Members of the Bangladesh Garment and Industrial Workers Federation protest the deadly working conditions that led to the Rana Plaza building collapse in 2013. / Photo from the International Labor Rights Forum
Label-scouting consumers will have noticed a trend in the last several years: fewer “Made in China” tags on clothes on store shelves and an increase in tags from Bangladesh. Bangladesh is now home to factories producing clothes for some of the biggest clothing labels in the world, like Gap, H&M, and Walmart. Garments now account for 80 percent of Bangladesh’s exports, and the industry employs about 4 million people, according to the Bangladesh Garment Manufacturers and Exporters’ Association.
But the manufacturing boom in the country comes with a heavy price for workers. Since 2006, preventable accidents have plagued garment factories in Bangladesh, according to the Clean Clothes Campaign.
The problem was brought into the international spotlight after a fire at the Tazreen Fashions factory in 2012 killed 112 people; a resulting government inquiry accused the factory’s owner of “unpardonable negligence,” which included storing large amounts of flammable materials in unsafe conditions, and reports that mid-level managers insisted that workers on some floors continue working despite alarms indicating a fire had broken out.
But the tragedy of the Tazreen fire was soon followed by an even more devastating event when the eight-story Rana Plaza building collapsed in April of 2013, killing over 1,000 people and injuring 2,500 more.
Workers had noticed dangerous cracks in the building the day before the collapse, and the building was evacuated. However, workers from the garment factories that took up the upper floors were ordered back to their posts the following day, assured by supervisors that the building was safe. Over 3,000 garment workers were in the building when it fell.
Investors around the world have a huge role to play in urging clothing retailers and brands to ensure that Rana Plaza is the last avoidable major tragedy in Bangladesh garment factories.
The Bangladesh Accord
As calls for major reforms in Bangladesh have become more urgent, investors are pressuring companies to commit to improving conditions for garment workers by signing on to the Bangladesh Accord on Fire and Building Safety.
Created in May 2013, the Accord is a legally binding agreement among Bangladeshi and international trade unions and international clothing companies. The Accord aims to address all aspects of fire and building safety during a period of five years in factories that supply garments to Accord signatories.
More than 190 apparel brands from over 20 countries have signed onto the Bangladesh Accord, along with two global trade unions and eight Bangladesh trade unions. However, the vast majority are European companies, with US businesses largely absent—only 20 US corporations have signed on, including American Eagle Outfitters and Fruit of the Loom.
Companies that sign on to the Accord agree to work with manufacturers to ensure independent safety inspections and prompt repairs and renovations, as well as to provide pay to workers if they have to stop working due to dangerous conditions. Accord-member companies commit to staying in Bangladesh for at least two years, giving them a real stake in the long-term process to improve safety in garment factories.
“The Bangladesh Accord on Fire and Building Safety is a critical initiative,” says Green America executive co-director Fran Teplitz. “No one should have to endure the suffering, loss of life, and risks that garment workers face every day in Bangladesh.”
Shareholders Support the Accord
Immediately after the Rana Plaza collapse, the Interfaith Center for Corporate Responsibility (ICCR) provided critical leadership, circulating an investor statement calling for clothing companies to sign on to the Bangladesh Accord. The ICCR Bangladesh statement is currently supported by over 200 investment companies and organizations, representing over $3.1 trillion in investor assets.
ICCR is a coalition of faith-based organizations and pension funds that use their collective shareholder power to pressure companies on social and environmental issues.
“From an investment point of view, it’s about risk analysis,” says David Schilling, senior program director at ICCR. “If companies don’t have policies and practices to address the health and safety of workers where they source products, their whole enterprise is vulnerable to reputational risk from major disasters like Rana Plaza.”
Schilling notes that the issue is attracting investors who are new to socially responsible investing. “We’re working with members of ICCR ... but have also combined forces with larger pension and asset managements firms that may not have had a long-standing interest in human rights issues,” he says. “Rana Plaza galvanized, and maybe accelerated, the movement of social analysts in firms to look more carefully at human rights criteria.”
The Accord vs. The Alliance
Rather than signing onto the Accord, 26 North American companies, including Gap, VF, and Walmart, founded the Bangladesh Alliance. While the Alliance aims to work toward improving worker safety in Bangladesh, critics say it’s much weaker than the Accord.
On the surface, the Accord and the Alliance may seem similar. The Accord conducts health and safety inspections at 1600 Bangladesh garment factories that do business with its 190 members, and the Alliance is doing the same at the more than 580 factories patronized by its 26 members (with some overlap between the two groups).
Both the Alliance and the Accord claim their standards are legally binding. Both publish data about factories, including inspection reports and remediation plans.
However, human-rights leaders are asking companies to prioritize the Accord, which they say is more comprehensive and more transparent than the Alliance, and which gives workers a much stronger stake.
Specifically, the Accord was developed by worker unions and labor rights non-governmental organizations (NGOs), in collaboration with apparel companies, says Liana Foxvog, director of organizing and communications at the International Labor Rights Forum. Bangladeshi worker unions have equal representation to brands on the Accord’s steering committee.
In contrast, the Alliance was created by retailers and has a majority of corporate managers and factory owners on its board of directors, with no worker unions.
“I think both Alliance and Accord have thorough inspections,” says Schilling. “[But the Accord] is the one with close ties with workers on the factory floor.”
The Accord is also a legally binding contract, and companies that sign it can be taken to court if they do not adhere to its provisions. While the Alliance claims to be legally binding, Theresa Haas of the Worker Rights Consortium (WRC) says most of the provisions are voluntary. “Brands and retailers can walk away at any time with little to no consequences; they are not legally obligated to follow through with many of the promises they made [after Rana Plaza],” she says.
For example, the WRC notes that the Alliance agreement contains language exempting members from being obligated to participate in key recommended programs, such as a loan program to help factories finance repairs. A similar program is mandatory for Accord signers.
“The Alliance lacks both the transparency and the avenues necessary to enable workers to have a voice for safety on the job,” says Foxvog. “It’s modeled on the same voluntary, confidential ‘corporate social responsibility’ programming that failed to prevent at least 1,138 deaths and many more injuries at Rana Plaza.”
Investors Take Action
Green America, ICCR, and allied organizations continue to put pressure on US retailers that have failed to sign on to the Accord, including Gap, VF, and Walmart. (All are Alliance members.)
While many social and environmental issues come to companies in the form of shareholder resolutions, Schilling does not expect to see demands to join the Bangladesh Accord come to companies this way.
“We’re seeing a change in approach,” he says. “Instead of making demands for third-party monitoring through shareholder resolutions, as we’ve done in the past, we are instead engaging in dialogue with companies to support the multi-stakeholder approach of the Bangladesh Accord.”
Likewise, many socially responsible investment firms have established relationships with retailers working in Bangladesh, and they are engaging in dialogue with them on worker health and safety.
“Trillium and its investor partners engaged numerous companies that contract with factories in Bangladesh to join the Bangladesh Accord,” says Susan Baker, vice-president of shareholder advocacy at Trillium Asset Management. Baker says that Trillium also urges companies that have joined the Alliance to publicly disclose their efforts to help Bangladesh workers and Rana Plaza victims, as well as their supplier factory locations.
Those efforts bore fruit in 2014, when Target became “the first general merchandise retailer to publish a full list of its registered factories,” says Baker.
“Target is responding to its customers growing interest in what is in the products they buy, as well as where they come from,” says Baker.
Supporting Rana Plaza Victims
ICCR is now mustering investors to call on garment companies doing business in Bangladesh to donate to the Rana Plaza Arrangement, a trust fund to provide compensation to Rana Plaza victims.
In 2013, Bangladeshi NGOs, unions, and the government, as well as industry representatives, created the Arrangement. Victims file claims, and a group of independent commissioners decides on the compensation they receive.
Activists are urging companies with ties to Rana Plaza, like Walmart and Benetton, to make a significant donation. Some donors are publicly disclosed.
The Arrangement currently has collected $21 million for Rana Plaza survivors, says Haas. Unfortunately, the estimated amount needed to fairly compensate all victims is $30 million, so the fund is $9 million short.
A group of institutional investors in 12 different countries have signed onto the ICCR investor statement asking garment companies to participate in the Rana Plaza trust fund, as well as to ensure worker health and safety by committing to the Bangladesh Accord’s level of transparency in inspections, remediation, and outcomes.
What You Can Do
Whether you have investments in individual companies or mutual funds, you can support the cause of making factories safer in Bangladesh and compensating Rana Plaza victims.
“Individual investors can make a difference by looking at their portfolios,” says Schilling. If a clothing company you hold stock in has not signed onto the Accord, send a letter requesting that it do so, he says. “Companies do pay attention to what they hear from individual investors.”
If you have holdings in companies that have signed on, let them know you appreciate their leadership.
In addition, says Baker, “Ask companies that are involved in the Accord or the Alliance to report publicly on the commitments they agreed to. ... And press companies to disclose registered factory lists.”
Also, investing through socially responsible investment companies ensures that your money is going toward engagement with corporations about human rights and other important issues. Along with Trillium, Calvert Investments and Domini Social Investments support the Accord and are using their economic clout to urge companies to sign on.
Right now, you can urge clothing companies to the Rana Plaza Arrangement trust fund for victims of the factory collapse. A list of publicly disclosed donors, including a handful of garment brands, is available on the site.
Update: In June 2015, several events brought some justice to Bangladeshi workers and families of and workers.