Bangladesh, Compliance and ethical trading, Labour standards

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

Bangladesh, Compliance and ethical trading, Labour standards

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.

Bangladesh, Compliance and ethical trading, Corporate Responsibility/Compliance

Working standards and the Bangladesh RMG sector – the challenge for Brands, Retailers and Producers

In a list of  The Most Controversial Companies of the year 2012   –  published in January 2013 by a private research provider – other research providers are available  –  analysing alleged breaches of international standards relating to 10 global companies as reported in high profile news stories, the horrendous fire  which killed over 117 people at the Tazreen factory in Ashulia near Dhaka in Bangladesh in November 2012,  features at the top of the list ahead of many larger companies.  http://www.laborrights.org/news/coverage-of-the-tarzeen-fire.

This poses a challenge to everyone involved with the garments industry around the world – and is a particular challenge for Bangladesh where RMG is the country’s biggest export and industrial employer. Should not the past 20 years of codes of conduct, compliance, inspection and audits by the industry worldwide be doing more to mitigate this sort of accident….

In part, many would argue it has – although more needs to be done  Impact assessment studies by bodies such as the Ethical Trading Initiative confirm codes of conduct and their associated audits have played a part in improving standards, particularly on easier to audit issues such as child labour. However breaches of core labour standards remain in many industries; In particular, systemic issues or risks associated with long/forced overtime hours, low pay, and discrimination are harder to control or root out. And any massively competitive industry, particularly one operating where there is a large supply of cheap labour like the Ready Made Garments (RMG) export sector in Bangladesh, is likely to face some systemic breaches of standards

–  The challenge therefore is how to spread good practices that already exist in the sector(which is building more modern factories and continuing to achieve growth becoming the 2nd biggest exporter of RMG in 2012 after Chinahttp://www.worldbank.org/en/news/feature/2012/07/03/consolidating-accelerating-exports-bangladesh  ) and raise the playing field as a whole.

Although conscientious efforts made by some retailers and brands (and support for fair trade models by some consumers and producers eg; via  www.ethicalfashionforum.com/,)  are beneficial and improve standards in the short term, in the long run experience suggests that empowering workers to help represent themselves is an essential but oftenoverlooked element in sustainably safeguarding and improving standards –not to mention productivity.

This is not surprising perhaps as freedom of association and collective bargaining are sensitive issues in many countries or politically restricted as in China. In Bangladesh, it is to be hoped that the government’s 2013 national action plan on fire safety and associated investigations in the wake of the Tazreen and similar fires will help to raise standards and prevent further accidents and deaths.  The various multistakeholder initiatives involving brands, unions, the ILO and the BGMEA (Bangladesh Garment Manufactures & Exporters Association) such as that convened by the global garments union (Industriall – January 2013) will hopefully provide a platform for further improvements in working conditions and labour rights; in the past, too much of the Bangladeshi political  debate has been dominated by talk of conspiracies against the industry and speculation about the cause of fires, rather than calmly dealing with first hand testimony from workers (promptly interviewed by local media and news channels) about locked doors and lack of fire exits.

In turn, more brands and buyers need to take their own commitments and responsibilities more seriously – retailers must be expected to follow best practice by fully addressing breaches of labour standards when they are highlighted and  pro-actively working to mitigate problems, implement corrective action plans and raise standards within their supply chains – if they fail to do this or walk away from a problem supplier as Wal-Mart is alleged to have done recently in Bangladesh http://www.thedailystar.net/newDesign/news-details.php?nid=270558, they will rightly face criticism.

Of course if as analysts suggest, the Bangladesh industry’s export growth has been driven mainly by low wages  (all the many genuine efforts to implement codes of conduct notwithstanding) it is easier to understand – if not agree with defensive and nationalistic responses made to calls to increase trade union rights in Bangladesh.  The sector is too important in providing jobs (and bringing millions of women into the formal workforce) for this sort of resistance not to occur. Likewise global market pressures are so competitive that many buyers are happy to take advantage of  this type of race to the bottom.

Certainly with the vast majority of bargaining power and finance within the sector lying in the hands of global  buyers and retailers, they are the ones with the most ability to facilitate improvements to standards and wages,  (which experience suggests can be a win-win by improving productivity rather than being a cost) – so this is arguably where most responsibility lies and where consumers and activists will target most pressure to help raise standards.

http://www.industriall-union.org/industriall-promotes-rights-of-garment-workers-in-bangladesh

http://www.ilo.org/global/standards/lang–en/index.htm

http://www.fibre2fashion.com/news/apparel-news/newsdetails.aspx?news_id=121553

Corporate Responsibility

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?

Corporate Responsibility, Responsible & Ethical Investment

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

Bangladesh, Climate Change, Environment

All things must pass, but lets hope

…that this doesn’t come to pass  http://goodbyebangladesh.blogspot.com/, 

With the business case increasingly well costed and established,  major investors around the world are playing their part–  the Institutional Investors Group on Climate Change for instance includes some pension funds and asset managers in Europe, representing around €7.5trillion in assets and is collaboratively working to ensure climate change risks and opportunities are addressed and reflected in their investment practices and decisions.

http://www.iigcc.org/

And at the local level there is plenty of eco innovation and action to welcome.

 http://ufahari.com/ideas-innovations/in-bangladesh-new-eco-friendly-kiln-to-lower-air-pollution/

 

Responsible & Ethical Investment

Responsible Investment (RI) must both be mainstream and need the help of more niche ethical investors

Responsible Investment(RI) as it is understood today as an increasingly mainstream expectation – see http://www.unpri.org  or http://www.uksif.orgASRIA etc  – would not exist without generations of active ethical investors using their power as citizens, consumers and investors, to make their points.  Often succeeding in having an impact far beyond their size in raising an issue up the media and policymaker agenda.

The 2007 credit crunch and failures in regulation (or the deliberate absence thereof)  underpinning the contemporary global financial crisis makes it clear that there is still some way to go before the financial services industry meets all the reasonable needs of its customers and beneficiaries (among whom would be most people reading this) when  it invests money on their (our)  behalf.    PMCRreview article Niaz Alam

Hence there is still much to be said for active groups of smaller deeper/ traditional ethical investors who are often the first to raise key ESG issues – and avoid the downsides when risks become more apparent… So even though the common goal of all RI practitioners is to improve impacts against ESG standards across the board and to mainstream good practice, it is perhaps short sighted to dismiss ethical/moral choices as always a niche/minority activity.  The end of 2012 and start of 2013 for instance 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)

Whilst hugely valuable and influential, ethical choices by individuals, such as choosing an ethical bank account, or buying goods certified as organic or fair trade will almost by definition always at first be 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.)

In order to get away from such accusations that ethics are an optional or niche factor, some responsible investors are focusing on integrating ethical factors into mainstream investment choices by for example incorporating reference to international human rights law and ILO conventions within their statements of investment principles. For example the Norway Government pension fund (commonly referred to as the Norway Oil Fund and one of the world’s largest sovereign wealth investors), sold over 350m USD of shares in Wal-Mart in 2006 because it was not satisfied with the company’s responses to allegations that its operations may have breached the spirit of international conventions on labour rights and freedom of association.

This approach has gained widespread endorsement with the growth of the UN Principles for Responsible Investment (PRI), an investor-led coalition  that seeks to  “help investors integrate the consideration of environmental, social and governance (ESG) issues into investment decision-making and ownership practices across all asset classes and regions…”  By the end of 2012, assets reported under management by PRI signatories stood at more than $32 trillion USD ( that is to say 32000 billion USD or 15% of the world’s investable assets).

Some fear that Responsible Investment principles – if not adequately implemented and monitored for example with the help of  improved disclosure and transparency (as is indeed now being required by UNPRI,)  may be lost in the wider picture or treated as an optional extra- while others such as UKSIF http://www.thecityuk.com/blog/date/2011/07 argue that it is essential that all investors adopt an RI approach as  sustainable finance is essential and integral to the necessary global transition to a more resilient resource-efficient economy.

Of course, as with all good intentions, in the long run, it is not the words on paper that count so much as how they are put into practice.

Books and recomendations, Corporate Responsibility, Corporate Responsibility/Compliance

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 19th century, some employers made a business case for improving the living conditions of workers and in early 20th 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)