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April 25, 2014
Investors Mark Anniversary of Rana Plaza Tragedy
    by Robert Kropp

A coalition of institutional investors organized by the Interfaith Center on Corporate Responsibility issue a statement calling on apparel brands and retailers to ensure that the human rights of workers in supply chains are being honored.


One year ago yesterday, a building with five garment factories in it collapsed in Bangladesh, killing more than 1,100 workers. The Rana Plaza building collapse was a tragic reminder of the responsibility of large corporations to monitor human rights conditions in their supply chains; according to the Guiding Principles on Business and Human Rights, “Business enterprises…should avoid infringing on the human rights of others and should address adverse human rights impacts with which they are involved.”

“Business enterprises should identify general areas where the risk of adverse human rights impacts is most significant, whether due to certain suppliers' or clients' operating context, the particular operations, products or services involved, or other relevant considerations, and prioritize these for human rights due diligence,” the Guiding Principles advise.

However, Hu man Rights Watch reports that the Rana Plaza Donors Trust Fund, administered by the International Labour Organization (ILO), has received only $15 million of the goal of $40 million in contributions from international garment brands. “The fund will establish a systematic and transparent claims process so that all victims, their families, and dependents will receive the long-term support they need,” Human Rights Watch stated.

“Fifteen brands whose clothing and brand labels were found in the rubble of the factory by journalists and labor activists have not paid into the fund,” the organization continued..

On the anniversary of “one of the worst workplace disasters in history,” a coalition of institutional investors organized by the Interfaith Center on Corporate Responsibility (ICCR) released a statement acknowledging the “serious commitments” that “have been made by a number of stakeholders—trade unions, civil society groups, companies, the Bangladesh government and the ILO.”

However, noting in particular the “considerable underfunding” of the Rana Plaza Donors Trust Fund, the 134 investors, representing more than $4 trillion in assets under management, stated, “While companies that haven’t met their human rights responsibilities face clear legal, financial and reputational risks, the moral mandate for increased human rights due diligence inherent in these principles transcends ordinary business concerns.”

“This anniversary serves as a reminder of the human rights risks inherent in outsourcing apparel manufacturing to factories with inadequate safeguards to protect workers,” David Schilling of ICCR wrote. “Whether we are investors or consumers, NGOs or government officials, we must appeal to apparel brands and retailers to use the full measure of their influence to respect and protect the human rights of workers throughout their global supply chains, and to provide remedies when those rights have been violated.”

In 2013, ICCR, along with Calvert Investments and the Institute for Human Rights and Business (IHRB), published Investing the Rights Way: A Guide for Investors on Business and Human Rights, a guide for investors with recommendations based on the Guiding Principles.

Investing the Rights Way focuses on three elements of the Guiding Principles of particular importance to investors. In order to express their commitment to human rights, companies should publish and make publicly available a human rights policy that investors can use to help them assess that commitment. Companies should also carry out human rights due diligence, which entails identification and management of impacts on people and their rights. For investors, human rights due diligence processes "show that companies are actively taking steps to determine and address human rights risks to people and their related reputational, financial, and operational risks to the company," according to the report.

Finally, companies should establish grievance mechanisms for individuals and communities that have been adversely affected by business operations. For investors, the presence of grievance mechanisms indicate that companies have gone beyond mere statements of policy to actually address human rights issues on the ground, thereby managing risk more effectively.

 

 
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