For true reform in Bangladesh garment industry, we need to go back to the drawing board

by Dorothée Baumann-Pauly and Auret van Heerden | @DoroBauPau | NYU Stern School of Business and Human Rights
Thursday, 1 June 2017 14:57 GMT

Protesters and activists hold placards on the first year anniversary of the collapse of Rana Plaza as they gather in Savar April 24, 2014. REUTERS/Andrew Biraj

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For real progress to be made in Bangladesh's clothing industry, four things need to happen

After much delay, a Dhaka court has framed charges against Sohel Rana, the owner of the Rana Plaza factory complex, and nine others for their role in the deadliest garment-factory disaster in modern history, which claimed the lives of more than 1,100 workers. The progression of the case against Sohel Rana may offer hope that accountability is possible after the Rana Plaza collapse. However on its own, his trial will not fix the larger issues that continue to plague reform efforts within the country’s garment sector.

The Rana Plaza disaster in 2012 provided the catalyst for more than 200 global brands and retailers to come together to launch two ambitious and unprecedented five-year initiatives to address factory safety issues. The Accord on Fire and Building Safety in Bangladesh (Accord) and the Alliance for Bangladesh Worker Safety (Alliance) have galvanized action by the global garment sector, provided a laboratory for private governance mechanisms, and been the impetus for thousands of factory inspections. However, actual progress in remedying the safety issues revealed by these inspections has been disappointing. Only 79 factories, less than 4 percent, have completed their corrective action plans (CAPs). With just one year left in each agreement, the Accord and the Alliance are running out of time to complete their agenda. 

One significant challenge has been the absence of adequate financial resources, either from local factory owners in Bangladesh, their international buyers, or other sources. In most cases, completion of the remediation process hinges on costly structural repairs to factories. Many local owners are unwilling to invest without guarantees of future orders. This question of finance and investment goes beyond individual facilities. Weak national infrastructure for electricity supply, wastewater treatment and water management must also be updated. However, the question of “who pays?” or burden sharing needs to be addressed before these improvements can be made, or perhaps they never will.

For real progress to be made in Bangladesh, four things need to happen. First, it is critical for key actors to be engaged. Current initiatives do not include local manufacturers or government in their decision-making bodies. Many of the root causes of unsafe factories are deeply embedded in the operating context in Bangladesh. Some of these problems are tied to structural weaknesses in makeshift factories and to the weakness of Bangladesh’s electrical grid, which forces many factory owners to install heavy generators in buildings never designed for them. To address these structural issues requires a Bangladeshi-led initiative that involves foreign brands, foreign governments, and international financial organizations.

Second, there needs to be a much broader acknowledgement of the true scope of the problem. After Rana Plaza, the industry has made major strides in improving transparency and the Accord and Alliance have acknowledged 2,300 factories where their brands’ garments are being produced. This is a significant, but insufficient number. In 2015, the NYU Stern Center for Business and Human Rights mapped more than 7,000 garment factories producing for export. Therefore, current remediation efforts only address the tip of the iceberg of Bangladesh’s ready-made garment (RMG) industry and leave almost three million workers unprotected. Against this background, new research is urgently needed to understand the true size of the supply chain.

Third, we need better estimates of the true costs for fixing the problem. Once key stakeholders come to the table and agree on the actual size of the industry, estimating the cost for what needs to be done becomes possible. Once there is a price tag for comprehensively upgrading the sector, it becomes easier to raise needed funds from public and private sources and to prioritize how to spend new and existing funds.

Finally, as this information becomes available, a comprehensive plan based on a shared responsibility model must be drafted. No actor alone can, or should, address the many challenges in Bangladesh’s garment sector on its own. A task force should be created that is composed of key actors, namely governments, suppliers, buyers, international financial institutions and philanthropic entities. They need to come together to develop a comprehensive plan and budget that ensures a sustainable future for Bangladesh’s garment sector.

Simply extending the mandate of the current private initiatives in Bangladesh while following the same premises will not make the RMG sector safe and sustainable. All of those working on these issues, inside Bangladesh and in the greater international community, need to go back to the drawing board, and build on the lessons from the past four years. The lives of over 5 million garment workers depend on it.

Dorothée Baumann-Pauly is the Research Director, and Auret van Heerden, a Senior Advisor, for the NYU Stern Center for Business and Human Rights.