May 10, 2013

Retail brands and Bangladesh

Rana Plaza debris (photo: Rijans Flickr)
Lest we forget: What remains of the Rana Plaza complex near Dhaka (photo: Rijans Flickr)
The garments factory disaster on April 24 in Bangladesh throws more than a lurid light on local working conditions and those international retailers (Loblaw, Primark etc.) and brands with goods made on the premises.

The tragic death of over 1,100 people through the collapse of the Rana Plaza complex near Dhaka also raises questions fundamental to our consumerist society.

Are western customers prepared to accept such tragedies for cheaper goods? And can retailers and brands risk their name in the relentless pursuit of lower costs and higher margins?

Judy Gearhart, Executive Director of the International Labor Rights Forum in Washington, argues for more workers' rights and for the trade to take a qualitative leap forward in corporate accountability.

No more confidential CSR

As a representative of a NGO dedicated to achieving just and humane treatment for workers world-wide, Gearhart wants retailers and suppliers to move beyond the current practice of relying on confidential and voluntary Corporate Social Responsibility (CSR) agreements.

But, even in the wake of a series of factory disasters in Bangladesh, will the arguments of an advocacy organisation influence the international trade?

Meanwhile, Irish value fashion retailer Primark, who has recently expanded to Germany, and Canadian retail group Loblaw have issued statements promising compensation to the families of the victims.

The website of Primark, the Associated Business Foods (ABF) subsidiary, refers to the tragedy and carries a number of pages on its ethical trading policies etc.

Loblaw, which is also owned by the Weston family, has a CSR report on its site. Executive Chairman Galen G. Weston, who recently announced record profits for the company, stated that he is "deeply shaken" by the recent events in Bangladesh.

Other retailers who might have had direct or indirect dealings with the Rana Sana factory in the past include Tengelmann fashion subsidiary KiK, C&A, Mango, and El Corte Inglés.

"So many people are to blame!"

ILRF director Judy Gearhart (photo: ILFR)
Voice of compassion: ILRF director Judy Gearhart (photo: ILFR)
Ms Gearhart, who is to blame for the collapse of the Rana Plaza textiles factory in Dhaka and the death of so many workers?

So many people! The employers, government and the brands that were buying from the factory are, of course, directly to blame, especially because they are the parties who have the ability to reform the sector.

But the fundamental problem goes much deeper. The whole tragedy calls into question the way international development aid has been structured to date. It has intensified free-market, unfettered investment to the point that national export income has become totally lopsided.

And the Bangladeshi government, lacking sufficient infrastructure to enforce laws and regulations within industry, simply cannot cope.

We must also recognise as western consumers and voters that the pursuit of price perfection has just gone crazy. We’ve pushed too hard and hit a point where the economic model has gone awry.

Put more simply: As a consumer I don’t want to buy a pair of jeans that are 20 cents cheaper, if people far away in a poor country died making it.

Would it be fair to say that Primark, Loblaw and others have no legal obligation, but a moral one?

Absolutely! And the only reason why they don’t have a legal obligation is because they and other global brands have purposefully fought to distance themselves from responsibility for such workers.

But weren’t Primark, Loblaw and other western brands heavily into Corporate Social Responsibility?

This is the irony behind the huge growth in the CSR industry. It has allowed brands to reassure consumers that they are taking responsibility for workers, even though they have disintegrated their supply chains to a point where no such responsibility really exits in any meaningful, legal way.

So what needs to be done?

There is no simple answer. Consumers want a label, a certification, a grade, but the truth is that we are really talking about flaws in economic development models and global business relations.

But, on a corporate level, brands really need to take a big leap forward in how they conceptualise CSR. They should rethink and talk instead about “corporate accountability” and what it means to be good citizens in the communities where their goods are made.

We want companies to make a contractual commitment to worker safety similar to the Bangladesh Fire & Building Safety Agreement, which has been signed by German retailer Tchibo and PVH, the owner of Calvin Klein and Tommy Hilfiger.

Are you satisfied with the statements made by Primark and Loblaw that they will be compensating victims?

I think that it is very honourable that they have agreed to come into the compensation package.

By contrast, we are still pushing for some of the other brands who have been implicated, such as J.C. Penney’s, The Children’s Place, or Benetton, to do so.

This is a depressingly familiar pattern. For example, Walmart hasn’t come forward yet with compensation to help the victims of the Tazreen fashion factory fire in Dhaka in November 2012. Presumably this is because it wasn’t one of their approved factories.

But that doesn’t change the fact that they were associated with the tragedy; the workers who died still made their branded product. Surely if there was a tragedy at Walmart's home town in Bentonville/Arkansas, they’d find resources to help that community?

How effective was the help given by the Bangladeshi government?

Compensation to the survivors of a deceased worker under national law is abysmal. As a rough guide, workers will receive around three years’ average salary, depending on inflation. We have been pushing for something more adequate, which would cover 25 years of salary with inflation factored in.

From the brands?

No, it’s essential here that factories and employers’ associations also contribute. We have had a lot of trouble with getting them to pay in the past.

For example, after the garment factory fire in Dhaka in 2010, Gap, Abercrombie & Fitch, J.C. Penney’s, Kohl’s, PVH, Carter’s, and VF Corporation all eventually paid in, but victims were never compensated by the employers as had been negotiated.

On its website Primark apologises to the families of the victims and claims full responsibility. But the fashion retailer also shows photos and videos of smiling, happy Bangladeshi workers. Isn’t this just mocking the dead?

You can look at this in two ways. Frankly, it would be more hypocritical to take all past pictures down after the event. It is more honest to leave what they have written prior to the event.

Many NGOs see the tragedy as confirmation that the voluntary self-policing of businesses simply isn’t working. Would you agree?

The whole voluntary monitoring system is deeply flawed. How can workers complain to auditors about the management when it pays the auditors themselves?

Also, nearly all the codes of conduct and monitoring programmes are voluntary and confidential. What does this come down to in the end? Brands are making demands on their suppliers without making any commitments.

Let me give you an example. If a factory has to shut down for repair, locals generally don’t have the confidence that the brand has the level of commitment that is going to allow them to make the repairs and get the business back again later.

Do you really believe in Rana Plaza, for instance, that had Ether-Tex called up any one of those brands to say, “There’s a crack in the building, and we’ve got to delay the order” that they would have objected?

I am certain that every one of those brands would have said "absolutely, don’t put the workers at risk". But would those buyers really go back and place a new order with the same supplier who was late on delivery, and who had reported a crack in his building? There simply isn’t that level of close communication and trust.

Some brands have tried to develop a closer relationship with their key suppliers, but, at the end of the day, brands and retailers are not making contractual commitments to ensure worker safety programmes are fully in place.

So what would you ideally want?

In the best case scenario you would have a brand that would be fully engaged with the factory and who would say to them: "We understand, so let’s talk about what you need in order to secure the workers and get your orders out on time in the future."

These brands would negotiate contracts that ensure workers’ rights and welfare are covered, and not just price and payment terms that ensure the best profits for the brand and factory owner.

But many brand websites suggest that they do have such a dialogue with their suppliers…

The best of them may have such a dialogue and relationship with some of their very best suppliers, but virtually none have made a legal or binding commitment to work through the workplace improvements required by their codes of conduct.

In fact, pretty much all of the monitoring and codes that have gone forward have been based on the premise that anything the brands do in this field is voluntary and confidential.

Surely the whole nature of a business relationship is based on confidentiality?

What that creates is a situation where, for instance, Walmart labels and products are found in the rubble of Tazreen, but where Walmart can deny responsibility, claiming that it was not one of its approved factories.

In fact, we found on the factory website that Tazreen had received an orange rating from Walmart, which presumably was a bit of an alert. It is therefore quite possible that Walmart had already cut them off their approved list.

Walmart probably did an audit of the factory and found a problem. We don’t know what that problem was, because it was confidential, but let’s just say for argument’s sake that the audit recorded a crack in the building or admonished a fire hazard.

Doubtless, Walmart then talked to the owner of the building or the management of the factory and told them to get the problem fixed. But in so many of these kinds of cases, once the brand find it’s getting too difficult to get the problem fixed, they walk away.

But the issue that really gets raised here is that voluntary and confidential commitments mean that we’ve created a system where a brand can go in, find a death trap, and walk away without telling a soul.

What role does the Bangladeshi government play in all this? After all, Rana Plaza belonged to an influential member of the government.

Nobody denies that corruption, or “greasing the wheel”, is a real problem, but there are also reasons for it. In fact, I don’t think it is really helpful making blanket allegations. Instead one should explore what’s driving it all and try to be more constructive.

For a start, local inspectors are heavily underfinanced, and there are only a tiny number of fire safety inspectors for the whole country. You could quadruple the number and it still wouldn’t be nearly enough.

Also, western brands and even development agencies, which support public-private partnerships around CSR, are creating a system that actually encourages corruption.

How do they expect locals not to cheat on their monitoring programmes, when western investors are not offering to discuss the feasibility of the very demands they are making?

International buyers demand ever more CSR things from local entrepreneurs, but still haggle on price and timing. Clearly they expect the magic just to happen of its own accord! How can we blame factory managers if they then take that to be an implicit nod that a blind eye will be turned if they cut corners?

So western buyers should simply pay more?

It’s not as simple as that unfortunately. Western brands can’t just pay more because they are dealing with independent businesses. In fact, they can never be sure that the extra money will go towards improving factory infrastructure or working conditions.

This is why we need binding commitments, such as the Fire and Building Safety Agreement, which are overseen by both worker organisations and experts in fire and building safety. This agreement includes essential, game-changing elements.

These include the public reporting of all fire & building audits conducted by independent safety experts; mandates for factory owners to make timely repairs; contracts between international investors and the factories to ensure brands provide adequate resources and pricing contracts that enable repairs and ensure their suppliers eliminate deadly hazards and operate in a safe manner; an obligation for brands to terminate a contract if a factory defies their obligations to implement changes required by the inspection team; and a right for workers to refuse unsafe work without retribution and union access to factories, among other labour protections.

To make a program like this work, these commitments must be contained in an enforceable contract between the brands and worker representatives, because it is the workers who have their lives on the line.

How do you react to Walmart’s statement that it will continue sourcing from Bangladesh and improve safety standards in the country?

The goal here is not to leave the country, but to redouble the effort, so Walmart is right on that point.

The big question though is what Walmart intends to do. So far they haven’t even sat down with IndustriALL Global Union to talk about compensation funds for the Tazreen fire, despite frequent invitations to do so.

Instead they invested $1.6m in a training institute, which is really not going to change the conundrum created by the voluntary and confidential nature of their systems. They have also said nothing about working with the trade unions and allowing workers to be part of the solution.

The EU is now threatening Bangladesh with trading sanctions. Is this the right step to take and, if not, what steps should the EU be taking?

First of all, I think they and other buying country governments (e.g. US and Canada) should consider imposing some sort of requirements on their own companies that have been buying goods produced in Bangladesh.

However, I do think that trade sanction threats are something that will get the attention of the government and apparel industry in Bangladesh.

After all, the country has not changed its freedom of association and collective bargaining laws in the export processing zones to come into line with international conventions.

We are therefore advocating that the US government revoke GSP (Generalized System of Preferences) benefits to Bangladesh. I should note that American GSP benefits don’t affect the garment sector, but it is an important tool for pressing change, and right now that messaging needs to be strong.

However, I also note from the EU statement that they are ready and willing to help Bangladesh come up to CSR standards. Perhaps this line was quickly added, but there really aren’t CSR standards — certainly none that have helped to prevent the recent tragedies.

CSR standards have been crawling all over Bangladesh for 15 years, and we’ve lost nearly 100 workers a year for seven years now — and that’s prior to the Rana Plaza collapse.

Should western companies leave Bangladesh for some more ordered country?

No, we are not advocating that they leave the country. We want them to buy from factories that they work with as partners, to have insight into the full management of the business, and to be completely sure that the workers are being paid a decent wage in safe conditions, regardless of whether they do business in the US, Bangladesh or anywhere else.

Pope Francis says that the wages of the victims in the Dhaka factory amounted to slave labour. How would you describe pay levels and working conditions in Bangladesh?

US labour historians have called this kind of work wage slavery; and it needs to be recognised as such. If workers don’t have the right to bargain for a liveable wage or to refuse dangerous work, it is certainly very akin to slavery.

In Tazreen workers were literally jailed in the factory with bars on the windows and no way to escape. Let me tell you about one very brave young woman, Sumi Abedin, who survived the Tazreen fire and has generously shared her story with us.

When the fire broke out, she made it from the fourth floor to the second floor. Finding no way to escape, she went back up the stairs to the third floor where she saw people breaking out the window bars.

As she crossed the floor, she passed others who had already passed out from the fumes. Sumi didn’t think she’d survive jumping from the third floor and others who jumped with her did not.

But do you know why she threw herself out of that window? She said she wanted to be sure that her mother would find her body.


Lebensmittel Zeitung print and digital (photo: LZ)
Our German B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: By international editor Mike Dawson in
Lebensmittel Zeitung, no. 19, 10.05.2013

German Retail Blog

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Comments for this article are closed.

  1. paddy19
    Created 10 May, 2013 08:41 | Permanent link

    Curious that you keep picking out Primark and Loblaw.

    "I think that it is very honourable that they have agreed to come into the compensation package.

    By contrast, we are still pushing for some of the other brands who have been implicated, such as J.C. Penney’s, The Children’s Place, or Benetton, to do so."

    Why did you not highlight these big names?

    All retailers push for the lowest prices. Just because they charge higher retail prices does not make them any more ethical than the low cost operators. It simply means they have a different business model.

    Seems to be a definite prejudice in the media against the low-cost and low-advertising retailers.

    How about a little more balanced reporting!

  2. Mike Dawson
    Created 10 May, 2013 15:29 | Permanent link

    Obviously, it is true that those who "charge higher retail prices" are not necessarily "more ethical" than low-cost operators.

    But the two retailers "picked out" are very different. Primark is a low-price retail concept, while Loblaw, despite attempts to shed its high-price image of late, is not. Therefore, two diverse models are involved as regards pricing.

    Loblaw and Primark, who were not available for interview, are mentioned because they both confirm that they had business with Rana Plaza and, as Ms Gearhart says, "have agreed to come into the compensation package".

    Judy Gearhart refers in the interview to an earlier incident, the fire at Tazreen factory, where all retailers believed to be "implicated" are duly mentioned, and, again, some of these are non-discounters.

    As you seem to indicate, it is highly likely that a number of big fashion brands were involved, but, even where advertising literature or samples have been found in the rubble, this is not necessarily proof that they were actually producing there or intended to do so, and many of the forensic investigations are still ongoing.

    Incidentally, Lebensmittel Zeitung (food newspaper) has no fashion brand or fashion retailer advertising customers and therefore no reason to talk them up or down. As no retailers of any sort usually advertise in Lebensmittel Zeitung, there could not be any commercial reason for favoring or not-favoring "low-advertising" ones. In fact, our coverage of those low-price retailers within the food trade, e.g., Aldi, Lidl, Kaufland etc. has always been extensive, although it is a myth that they are "low advertising" in other media (cf. the official ranking tables of the advertising industry).

    Whether national dailies and TV channels, who indeed depend partly on retailer advertising revenue, are prejudiced against "low-cost and low-advertising" ones, is a different matter, but one which can't be answered adequately on a blog of a B2B newspaper with a completely different readership.

    However, re-reading BBC, CNN, CNBC, FT, online and other "media" coverage of Rana Plaza in the light of your comment, it would be hard to substantiate any claim that low-price retail models are being made a scapegoat for higher-price ones or even that brands are being spared at the expense of retailers.

    Finally, it is a little difficult to see Primark and other low-cost retailers as the real victims of this tragedy.

  3. Iqbal Emam
    Created 4 September, 2014 11:18 | Permanent link


    A really good article exploring the poor conditions of these three countries where all the world's best clothes brands are manufacturing their expensive clothes and the middle man is getting more and more wealthy. All these major players have to come up with the social responsibilities to take care of these workers.

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