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Expert View April 2017

 

 

 

Rana Plaza - Four Years Later 

By: Margreet Simons
 
Monday, April 24, 2017, is proclaimed as “National Garment Workers’ Mourning Day” in Bangladesh. On that date four years earlier, 1,136 people were killed and more than 2,500 injured in the collapse of the Rana Plaza garment factory, near Dhaka, supplier of a large number of international garment brands. The tragedy of Rana Plaza threw light on the glaring and ongoing abuses in the garment industry, showing the world what is really going on behind the façade of glamourous fashion.
 
It took two years for the Rana Plaza Donors Trust Fund, set up by the ILO to disburse USD 30 million to the victims and their families to compensate them for loss of income, medical care and other basic costs. However, these compensations do not reflect recognition of the traumatic experience, pain and suffering inflicted upon the victims and their families as a result of corporate and institutional negligence. And when it comes to structural reforms, there is still a long way to go. April 24 therefore is a day of mourning, but also a day of protest.
 
Soon after the tragedy, the Accord on Fire and Building Safety in Bangladesh was launched by the ILO, OECD, UN and the Dutch Ministry of Foreign Affairs. This is a five year independent, legally binding agreement between global brands and retailers and trade unions designed to build a safe and healthy Bangladeshi garment industry. The Accord has yielded some success thus far. Almost 1,600 factories - a third of the nearly 5,000 factories in Bangladesh - are covered by the Accord, but only 60 of them have successfully implemented the necessary fire and safety measures. After a process of notice and warning, global brands and retailers terminated contracts with 55 suppliers, due to inadequate participation and lack of progress made. Regrettably, these suppliers will now likely switch to clients that have not signed the Accord.
 
As these figures illustrate, the labour conditions in the Bangladeshi garment industry have not yet improved across the board. Rana Plaza was followed in the past four years by numerous reports on breaching of core labour rights. Strikes of labour unions and workers, demanding better wages, were responded by a wave of oppression from the side of the Bangladeshi government. The five years of the Accord will clearly not be enough. A systematic problem of such a scale needs a permanent structure and continuous efforts from all stakeholders, in terms of formalizing policies and legally binding contracts, operationalizing processes and measuring impacts.
 
The global garments industry will need to be supported and incentivized to make this happen.  Governments can play a role in this. Recently the EU, accounting for more than 60% of all Bangladesh’s garment exports, warned Bangladesh of suspending trade preferences unless the country improves its labour laws before 18 May 2017. As a next step, the EU should consider to make legally binding agreements between garment retailers, trade unions and NGOs mandatory in order to get access to the EU market. 
 
Banks and investors financing garment brands and retailers, should also use their financial leverage over these companies to support the necessary transition of this industry. In May 2013, the US-based investor platform Interfaith Center on Corporate Responsibility (ICCR) organised 250 investors to sign the Bangladesh Investor Statement, which in clear terms criticized the business model of the global garment industry, based on fuelling competition between low-cost producing nations in a race to the bottom for garment manufacturing contracts. Up to date, the ICCR continues to put pressure on garment brands to take responsibility for their supply chains. How can other banks and investor add to these efforts? In a case study for the Dutch Fair Bank Guide, Profundo analysed how Dutch banking groups responded to the Rana Plaza tragedy. Actiam, ASN Bank and Triodos signed the Bangladesh Investor Statement, and carry out engagement processes with companies in the garment sector. For ABN Amro, signing the Bangladesh Accord is mandatory for clients that source garments from Bangladesh.

For more information and research opportunities on this topic, please contact Margreet Simons, m.simons@profundo.nl.
 
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