By and  on August 7, 2014

NEW YORK — Human rights took center stage at the Ralph Lauren Corp. annual meeting Thursday.

The focus was due to a shareholder’s proposal from the AFL-CIO seeking the company’s participation in the Accord on Fire and Building Safety in Bangladesh that 180 companies have signed regarding improving working conditions at the Asian country’s factories. That proposal was seconded by New York City Comptroller Scott Stringer, who noted that the city’s public pension funds are shareholders. The discussion allowed the company, both chairman Ralph Lauren and general counsel Avery Fischer, to highlight to shareholders what it has done over the years to ensure humane working conditions.

Nazma Akter, president of Sommilito Garments Sramik Federation, speaking on behalf of the AFL-CIO proposal, noted the loss of more than 1,100 factory workers due to the building collapse at Rana Plaza in Dhaka, Bangladesh, last year, which led to the formation of the accord. Akter also pointed out that the “young women who have died in the last 20 years” in factories were in buildings where the issues were ones that could have been prevented.

“We know you care,” Akter said, addressing Lauren. “Ralph Lauren is a company that has always stood for the highest quality. It has not joined the accord. Why?”

Akter claimed that the accord is a necessity to protect workers from dangerous working conditions, adding that there are more than 4,000 factories in Bangladesh and 1,600 factories covered under the accord. She also said that “workers must have the freedom of association to protect their human rights.”

Stringer seconded the proposal. He is trustee of the city’s five public pension funds, which in total own 147,321 Ralph Lauren shares.

He spoke of how the fashion company, as a premium brand that produces 80 percent of its products in Asia, is “particularly vulnerable to the reputational and operational risks created by potential human rights violations.”

Stringer noted the global brands that source from Bangladesh, which have signed the accord, include Abercrombie & Fitch Co. and PVH Corp., which owns Calvin Klein and Tommy Hilfiger.

Stringer posed the question, “Since the company is already a huge proponent of human rights, why not sign the accord?” He noted that the city’s pension funds, as long-term shareholders, believe that “Ralph Lauren has a duty to identify, prevent and mitigate actual and potential human rights abuses.”

“I have been in business for 47 years,” Lauren said in response. “One thing I am most proud of is what I have felt I have taken care of…in terms of human rights, in terms of the world, in terms of trying to give back....”

On Bangladesh, he explained, “We definitely have our own plan. We have a committee that we work with that is very strict, that really helps and is continuing to help workers in Bangladesh, people in Bangladesh and the people in Asia. I am very proud of this company. We believe in integrity. We live by the moral rights, and try to work with everybody. We would not be here after all these years if I didn’t build a reputation around the world with all people.”

Fischer explained that the company has a “very rigorous selection and approval process for factories. We are committed to working only with vendors that meet high standards of safe, healthy and humane working conditions and provide extensive training and monitoring to our factories to ensure compliance.”

Bangladesh, he pointed out, is not a significant part of the company’s sourcing strategy. “Only 2 percent of our global factories are in Bangladesh, totaling only 15 factories,” Fischer noted. “Workers’ safety and human rights is a global issue for us. Since 2007, we’ve participated in the Better Work ILO program, which is more representative and appropriate for our global production.”

Following a film highlighting corporate events from the past year, Lauren reiterated his belief that the company’s development is still in the “beginning” stages. “As we go on, so many areas have opened up: International, global businesses, e-commerce, luxury, Polo for women. I am very proud of what we have done, and I am very proud of the people that have helped me do this,” the chairman said.

Lauren was asked by a shareholder about how to replace Roger Farah, former president and chief operating officer, and the skill set that he brought to the table. Farah retired at the end of May. The chairman said, “Roger is a great friend of the company [and] has done a great job for this company, but you have a team of people here. [The company] doesn’t live on one man. It doesn’t live on me either.”

Another shareholder asked about whether the company has made any move to transition some of its production back to the U.S.

Don Baum, executive vice president for sourcing, manufacturing and supply chain, said the company has had an alignment and agreement with a New York factory for three years, primarily for the production of women’s wear product. He noted that apparel for the Winter Olympics was made in the U.S. (after a furor erupted that the Lauren apparel for the U.S. team at the 2012 Games was not), as are men’s suits in Rochester, N.Y., and ties. “We are actively pursuing production in the USA,” Baum said.

At the end of the meeting, it was disclosed that the shareholder proposal regarding the Bangladesh accord was not approved.

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