brands under fire

Bangladesh Hangs in the Balance as North American Retailers Weigh Options

Posted by Alicia Ciccone on May 14, 2013 07:01 PM

As it stands, 1,127 lives were lost in the factory collapse in Bangladesh and over a dozen international retailers have signed on to the binding Bangladesh Fire and Building Safety Agreement as the May 15 deadline looms. 

In a move that was hailed as "game-changing," H&M, Bangladesh's largest producer, signed on to the agreement on Monday, which promises to ensure independent inspections of all factories and financial aid to improve factory safety. “With this commitment we can now influence even more in this issue," said Helena Helmersson, Head of Sustainability for H&M, in a statement posted on the fast-fashion retailer's corporate website. 

While H&M's decision may have influenced other signatories like Italy's Benetton, Spain's Mango and Britain's Marks & Spencer, it has yet to affect the decisions of North American retailers including Gap Inc. and Walmart.

As rumors swirl about an alternative North American plan, Walmart outlined Tuesday its own safety plan that builds upon the brand's existing Bangladesh safety infrastructure. In the release, the retailer said it would be partnering with Bureau Veritas to provide fire safety training to "every worker in every factory producing for Walmart," and would be contributing $600,000 to the Labor Voices project to support a "grassroots level outreach to workers" in order to open more communication channels in addition to its existing worker hotline. 

The brand, which is the world's largest retailer, had previously made improvements to its supplier safety structure after factory fires implicated the retailer, however it infamously led a coalition against the proposed Bangladesh Safety Agreement in 2011, in which it cited that the additional 6 to 10 cent per-garment costs prevented it from accepting the proposed terms. The current agreement, which is a revised version of the one that Walmart turned down, estimates that participation in the agreement will cost each company a maximum of $2.5 million over the five-year period of the agreement, The Wall Street Journal reports

The retailer explained its decision not to join the IndustriALL factory labor proposal in a statement released Tuesday afternoon:

"Walmart has participated with other stakeholders in discussing group efforts to improve working conditions in Bangladesh. The company, like a number of other retailers, is not in a position to sign the IndustriALL accord at this time. While we agree with much of the proposal, the IndustriALL plan also introduces requirements, including governance and dispute resolution mechanisms, on supply chain matters that are appropriately left to retailers, suppliers and government, and are unnecessary to achieve fire and safety goals. Since the IndustriALL accord affords a 45-day discussion period, Walmart looks forward to participating in the continued discussion. If the issues with the accord could be addressed, Walmart would be pleased to join the effort."

Another major US retailer, Gap, who has also been implicated in previous Bangladesh factory accidents, has said that it is "six sentences away from signing" the agreement. The retailer is reportedly hung up on the agreement's liability terms, which may provide some insight into why more US retailers haven't signed the agreement. The majority of those that have signed are companies based in Europe, but Gap spokesman Bill Chandler said those companies "operate in a much different legal landscape," according to USA Today. Sears, JCPenney and Target are also holding out from signing the agreement, but the American brands may have another plan up their sleeve. 

A meeting between North American retailers, the National Retail Federation and other trade associations reportedly took place Tuesday afternoon to discuss an alternative option for retailers concerning safety regulations in Bangladesh, Reuters reports. Several key retail leaders including Sears, JCPenney and Macy's have acknowledged that private talks among North American retailers and trade groups are ongoing, though no details of a supposed agreement have surfaced.

"There has been some discussion of possibly melding the two proposals into one hybrid industry solution," a JCPenney spokeswoman told Reuters. 

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