2013’s disaster served as a wake-up call to the garment industry. How have factory conditions changed and how are we tackling related risks through engagement?
26.04.2024 | 05:10 Uhr
The 2013 Rana Plaza disaster in Bangladesh was the worst
industrial accident in fashion history with over 1,000 people killed,
serving as a wake-up call for the garment industry about the poor safety
and working conditions of workers in garment factories. In the
aftermath, a coalition of investors convened by Interfaith Centre on
Corporate Responsibility (ICCR)1 formulated the Bangladesh Accord2
– a legally binding agreement to be signed by global garment companies
committing to improve the working conditions of garment makers in 1,600
factories of Bangladesh. More than 200 fashion brands, including
Inditex, Punto and H&M signed this Accord in 2013. Since then, the
Accord has resulted in improvements such as building and fire safety
inspections, increased trainings, and remediation of safety issues at
garment factories in Bangladesh, leading to significant improvement in
worker safety.
Structurally unsafe factories and poor working conditions not only
carry a human cost, but there is also the financial cost to brands with
supply chain disruptions caused by factory closures, reductions in
worker productivity and strikes. Studies3 relate high
employee turnover and absenteeism to poor working conditions in
factories, leading to increased costs for hiring, training and sick
leave. Add to this the increased regulatory risks of non-compliance with
the legally binding Accord as well as the risk of reputational damage
to brands, and the benefits of working with factories with safe working
conditions become an even more attractive prospect. Brand awareness and support of this model has grown, with the
International Accord established in 2021 and the Pakistan Accord
launched in 20234. The Accords have brought about significant structural changes in
factories. Through our Responsible Investment team’s engagements, we
discuss with brands to consider signing these Accords where they have
material exposure to garment factories in these regions. As part of our
related active ownership efforts, we also discuss adherence to
responsible purchasing practices such as fair and timely payments,
committing to long term business relationships with suppliers and
installing comprehensive grievance remediation processes to ensure a
safe, healthy, and productive workforce. Commemorating the Rana Plaza disaster’s 10th anniversary last
year, a coalition of 194 global investors representing $2.1trln in AUM,
including Columbia Threadneedle Investments, released a statement5 encouraging apparel companies to strengthen their implementation of human rights due diligence in their global supply chains. The investor statement references the prioritization of health,
safety and living conditions of garment and textile workers in
Bangladesh, Pakistan and other garment producing nations by: So far, we have seen some brands improve efforts around
enforcement of better labour standards by signing and upholding the
provisions of the Accords, participating in tripartite labour-related
negotiations, and going beyond social audits to the identify root-cause
of problems, implementing systemic change. We will continue to include
this matter in our engagements where relevant.Looking ahead to the future of fashion production
1https://www.iccr.org/
2Bangladesh Accord (now extended to International Accord)
3Employee turnover and its impact in RMG sector in Bangladesh: An Empirical Study;
Employee Turnover in the Garment Industry in Bangladesh: An Organization-level Perspective
4List of signatories to the Accords can be found here.
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