THE ROAD FROM RANA PLAZA

Three years on, the scale of the pain caused by the Rana Plaza tragedy remains as shocking as ever. Building a safer, more sustainable garment industry will be the best and most lasting memorial to those who suffered at Rana Plaza.

To reach this goal, all stakeholders in the global garment chain need to stay focused on co-operative efforts to raise standards by remembering:

1. There is no substitute for vigilance, 2. Co-operation is key, 3. Government must play its part, 4. A better future needs a level playing field 5. Climbing the value chain beats a race to the bottom 

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Three years on, the scale of the pain caused by the Rana Plaza tragedy remains as shocking as ever.

Among the hundreds of RMG workers who survived the factory collapse that killed 1,135 people on April 24, 2013, three fifths still suffer serious physical and psychological after-effects. Around half are unemployed and less than one in 20 wish to return to work in the garment industry.

The reminder provided by the anniversary will hopefully boost ongoing efforts to aid, rehabilitate, and provide solidarity to all survivors and the families of the bereaved.

The ILO chaired fund set up by the Rana Plaza Arrangement backed by the government and leading brands has made invaluable progress in enabling support to be provided for victims in line with the standards required by ILO Convention 121, without getting delayed by legal disputes.

Those brands who led the way in supporting the Arrangement deserve recognition for acting transparently to speed the flow of compensation available to victims.

It was tacit acknowledgement on their part that the vast majority of bargaining power and finance within the garment sector lies in the hands of global buyers and they are the ones with the most ability to facilitate improvements to standards and wages in the industry.

As for the people most directly responsible on the day, the building owners and managers who forced workers back into a factory which had been officially declared unsafe, murder charges were filed last year against 42 different people and the city development authority RAJUK has filed a separate case against 13 people, for flouting the National Building Code.

Hope remains that the wheels of justice will keep turning and the survivors’ needs will not be forgotten.

For Bangladesh, the anniversary is a salutary reminder of the need to redouble efforts to build a better future for the millions of people who work in or are dependent on the RMG sector.

Building a safer, more sustainable garment industry will be the best and most lasting memorial to those who suffered at Rana Plaza. To reach this goal, all stake-holders in the global garment chain need to stay focused on co-operative efforts to raise standards by remembering:

1. There is no substitute for vigilance

Official government efforts and the Accord and Alliance brand led stake-holder safety initiatives are making a real and meaningful difference.

Factory inspections are steadily and surely identifying and repudiating areas for improvement.

Last year, for instance, there were only five incidents of fires in the whole industry which passed without loss of life. This compares with some 250 officially recorded garment factory fires taking place during 2012, which took the lives of 115 people. The large decline in fires and improved safety rate is a sign of how increased monitoring and growing awareness among workers and factory owners are helping to prevent accidents.

Renewed attention has also been given to labour rights issues and the minimum wage was raised after a long hiatus.

2. Co-operation is key

Stake-holder collaboration is vital to help build the long-term partnerships needed to help grow Bangladesh’s garment manufacturing sector as a safe and sustainable industry.

The stake-holder safety initiatives and Rana Plaza Arrangement signal how industry wide co-operation can help bring about a sea-change in attitudes.

Amid an ever competitive global marketplace, brands and buyers need to keep playing their part in working to help factory owners secure the finance to fund improvements.

It is in everybody’s interest to raise standards here and now in Bangladesh, where the industry is well-rooted than elsewhere where the same downward pressures on prices and standards create the same challenges.

Investing more in long-term orders and building closer relationships with well-performing producers, is key to improving the sector’s cash flow and securing new funds to keep upgrading standards.

It is a testament to the Bangladesh garment industry’s collective resilience that it has continued to grow and reach out to new markets despite all the pressures it is facing. There are encouraging signs that leading manufacturers and the BGMEA are now taking more of a lead in building better factories and investing more in research and development to raise productivity in the apparel industry.

Much more co-operation is needed to ensure the benefits of improved conditions and better safety standards reach across all the tiers of the supply chain.

The short lead times, low margins, and large amount of sub-contracting inherent in fast fashion, make it imperative that all stake-holders work closely to identify and close off loopholes which enable codes of conduct to be broken.

3. Government must play its part

The government has to do more to ensure it fully enforces safety standards and labour laws.

It is welcome then the Department of Inspection for Factories and Establishments now has  277 inspectors to ensure welfare, safety, and health of human resources working in industrial sectors, compared to just 42 three years ago.

The government also needs to keep up a national focus on enhancing labour rights and developing better workplace insurance systems. This can help not only improve working conditions and increase the appeal of Bangladeshi goods, but also strengthen the industry’s case for securing a fairer deal from importing nations.

Lack of land and reliable energy supplies are the two biggest deterrents that impede investors from developing safer, modern factories. It is still vital then for the government to facilitate and attract greater investment in new factories by freeing up underused state owned land for the development of EPZs and industrial parks.

4. A better future needs a level playing field

Despite the WTO Bali package, it is telling that little has changed since the IMF’s famous 2002 report on the “The Truth about Industrial Country Tariffs.”

Developing countries that export primarily agricultural and labour-intensive goods such as textiles and clothing are still hard hit by large industrial countries’ tariff policies.

This remains particularly the case with Bangladesh RMG exports to the United States, where the IMF study showed in 2001, the US collected duties of $331 million in 2001 on total imports from Bangladesh then worth $2.5bn, which was slightly more than the $330m it collected on $30bn of imports from France.

With Bangladesh now an even bigger RMG supplier to the US market, the picture is somewhat worse with well over $800m now paid each year in tariffs to the US government on imported Bangladeshi garments.

The tariff rate charged on Bangladeshi RMG exports to the US (15.6%), the second highest in this category, is especially discriminatory, as it is higher than nearly all other developing countries and roughly five times that charged on RMG exports from China and India.

It compares unfavourably with the EU’s “everything but arms” duty and quota-free scheme.

As it is stated, US policy to officially encourage efforts to raise labour standards in Bangladesh, if the US does not wish to remove its tariff, it should adopt the proposal made by the former chief economist of the Bangladesh Bank and establish a “tariffs for standards” fund.

By putting a portion of the excess rate paid by Bangladesh, say $200m, into a fund administered by a third party to finance factory upgrades and improvements in working standards, the US could help level the playing field for Bangladeshi exporters by directly supporting increased investment in improving Bangladesh’s RMG sector.

5. Climbing the value chain beats a race to the bottom

It is in the common interest of buyers and factory owners and workers alike for Bangladesh’s garment industry to improve its standards, as consumers and buyers will also gain from higher standards through improvements in productivity.

For the Bangladesh garment sector to achieve its goal of doubling exports to $50bn by 2021, a comprehensive approach needs to be taken to maximise investment in building new factories where productively and standards can both be improved.

This is particularly crucial for the Bangladesh RMG sector, which needs to both adapt to new competition and invest in improving workforce skills so the industry can keep rising up the value chain.

– See more at: http://www.dhakatribune.com/opinion/op-ed/2016/04/24/2257/

 

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And the first Bangladeshi fund to sign UNPRI is …

Apologies to any readers who dislike acronyms and business buzzwords. But the six UN Principles for Responsible Investment (UNPRI), or PRI for short, simply consist of what they state on the label.

The initiative aims to help investors integrate the consideration of environmental, social, and governance (ESG) issues into their decision-making and ownership practices. The goal is that by addressing these issues across the businesses in which they invest, PRI members will improve the long-term value of their investments and encourage a sustainable financial system.

Although its membership includes specialist ethical investors, UNPRI is aimed at and includes all types of investment institutions among its members, from large asset owners such as pension funds, to banks, fund managers, research houses, and actuaries. Signatories include the California Public Employees’ Retirement System and household names such as HSBC and the Johannesburg Stock Exchange.

Members take as common ground the view that while the market economy has emerged as the most efficient system for allocating economic resources, it is increasingly material for companies and shareholders to address the environmental impacts, social inequalities, and other negative externalities which affect or interact with their business activities.

It asks investors to review and report on the ESG impacts of all the different assets and businesses in which they invest, and to work collaboratively as shareholders to encourage companies to improve their ESG performance and hence, long-term value.

There are sound reasons why UNPRI deserves more attention in Bangladesh. Not least, the principles which were formally launched by Kofi Annan in April 2006, have now been signed by over 1,200 organisations, who between them manage or own $34 trillion, or 15% of the world’s investable assets.

Presently, in the whole of South Asia, there are only three signatories (all in India). This is the same number as in China and Indonesia, meaning that Hong Kong (11) and Luxembourg (14) each have more UNPRI signatories than China, Indonesia, and Saarc put together. While the low sign up rate to UNPRI outside G8 and OECD nations, reflects the organisation’s evolution around the global financial centres of Europe and North America, there are three key reasons why a number of Bangladeshi banks and financial institutions, should already be signatories and active members.

Firstly, some local institutions are already following overlapping or related principles. Indeed, since 2008, via its directive on Mainstreaming Corporate Social Responsibility (CSR), and through its policies on green banking, the Bangladesh Bank has been officially encouraging banks and financial institutions to adopt or follow similar principles.

As an aspirational and voluntary code, with relatively low mandatory fees, there is nothing to stop Bangladeshi financial institutions from signing up to PRI. In fact, its potential benefits in terms of gaining recognition and networking far outweigh the costs involved.

Secondly, Bangladesh can claim a part of one of Luxembourg’s 14 current signatories, the Grameen Crédit Agricole Microcredit Foundation. This not-for-profit organisation registered in Luxembourg, was set up in 2008 by an endowment of 50m euros donated by the French bank Crédit Agricole SA, which is invested to help the foundation encourage microfinance and social businesses around the world.

Thirdly, and most significantly, there is a huge amount of international interest in ethical and responsible business issues within Bangladesh. While policymakers can’t fail to clearly appreciate this in relation to companies and brands directly involved in the RMG industry, it is less widely noticed that many large institutional investors are similarly interested in the country’s development.

After the Rana Plaza disaster for instance, the US-based Interfaith Centre for Corporate Responsibility (ICCR) issued its Bangladesh Investor Statement which by September 2013, had been signed by over 200 other organisations who between them have $3 trillion of assets under management.

The statement appealed to the brands and companies in which signatories invest to, among other steps, join the Accord on Fire and Building Safety stating that: “As investors, we also bear responsibility to enhance the power of the private sector to effect positive change by engaging companies to ensure that human rights remain at the core of their business models.”

Supporters of the Bangladesh Investor statement, who overlap with many of the UNPRI’s 1245 signatories, include large insurance companies and Swedish government pension funds, as well as the core ethical and religious investors which ICCR represents.

For the most part, it can be assumed the analysts who signed this statement are interested primarily in the reputation and supply chains of a few large western brands and retailers in which they hold shares. But to take a flight of fancy, what if it was an equal world, and as global investors these signatories invested assets according to population, so that over 2% of their assets (over $60 billion) were in Bangladesh? Or 2% of the PRI’s $34 trillion …

That’s plenty more reasons for Bangladeshi institutions to sit up and take notice, right? Bangladeshi businesses and financial institutions should be playing just as big a part in participating in developing and shaping international standards of good practice, as they do in trying to meet such standards.

Now, I’ve been around codes of ethics long enough to be ultra conscious that good intentions don’t always lead to good outcomes. Or that a business might be responsible in, say, reducing its greenhouse emissions or improving labour conditions, without having a code of practice on its website, or being signed up to a multi-stakeholder initiative or pressured by its shareholders.

But being realistic is not the same as cynicism. If UNPRI members collectively can’t make a difference by working together on what are after all the key issues of our day, then who can? All the more reason, then, to join them.

The code of practice for opinion-mongers states that one shouldn’t plug a race without tipping a winner. So, I’m going to point people trying to guess which will be the first Bangladeshi  financial institution to sign UNPRI, towards reading the annual reports of BRAC Bank or one of the sharia-compliant institutions.

Brac Bank’s report for example sets as a mission for the organisation to operate under a “triple bottom line” agenda where profit and social responsibility shake hands as it strives towards a poverty-free, enlightened Bangladesh,’’ while the related Brac EPL Investments Ltd was a pioneer in first publishing a Sustainability Report, according to the Global Reporting Initiative guidelines in 2011.

But actually, that’s not the answer. The ultimate answer is actually down to every reader with a bank account, insurance policy or investment fund. As customers, it is up to us to write as consumers to ask our financial institutions to adopt and follow ethical and responsible investment principles.

It’s your money after all. You can influence it. And that includes suggesting that Bangladeshi financial institutions should sign up to UNPRI.

– See more at: https://www.dhakatribune.com/uncategorized/2014/04/04/and-the-first-bangladeshi-fund-to-sign-unpri-is

When will the value of a Bangladeshi life go up?

Everyone acknowledges that the value of any single human life is incalculable.Ask an actuary, lawyer, or insurance company however, and they will be able to suggest financial amounts based on hard economics and labyrinthine legal precedent.

Whether in a rich country or a low income nation like Bangladesh, the compensation typically awarded to victims of accidents can never truly be sufficient to compensate for their loss. Even though the law everywhere is usually intended to do just that, the reality of bargaining power and self-interest is that corporations and governments will seek to limit their liability, so it is not unusual for compensation payments to be contested for many years.

In this context, the stakeholders who have signed the Rana Plaza Compensation Arrangement deserve credit for being able to agree a coordinated framework within the year, to compensate the injured workers and dependents of the deceased who died in the Rana Plaza building collapse at Savar on April 24th, 2013.

For families of the 1,133 people killed and over 2,000 injured, this agreement will hopefully increase the amount of much needed compensation and increase the pace of delivery of payments to cover medical costs and income replacement needs.

The Arrangement has been signed by four leading buyers (Primark, Loblaw, Bonmarche, El Corte Ingles), the Bangladesh Ministry of Labour, Bangladesh Employers’ Federation, BGMEA, Bangladesh Institute for Labour Studies (BILS) and labour groups including the global trade union, Industriall. It is also supported by the Clean Clothes Campaign NGO which has been pressing global retailers to do far more to help the families of the disaster’s victims.

Under the agreement, which provides for a single approach for compensation consistent with provisions of ILO Convention No 121, the International Labour Organisation (ILO) is chairing a multi-stakeholder Coordination Committee drawn from the signatories, to make disbursements to victims with instalments pencilled in to have started from February 2014, provided sufficient funds are received, but still, it is embroiled in a suuficiency protest, where the workers are protesting the Tk1.45m compensation amount. According to ILO standards, this figure stands at Tk2.8m.

To finance the payments, international brands and retailers have been approached to make voluntary contributions into a trust fund managed by a global bank and open to other international donors. Any local funds will be kept in a local bank which will also be used to make the payments agreed directly to the beneficiaries.

Although the final total funding needed will only be known once individual claims are determined according to need and medical advice, it is estimated that the total amount disbursed via this agreement will be around $40m. The amounts given will be offset against any other sums already paid to victims by the government and other local and global stakeholders.

Besides the four Canadian and European companies who have signed the Arrangement, over 20 other multinational brands have been linked to the five garment factories which were located in Rana Plaza, but legal caution and denials of liability are expected to deter most from signing up. Bearing in mind that on the day, the magnitude of the disaster was amplified by the negligence of local managers who demanded that workers go into a building that had been officially determined to be unsafe, such reticence comes as no surprise.

This does not mean that other brands outside the Arrangement have not also been active in making payments to victims or in supporting stakeholder initiatives to improve safety conditions. The legally binding Accord on Fire and Building Safety in Bangladesh has been signed by over 100 global companies and the Alliance for Bangladesh Worker Safety brings together major North American retailers who have agreed to make $100m of loans available to improve factories.

Looking to the future, it is the successful implementation of these types of initiative that will be key to ensuring safe working conditions for everyone in the sector.

 For the families of Rana Plaza’s victims however, it is their immediate day to day needs that matter most. No stone should be left unturned to increase the amount of support and finance provided. This is why it is vital that the Rana Plaza Compensation Arrangement has received strong institutional support and credible brand backing. Otherwise it would be all too easy for financial help to be lost in a quagmire of corporate defensiveness and legal dispute. The still-running disputes arising out of the Union Carbide disaster at Bhopal in 1984 highlight the risks to all involved of the cost of failing to settle just compensation as early as possible.

Of course by global standards the amounts people will receive seem small. Inevitably they are limited by factors such as actual wage rates and the low cost of living in Bangladesh, which give rise to a low value for the economic cost of the statistical value of a person’s life in Bangladesh.

Negotiators announcing the Arrangement have talked in ball park figures of families of the dead receiving up to $25,000 each. An unusual amount by Bangladeshi standards no doubt where per capita purchasing power is in the order of $1,900 a year, but no substitute for the loved one lost.

Still it promises to be more than if left to the law alone. In submissions to the High Court committee for determining compensation, the BGMEA was reported to have argued that the 1955 Fatal Accidents Act is not applicable in this case as the death of workers was not caused by “wrongful act, negligence or default’’ of the factory owners themselves. Responding to suggestions to set Tk 19.51 lakh as the amount of compensation for families of each deceased worker, it argued that relatives will get money from life insurance and labour law requires Tk100,000 compensation only.

Had such legalistic argument been stuck to by everyone involved, it is doubtful that the Rana Plaza Compensation Arrangement could have been approved before the end of 2013. The brands who signed deserve recognition that they have transparently acted to increase the amount and speed of compensation available to victims. It is tacit acknowledgement on their part that the vast majority of bargaining power and finance within the garment sector lies in the hands of global buyers and they are the ones with the most ability to facilitate improvements to standards and wages in the industry.

Hence, whilst the deplorable safety conditions that caused the Rana Plaza disaster are directly the fault of individuals enabled by the poor enforcement of safety laws within Bangladesh, it is right that international buyers share in the duty of responsibility towards workers in the industry. Corporate responsibility has to be about doing more than just the bare minimum of what the law requires.

None of this absolves Bangladeshis from taking more action to compensate victims and invest in improving the garment industry ourselves. Yes, there are sound arguments for much of the finance for the initiatives mentioned coming from abroad; global buyers relentlessly seek to drive down the cost of goods and western consumers benefit from the low wage rates of producing countries like Bangladesh. But this does not justify being passive in the face of global market forces.

At the very least, there is a basic moral duty for the garment sector to raise standards itself. More importantly over the medium term, a lot more still needs to be accomplished to raise the estimated $1bn required to build newer factories and spread good practices across the sector.

This is not an impossible challenge. After all, the Bangladesh garment industry would not have become the world’s 2nd largest exporter after China if it did not already have some competitive and fully-compliant world class producers. It should also in the medium term pay for itself by improving productivity and increasing profits.

Key stakeholders share a common interest with garment factory owners and workers in raising average standards in Bangladesh. Most of the problems inherent in ensuring the good working conditions which consumers expect and campaigners are calling for, are endemic to the garment industry worldwide. As buyers who “cut and run” to competing manufacturing countries like Cambodia and India only face running into similar problems elsewhere, it is better all round to improve conditions here and now.

Yet, despite long experience over the past two decades of dealing with stakeholders on compliance and labour standards issues, the BGMEA leadership traditionally places much of its external emphasis on maintaining a low cost model at all costs. This is neither positive strategic thinking for the long term, nor is it positive public relations as it gives the appearance of being over-defensive about poor conditions.

While garment owners have a good case for complaining about the low margins demanded by buyers, it is also the case that much of the impetus and funds for making factory improvements, is coming from overseas companies, campaigners and governments. Much more of this effort needs to come from the industry itself. It is not as if it is completely powerless as large factory owners have considerable economic and political influence within the country.

Members of the BGMEA should for example do more to demonstrate that they too are investing in improving conditions and developing skills training. They could also be more pro-active in building the country’s image, when for example, buyers request meetings abroad to negotiate contracts because of the perceived risks caused by the political climate. What is to stop more producers from arranging secure meetings in Cox’s Bazar rather than spending money to meet in India or Singapore?

As the nation’s dominant industrial sector, garment entrepreneurs owe it to themselves as well as the country’s workers to invest in moving the county’s exports higher up the value chain. They have no choice. Not only is it undesirable in the globalised economy to stay stuck in a race to the bottom, it is impractical. Sooner or later, Bangladesh will become a middle income country. Relying on low labour costs alone will not be sufficient to sustain the nation’s economic growth. This necessitates improving the climate for investment.

The BGMEA should work together with campaign groups and unions to raise standards so that the aftermath of the Rana plaza disaster does not just help to bring about vitally-needed safety improvements, but improves the productivity and sustainability of the industry overall.

Ultimately it will only be by raising living standards overall that the value of a Bangladeshi workers’ life will be raised higher.

Rana Plaza Compensation Arrangement

UN agency International Labour Organisation (ILO) acts as a neutral chair. The Understanding for this Arrangement has been signed by: Buyers (Primark, Loblaw,  Bonmarche, El Corte Ingles), Bangladesh Ministry of Labour, Bangladesh Employers’  Federation (BEF), Bangladesh Garment Manufacturers and Exporters Association (BGMEA),  IndustriALL, Bangladesh National Council, Bangladesh Institute for Labour Studies (BILS), Industriall Global Union and Clean Clothes Campaign http://www.ranaplaza-arrangement.org/

 

Bangladesh Accord

The Accord is an independent agreement  which includes independent safety inspections at factories and public reporting of the results of these inspections. Where safety issues are identified, retailers commit to ensuring that repairs are carried out, that sufficient funds are made available to do so, and that workers at these factories continue to be paid a salary. The Accord is a legally binding agreement. It has been signed by over 100 apparel corporations from 19 countries in Europe, North America, Asia and Australia; two global trade unions, IndustriALL and UNI; and numerous Bangladeshi unions. Clean Clothes Campaign, Workers’ Rights Consortium, International Labor Rights Forum and Maquila Solidarity Network are NGO witnesses to the Accord. The International Labour Organisation (ILO) acts as the independent chair. The Accord recently published its list of nearly 1600 factories which are covered under its provisions on its website. The list includes addresses of the factories involved and estimates that over 1.97m workers are employed at these sites. http://www.bangladeshaccord.org/

 

 

Alliance for Bangladesh Worker Safety

A group of North American apparel companies and retailers and brands have joined together to develop and launch the Bangladesh Worker Safety Initiative, a binding, five-year undertaking that will be transparent, results-oriented, measurable and verifiable with the intent of improving safety in Bangladeshi ready-made garment (RMG) factories. Alliance members represent the overwhelming majority of North American imports of RMG from Bangladesh, produced at more than 500 factories. Supporting associations include: American Apparel & Footwear Association, BRAC, Canadian Apparel Federation, National Retail Federation, Retail Council of Canada, Retail Industry Leaders Association, and United States Association of Importers of Textiles & Apparel. In addition, Li & Fung, a major Hong Kong-based sourcing company which does business with many members of the Alliance, will serve in an advisory capacity. http://www.bangladeshworkersafety.org/

 

National Tripartite Plan of Action on Building and Fire Safety in the RMG sector in Bangladesh

The Government of Bangladesh and representatives of Bangladesh employers’ and workers’ organizations have signed an integrated National Tripartite Plan of Action on Fire Safety and Structural Integrity in the garment Sector of Bangladesh (NTPA). The National Tripartite Committee (NTC) chaired by Labour Secretary, includes Government agencies, employers (BEF, BGMEA and BKMEA) and trade unions. Bangladesh University of Engineering and Technology (BUET) has begun a process to assess the factory buildings that are not part of Alliance or Accord, both for structural integrity and fire and electrical safety. Technical experts of the three initiatives: Accord, Alliance as well as BUET/ NTC  have worked together in joint development of standards to be assessed. ILO ‘Improving Working Conditions in the Ready-Made Garment Sector’ program (RMGP) RMGP focuses on minimizing the threat of fire and building collapse in ready-made garment factories and on ensuring the rights and safety of workers. The United Kingdom and the Netherlands are jointly contributing US$15 million to the US$24.21 million programme. The ILO is mobilizing further resources. This programme supports the National Tripartite Plan of Action on fire safety and structural integrity and includes a new  Better Work programme -aimed at improving working conditions in the ready-made garment (RMG) industry in Bangladesh. http://www.ilo.org/dhaka/

– See more at: http://www.dhakatribune.com/long-form/2014/02/18/when-will-the-value-of-a-bangladeshi-life-go-up/

Stakeholder plan for building a safer garment industry in Bangladesh

A leading garment manufacturer and investors were among stakeholders (RMGACTion)  who recently published a 10 point roadmap to build a safer and more sustainable garment industry in Bangladesh.  (summarised in this http://www.dhakatribune.com/op-ed/2013/jun/13/building-safer-and-stronger-garment-industry article and available in full at  http://www.scribd.com/doc/144709575/RMG-Sector-10-Point-Plan )

Rightly, the paper starts with safety as the most urgent priority for action by the industry, regulators, buyers and unions – and proposes the ILO backed Bangladesh Fire and Buildings Safety Accord signed in April as a starting point to help classify factories most at risk. It calls upon the BGMEA to ensure that all new factories built are independently certified to meet the Tier 1 classification (highest of three grade) – and that action plans are urgently developed and implemented for the 1000 worst Tier 3 graded factories found in the process.

Interestingly, the paper also looks to the longer term and welcomes BRAC founder Sir Fazle Abed’s statement that Bangladesh needs stronger unions more than outside pressure http://www.nytimes.com/2013/04/30/opinion/bangladesh-needs-strong-unions-not-outside-pressure.html?pagewanted=all&_r=0.  It has of course long been argued by workers groups that  empowering workers to defend their own rights via unions and collective bargaining is the most effective way to sustainably improve conditions – which is why freedom of association lies at the heart of the core ILO standards and hence the ETI Base code and is a core principle of the UN Global Compact.

Pragmatically, given the default resistance by most owners to supporting union rights in Bangladesh (backed by a strong lobby in Parliament with ministers from governments of both Bangladesh’s main parties making defensive and dismissive remarks in response to suggestions to increase union rights) – the paper calls for worker participation bodies and a new BRIDGE organisation to facilitate improvements (and implement employee welfare and training programmes) as stepping stones towards meeting this goal.

Most importantly, it looks to the longer term by recognising that Bangladeshi exporters should look to move up the value chain with its attendant benefits of higher productivity and wages. Realistically, much of the paper focuses on the need for a properly co-ordinated (and financed) Action plan to improve conditions in the factories that need it most.

It is in the financing part where the author’s laudable objective of devising a ‘plan for Bangladesh by Bangladesh’ which ‘does not require commitments by buyers’, that the plan may seem a bit sketchy.  Hence rather than proposing to take 1% to 2% of the export value of the industry from buyers, it mentions an export tax of similar value (which arguably amounts to the same thing.if not paid for by improved productivity – although that is clearly the desired goal) – and calls for multilateral funding for a $1billion RMG Sector Transformation Fund to loan money to finance improved factories and/or reloactions.

Whilst there are precedents to enable such a large programme of state aid – and it is clear finance is needed by a large cohort of factories – it is unclear how quickly this could be actioned in an election year and how effective the government would be in ensuring  transparency and accountability.

In practice therefore, all good ideas that can be implemented and monitored efficiently whether from buyers or regulators – or by workers themselves – need to be supported as the scale of the task necessitates a wide spectrum of practical approaches.  Some hard questions and choices will inevitably remain – as the understandably important national need to support millions of livelihoods can in the long term only be sustained by better productivity and more investment by factory owners and buyers alike – because ultimately the extent to which govt and external support can go in raising standards is constrained.

Similarly, in an industry of this size and scale, it is likely that differences may remain between the predominantly European buyers who tend to support an ‘invest and improve’ approach  towards non-compliance – and the ‘cut and run/ zero tolerance’ approach favoured by some major US firms.  In principle, a virtuous cycle of improvement is better supported by the former approach than the latter which is why unions and NGOs are right to argue that cut and run is no solution.   (Although cut and run advocates could argue that in a globalised world, Schumpter-ian forces can equally help drive out the worst offenders.)

Finally, to return the original safety issues at Rana plaza – and to be fair to Mike Flanagan, the retail consultant whose off the cuff wage rate email is quoted in the article, – his blog has a well considered review of what he summarises as the 7 key reasons and two factors, underlying the deaths at Rana plaza. (He points out that if only one or two of these had been different, the death toll would not have been as it was….)

Although Flanagan’s article http://www.just-style.com/comment/solutions-to-prevent-another-bangladesh-tragedy_id117742.aspx paradoxically (and I would argue mistakingly) criticises Bangladeshi media and campaigners for highlighting corruption issues and tracing buyers as people were still trapped (which just sounds like their job – with highly articulate and moving vox pops from workers and their families on local rolling news stations – helping to put a lot of pressure on the government to arrest the owner) – and he robustly defends the Walmart zero tolerance approach – his conclusions and proposed actions – which place a lot of emphasis on listening to workers and calls on buyers to ‘actively encourage worker whistle-blowing’ merits reading along with the RMGACTion plan.

CLEAN CLOTHES CAMPAIGN RELEASE ON RANA

Not every campaign or protest works or is worth endorsing and compliance professionals can only do so much in the face of corruption and complacency – but anyone looking to express support for building a virtuous cycle against the viciousness of the race to the bottom that underlies so much misery, may wish to take a look at the Clean Clothes Campaign’s press release on Rana Plaza http://www.cleanclothes.org/media-inquiries/press-releases/stop-the-killing-act-now and could do worse than signing its petition to Tazreen brands not to cut and run’ http://www.cleanclothes.org/urgent-actions/call-upon-tazreen-brands-to-deliver-the-goods#action

Effective campaigns supported by citizens and consumers all around the world are vital to ensure that the baby reported to have been born in the rubble  of Rana Plaza grows up in a world where human life is properly valued

http://www.daily-sun.com/details_yes_26-04-2013_Baby-born-amid-death-throes_479_1_1_1_7.html

RANA PLAZA DEATHS RISE – CALLS FOR ACTION MOUNTING

With a death toll exceeding the Tazreen tragedy last November and more bodies feared to be discovered, help not just sympathy is required for workers in risky factories all around the world. http://www.thedailystar.net/beta2/news/so-near-yet-so-far/

One can only hope this needless loss of human life will prompt more action (rather than ‘cut and run’) by brands such as those named in this article to make recalcitrant factory owners raise standards.   http://www.dhakatribune.com/politics/2013/apr/25/ill-fated-factories-supplied-global-brands

LESSONS FROM PAST TRAGEDIES SUCH AS SPECTRUM and TAZREEN STILL NEED TO BE LEARNED AND APPLIED IN FULL.

Bangladeshi citizens themselves must also face the wider societal challenges of reducing the culture of disregard for safety and fatalistic acceptance of tragedy that appears to underlie this disaster.

Tax to rise in 2013? (Up the ESG controversy agenda)

 January 2013 saw a private research provider – other research providers are available  – publish its top 10 list of   The Most Controversial Companies of the year 2012   –  analysing alleged breaches of international standards relating to 10 global companies as reported in high profile news stories. – other research providers are available

 Labour standards figure prominently as ever and the 2012 list is headed by the huge death toll in the Tarzeen fire http://www.laborrights.org/news/coverage-of-the-tarzeen-fire  Given that UK companies and media coverage feature strongly in this assessment, the tax debate originating in the UK and spreading  globally since the turn of the year, may feature prominently in the 2013 report?

• (http://www.telegraph.co.uk/news/politics/9829108/Starbucks-threatens-Cameron-after-unfair-tax-attacks.html
• http://www.wired.co.uk/news/archive/2013-03/05/microsoft-danish-billion-dollar-tax-bill
• http://www.taxresearch.org.uk/Blog/2013/03/02/tax-us-if-you-can-the-new-edition/)

Is there financial value in ESG?

Deloitte have published a new report “Finding the Value in Environmental, Social, and Governance Performance” which reviews evidence suggesting that environmental, social, and governance (ESG) issues can result in positive benefits and better position a business to mitigate any downside risks from an ESG shock.  

By no means a  definitive answer to the perennial challenge of demonstrating value from ESG commitments  – or the conundrum that there are always companies that thrive in the face of adverse publicity – but even so a good example of the continuing mainstreaming of ESG

Corporate responsibility – from the Industrial Revolution to 2013 and beyond

Whilst some of the contemporary debate about Corporate Responsibility (CSR) may appear new to some, it is worth remembering that debates about environmental and social impacts in business are at least as old as the industrial revolution itself. Even in the 19^th century, some employers made a business case for improving the living conditions of workers and in early 20^th century Michigan, Henry Ford argued that raising wages so that the workers who made his cars could also afford to buy them was good both for his workers and his company.

Conscientious citizens have long used their influence as consumers and investors to influence the private sector.  Although boycotts can be counter-productive and are often limited in their effect, they can have huge symbolic power as Gandhi famously demonstrated.  The 1970s and 1980s campaigns against investment in apartheid South Africa and some of the Western multinationals operating there, greatly increased global public and media interest in concepts like ethical investment and corporate responsibility.

Key CSR issues and the UN Global Compact Principles

CR – the Business Case (1)

http://www.crguk.org/

http://www.csrcentre-bd.org/

Although hugely valuable and influential, ethical choices, such as choosing an ethical bank account, or buying goods certified as organic or fair trade are almost by definition always at first a minority choice.  There is also often a moral dimension – who is more useful for the good of wider society, an investor who avoids holding shares in a tobacco company because they do not want to profit from the harm inherent in the product, or the citizen who campaigns democratically for the government to discourage use by raising taxes?   (One answer by the way is that someone could be both.)

Nonetheless, even though the common interest of practitioners is to improve impacts against ESG standards across the board and to mainstream good practice, it would be short sighted to dismiss ethical/moral choices as always a niche/minority activity.  The end of 2012 and start of 2013 saw the tax debate originating in the UK spread  globally (after many years of diligent campaigning and being overlooked by much of the media except for Private Eye)

• http://www.telegraph.co.uk/news/politics/9829108/Starbucks-threatens-Cameron-after-unfair-tax-attacks.html   http://www.wired.co.uk/news/archive/2013-03/05/microsoft-danish-billion-dollar-tax-bill  http://www.taxresearch.org.uk/Blog/2013/03/02/tax-us-if-you-can-the-new-edition/)