The power of collective investor action to safeguard workers in global supply chains

by David Schilling | Interfaith Center on Corporate Responsibility
Tuesday, 6 February 2018 12:33 GMT

Relatives of victims killed in Rana Plaza building collapse in 2013, mourn at the site during the fourth anniversary of the collapse in Savar, on the outskirt of Dhaka, Bangladesh, April 24, 2017. REUTERS/Mohammad Ponir Hossai

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The next three years will be critical for finishing the complex and comprehensive work to make Bangladesh apparel factories safe for workers

We live in a time of tremendous upheaval, with existential threats like the ravages of climate change that threaten public health, global water and food supplies; the severe migrant and refugee crisis that increases the chance of workers being exploited by labor brokers who charge recruitment fees resulting in debt bondage; and the ongoing health and safety risks in factories where fire and structural weaknesses are responsible for the injury and death of workers.

But in this time of great challenge there are also opportunities to respond that are presenting themselves. One of them is the chance to transform the garment sector in Bangladesh so that every factory is a safe and healthy place to work.

When the Interfaith Center on Corporate Responsibility (ICCR) issued a call to action to the investor community after the 2013 collapse of Rana Plaza in Bangladesh that killed over 1,100 workers, the response was immediate. ICCR was quickly able to amass a coalition representing over $4 trillion in assets to press companies to join the newly formed Accord for Fire and Building Safety in Bangladesh. In the ensuing four and a half years, the Bangladesh Investor Initiative, comprising over 200 investors from 12 countries, has borne witness to the significant progress made by the Accord in remediating some of the sector’s most urgent systemic issues. To date, sixteen hundred factories have been inspected and 82 percent of the identified safety issues have been remediated, the majority of them electrical.  Along with trade unions as equal partners, we believe the Accord’s success is largely due to the united front presented by brands and the supplier leverage they were able to achieve as a result.

While the Accord has made impressive headway, the deep work to transform the Bangladesh garment sector is not yet finished. Only 36 percent of the over 1,600 factories covered by the Accord have installed adequate fire detection and prevention systems, and 50 percent have yet to complete worker safety trainings that will help ensure sustainable, credible systems for addressing safety concerns going forward.

Investors were pleased to see that leading brands and trade unions signed a new agreement to extend the initiative until May 2021. However, the 150 signatories to the Bangladesh Investor Initiative’s public statement released January 25 are concerned that, of the 220 companies that signed the 2013 Accord, barely 60 have signed the new agreement. Again, we believe strongly that the strength of the Accord comes from the collective leverage brands are able assert over their suppliers. For this reason, a strong showing of unity from all brands sourcing apparel in Bangladesh is central to the Accord’s success.

The investor initiative supports:

Ø  Remediating all the issues found in factory inspections;

Ø  Training  workers to be the “eyes and ears” on the factory floor to ensure that future safety problems are detected before they become life-threatening events;

Ø  Building the capacity of the Government of Bangladesh and local safety organizations to take over all the necessary functions to keep workers safe by 2021.

Last week, the OECD (with 35 members countries) sponsored a Forum on due diligence in the garment and footwear sector.  This forum was an extraordinary opportunity for investors to join the dialogue with governments, businesses, NGOs and trade unions on what “due diligence” in responsible supply chains means. Investors at this forum sited the Accord as a positive example of collective action to assess, address and report on fire and building safety but voiced their strong concern that participation on the part of major brands remains low.  

Anna-Sterre Nette of the Dutch pension asset manager MN, and a participant in the Bangladesh Initiative, spoke at the Forum: “2018 is going to be a crucial year for the Bangladesh garment supply chain. The renewal of the Bangladesh Accord supports an effective mitigation of the country’s salient supply chain risks and remediation of worker safety issues. The OECD guidelines expect investors to use their “leverage” with companies they invest in to influence them to prevent or mitigate adverse impacts. Also, MN is concerned about the lack of corporate endorsement of the Accord shown so far. For that reason we strengthened individual company engagement along with our support for ICCR’s appeal to global brands to recommit to the Accord.”

The Bangladesh Investor Initiative is reaching out to 40 Accord companies, including Abercrombie & Fitch, Debenhams, Fruit of the Loom, Li & Fung, Marks & Spenser, Metro Group, Sainsbury’s, Tesco and Woolworths Australia exhorting them to sign on to the Accord’s three-year extension. A number of global brands are in discussions about joining the 2018 Accord. Further investor outreach is being planned in the coming weeks.

The next three years will be critical for finishing the complex and comprehensive work to make Bangladesh apparel factories safe for workers, to encourage ownership by local stakeholders and to build government’s oversight capacity.  As investors we encourage all companies sourcing in Bangladesh’s garment sector to build on the unprecedented progress made by the Accord since 2013. We urge all these companies to see through their commitment to remediating worker safety issues and ensuring the long-term sustainability of the sector.

In doing so, these companies will be mitigating the serious human rights risks to their own brands and modeling authentic supply chain accountability.

David Schilling, senior program director, Interfaith Center on Corporate Responsibility