Bangladesh agreements: as always the activists badmouth first, check facts later

The launch of the Alliance for Bangladesh Worker Safety was picketed on July 10 by self-described “activists”, handing out leaflets attacking it as “a fake”. None had any idea what the Alliance was proposing.

For our readers, here is a summary of the key differences between the Alliance the demonstrators have rejected without looking at it and the Accord on Fire and Building Safety in Bangladesh they purport to regard as wonderful:  

Membership. The Alliance currently consists of seventeen North American retailers/brands, with Li & Fung in an undisclosed "advisory capacity", though it "expects to add more members in the future". The Accord consists of 70 mainly European brands and retailers, though it also includes PVH, Abercrombie & Fitch, Canada's Loblaws (Joe Fresh), several Australian businesses and a number of smaller North American buyers

Absence Perhaps more interesting than which plan major buyers belong to is the list of major buyers who belong to neither, but do have sourcing in Bangladesh. No explanation has been offered for failing to commit by these buyers, listed in Clothesource's global Top Forty Apparel Buyers:

TJX
Nike
Adidas
Hanesbrands
Limited Brands/Victoria's Secret
Levi Strauss
Ralph Lauren
Fast Retailing
Shimamura
Sogo/Seibu
Takashimaya

Legal underpinning. Ultimately, the Alliance is a voluntary agreement: the Accord has a legal structure  enabling factories accounting for most of signatories' procurement in Bangladesh, subject to commercial viability, to force buyers to maintain their volumes for two years. Accord signatories are committed by the Accord to stay with the programme for five years.

The reasons behind the difference are unclear, and in our view not being presented honestly. Walmart reject legal underpinning because it “would subject us to potentially unlimited legal liability and litigation”: unions claim this argument  “has no legitimacy whatsoever”, though have never demonstrated any legal authority for such assertions. We believe the real division is that, generally, European buyers have no real alternative for the next few years to including Bangladesh in the list of countries they source from: for most North Americans, leaving Bangladesh (which has no import duty advantage over China or Vietnam for Americans), or dramatically reducing buying from it, might well become the best commercial alternative. The real fear for Americans is being "forced" into staying in Bangladesh if they do not want to. Walmart have been as unable as the unions to provide any support for their lurid claims.

Management: The Accord is managed by a Steering Committee of unions, buyers and an independent Chairman, Dan Rees of the ILO Better Factories Programme. Bangladeshi trade associations are complaining about their exclusion and lobbying for inclusion.

A nine-member Board of Directors has been established for the Alliance, consisting of four retailers, four stakeholders who provide specific expertise, and an independent board chair.  The chair is expected to be named within the next few weeks.

Factory Inspections and Safety Commitment:  Within one year (ie by July 2014), 100 percent of all factories that conduct work with an Alliance member will be inspected. Members have agreed to work only with factories that ensure a safe working environment, and as a result, all have committed to refusing to source from any factory the member determines is unsafe.

Accord Signatories have agreed to initiate an Interim Inspection Program to speed up the assessment of Bangladesh textile industry factories. Initial inspections will be carried out at every covered factory at the latest within a 9 month period of July 1 (ie by March 31), and plans for renovations and repairs put in place where necessary.

Establishing Common Safety Standards for Factories: The Alliance will develop and put in place common safety standards by October of this year. 

The Accord strikes us as woollier on this: it “has started to review existing standards, engage experts and liaise with the Bangladeshi government to design and structure a program including standards, rating systems, review of existing inspection reports, forms of inspection report and protocols for renovation and other remediation actions necessary” It intends initially inspecting while agreeing common standards

Result publication. Both the Accord and the Alliance will publish inspection results through the Fair Factories Clearing House. The Accord is clear that aggregated supplier data will be published in English and Bangla: the Alliance is clear that inspection results will be available to workers, but unclear about wider publication

Worker Training: Both have programmes for  ongoing, mandatory training and education for factory workers and managers.

Worker Voice: The Alliance will establish an anonymous worker hotline by November of this year that will use mobile technology and be administered by a third party. The Accord relies on elected worker committees

Progress Reports: Both have broadly similar programmes of public progress reports.

Programme Funding:  Each member of both the Alliance and the Accord will contribute a specific amount to support the initiative,  based upon the amount of production each company has in the country.

Alliance members with the higher levels of production will pay $1 million a year for five years.  Currently, the alliance safety fund is $42 million and growing, and the alliance will designate 10 percent of the fund to assist workers temporarily displaced by factory improvements or in the event of a factory closure for safety reasons.  The funds also will support the selected non-governmental organization (NGO) that will implement components of the programme.  .  Collectively, individual retailers have committed over $100 million in funding, the Alliance says, for low-interest loans and affordable access to capital in order to ensure repairs at factories they work with are made in a timely manner. At the launch, the Alliance claimed its members had actually committed $142 mn

Accord retailer/brand signatories are responsible to ensure that sufficient funds are available to pay for renovations and other safety improvements as directed by the Chief Safety Inspector. Such funds may be generated through negotiated commercial terms, joint investment, direct payment for improvements, government and other donor support or any combination of these mechanisms.

Net effect

The Alliance signatories are already making great play with the fact that there is substantially more cash available right now from Alliance signatories than from Accord signatories. Whether $142 mn is remotely near the amount needed to make Bangladesh factories safe is far from clear