How clothing makers can step up to ensure worker safety

The Sustainable Shareholder

How clothing makers can step up to ensure worker safety

Via Juan R Velasco/Shutterstock

The recent collapse of the Rana Plaza, a sweater factory fire in Dhaka and the 2012 fire in the Tazreen garment factory have left more than 1,500 garment workers dead and at least 1,000 seriously injured. While these incidents are unrelated, they reflect the abysmal human rights record of global companies that overlook working conditions in Bangladesh.

Historically, these types of episodes have been greeted with only temporary outrage. Sweatshops have dogged the apparel industry since the 1990s, notably with the Kathie Lee Gifford and Jaclyn Smith clothing line scandals. Despite occasional lawsuits and boycotts, the apparel industry largely has treated these public relations nightmares as a cost of business, and it tends to look the other way. Americans in particular have a short attention span on child labor and poor working conditions that occur in faraway places. However, anyone who has visited a maquiladora across the Mexican border to see how American companies escape our labor and environmental laws would be outraged.

Because of the apparel industry’s history with exploitation, it was among the first sector to establish codes of conduct and ways to verify compliance with such standards. But such audits have revealed a lack of discipline regarding the manufacture of products, which are often subcontracted to no-name operators who have no direct relationship with the brand owner.

Companies’ non-binding and confidential social compliance programs have sidelined workers and trade unions and have failed to protect workers. While factory auditing remains common and shop-floor training has increased to help monitor working conditions, problems persist with substandard building codes, low wages and lack of organized labor in some countries. This has created a lack of coherence between retailers’ stated codes of conduct and their procurement practices

Meanwhile, the International Corporate Accountability Roundtable, formed by leading human rights, labor and environmental groups, has been defining the materiality of human rights issues as they relate to profitability in order to demonstrate the real risk to companies that don’t support better standards or the disclosure of human rights and sustainability practices. ICAR was essential to the United Nations’ development of its Guiding Principles of Business and Human Rights, but implementing those principles remains a challenge.

Of particular importance is that businesses and other stakeholders need to state how poor human rights standards are material to the bottom line. When work stops or conflict arises with communities, it does affect productivity. Howeer, not until the industry interprets these instances as more than a cost of doing business will a higher standard be set. Part of the problem is that American companies are not held to the same labor and environmental standards in other countries as they are in the United States. American consumers, however, care primarily about low cost goods and not the working conditions, pay or environmental consequences of their production.

Because Congress won’t pass laws that require companies with operations outside the United States to assure worker and community safety and welfare, it is up to the public to pressure apparel makers to adopt higher operational standards. The Accord on Fire and Building Safety in Bangladesh is a legally binding agreement between the companies and unions. It features independent safety inspections with public reports, mandatory factory building renovations, the obligation by brands and retailers to underwrite the cost of repairs and a vital role for workers and their unions in protecting their own safety.

Since the Accord was announced, 50 companies have signed on. Among the American brands are Abercrombie & Fitch, PVH (owner of Tommy Hilfiger and Calvin Klein), Sean John Apparel, Scoop NYC and Zac Posen.

Measuring tape image from Juan R. Velasco/Shutterstock

Meanwhile, big brands including American Eagle, Nordstrom, K-Mart, Macy’s, Sears, JC Penney, Walmart, Gap, Kohl's, Target, Carter’s and Foot Locker have not signed it. These and other manufacturers and retailers supposedly are working on another agreement to be released in July. However, we fear that the standard will be lower and exclude the sorts of union and NGO stakeholders that can verify that standards are being met or hold companies accountable.

For this reason, a group of over 200 investors representing $2.2 trillion of assets under management, along with the International Labor Organization and other labor groups, NGOs and companies, recently released a investor statement on Bangladesh. It calls on companies to implement plans with measurable goals to address all aspects of fire and building safety. Drafted by the Interfaith Center on Corporate Responsibility, the letter “calls on industry leaders to implement systemic reforms that will ensure worker safety and welfare, and to adopt zero-tolerance policies on global supply chain abuses.”

The statement suggests, “Morality dictates that the price/value calculus for all manufactured goods must begin with the fundamental human rights of workers, including health and safety, freedom of association and collective bargaining and a living wage.”

Investors are demanding that relevant companies join the accord, commit to strengthening local trade unions and ensure a living wage. We demand that companies publicly disclose all their suppliers’ programs they have in place to ensure the safety and health of all their workers and measure their performance against these goals including any corrective action, and we expect companies to ensure that appropriate grievance mechanisms and effective remedies for affected workers and families, including compensation, are in place.

To spur additional movement on this issue, in June over 100 organizations representing unions, religious groups, investors and human rights organizations sent a letter to Secretary of State John Kerry. They urged the administration “to publicly support the Accord on Fire and Building Safety in Bangladesh, and to call on U.S. brands and retailers to sign on immediately.”

Further, the U.S. government needs “to be seen as leaders in developing effective assurances for worker safety going forward. This is essential if the Bangladeshi garment industry is to be a path to both economic and human development for Bangladesh, a critical ally for the U.S. in the region.”

We will keep working with our government and corporate management to implement safe and responsible business practices so that such calamitous events in places such as Bangladesh, the Philippines, Guatemala and China no longer occur. For a comprehensive look at these standards and the business reporting, policy and judicial initiatives underway to address this important issue, check out the Institute for Human Rights and Business’ new manual, “Investing the Rights Way: A Guide for Investors on Business and Human Rights."

Measuring tape image from Juan R. Velasco/Shutterstock