with safety standards, and fully disclose their supply chains."
"Companies must also actively ensure compliance," the letter continued. "It is not sufficient
to place the onus for compliance on suppliers alone while pricing systems actively undercut
requisite investment in infrastructure or encourage covert subcontracting."
it is not in our interests for there to be any more tragedies."