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European & US retailers clash over response to Bangladesh tragedy

June 2013

US retailers Sears, Gap Inc and, the world’s biggest, Walmart have no plans to sign the fire and building safety agreement backed by some of Europe’s biggest clothing brands - including H&M, Benetton, Topshop and Primark - aimed at trying to prevent another Rana Plaza disaster that killed more than 1,100 workers in Bangladesh in April.

Sears says that it is in preliminary discussions about an alternative proposal with retail trade associations in North America. Gap maintains that it won’t join the European pact without changes in the way conflicts are resolved in the courts and Walmart has laid out its own safety inspection plan, which is believes will yield faster results. It has plans to inspect 279 factories within six months and has already asked the Bangladesh government to suspend production at two sites.

The factory collapse is the worst disaster in the history of Bangladesh’s $19bn garment industry, and came just five months after a major fire at a garments factory near Dhaka, in which 112 workers lost their lives. It also follows the collapse of a garments factory in Baipail, in Savar, eight years ago which left 73 workers dead.

“It’s unbelievable that brands still refuse to sign a binding agreement with unions and labour groups to stop these unsafe working conditions from existing. Tragedy after tragedy shows that corporate-controlled monitoring is completely inadequate,” commented Tessel Pauli from Clean Clothes Campaign.

Outsourcing and offshoring expert Professor Michael Mol from Warwick Business School believes retailers could use NGOs to report on working conditions at factories they are using in countries like Bangladesh. He believes that there is no way back for the garment industry, and expects them to carry on outsourcing to countries like Bangladesh, but maintains they can do more to help improve working conditions: “One way out of this dilemma might be to give independent monitors, like NGOs, full access to assess the working conditions in these factories and to allow them to report this.”

Mol told Ethical Performance: “I think the main advantage of involving NGOs is that it would create a level of transparency and openness. You will not get that when tackling this problem inside the company or working with the Bangladeshi government or local labour unions, because they all have their own interests in mind.”

“As far as the US companies are concerned, I suspect their lack of willingness to play along and their insistence on sorting this out internally is driven by the weaker consumer response in the US and by the more laid-back approach of the government, in comparison to the European parliament and the various national governments in Europe. So these companies feel they can get away with it.”

“I do believe that this internal solution is even less likely to lead to improvements in labour conditions than the pact the European retailers have chosen. If these American firms think it will work well, then why has it not worked at all so far?”

“I believe companies should move away from viewing poor conditions as a source of competitive advantage, because it is neither desirable nor sustainable. There should not be anything worth hiding from the competition, or from the world, when it comes to labour conditions – wages are another matter.”

Global | supply chain

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