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Looking Beyond Five-Year Plan in Bangladesh

Questions remain about how sustainable the industry’s efforts will be when the present commitment ends.

WASHINGTON — The factory tragedies in Bangladesh have transformed the rules of ethical sourcing in developing countries, but questions remain about how sustainable the industry’s efforts will be when the five-year commitment in Bangladesh ends.

This story first appeared in the May 6, 2014 issue of WWD.  Subscribe Today.

Industry and labor officials tackled that question at a recent American Apparel & Footwear Association conference, acknowledging that improvements have been made in Bangladesh’s garment industry in the wake of the Tazreen Fashions Ltd. fire and Rana Plaza building collapse that claimed the lives of more than 1,240 workers in the past 18 months.

“With the goal of inspecting [about 2,200 factories] by July, I think there has been a huge commitment to stay in the country,” said Rick Darling, executive director of government and public affairs at Li & Fung Trading Ltd. “It’s a long-term commitment to realize that our industry makes a lot of money out of a country like Bangladesh and has a great obligation to go in and make sure that people who work in our supply chain are safe and empowered, and able to a make decision on their own when they see something going wrong in the factory.”

Retailers and brands created two separate safety initiatives in the wake of the tragedies in the country. North American companies formed the Alliance for Bangladesh Worker Safety, now comprising 26 companies including Wal-Mart Stores Inc., Target Corp., Gap Inc. and VF Corp. The second initiative — the Accord on Fire and Building Safety in Bangladesh — has 150 companies, including H&M, Marks & Spencer, Carrefour, Primark and C&A.

Companies taking part in both initiatives made a five-year commitment to improve fire, electrical and structural deficiencies in Bangladesh.

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Nancy Donaldson, director of the International Labor Organization’s Washington office, called the industry initiatives “groundbreaking,” but questioned how sustainable they would be three to five years from now.

“We think what sustainable means is a living wage, which has already happened,” she said. “[The Bangladeshi government] did a first round of changing labor laws and the regulations are pending now, but more work needs to be done. This is very basic stuff.”

She said the ILO’s Better Work Bangladesh program recently launched, but since it is on such a “big scale,” officials are working on a geographic basis to “create density for best practices.

“There is no substitute for the level of activism on the part of your companies,” Donaldson said. “There is also no substitute for the involvement of the EU and U.S., and the key donor countries like the Netherlands.”

Nate Herman, vice president of international trade at the AAFA, said the “big question” confronting the industry in light of the accord and alliance expiring in five years is, “How do you make the changes that are happening right now in Bangladesh sustainable over the long term?”

Darling agreed. “That is probably the biggest challenge that is being faced right now. The Bangladesh government has not been particularly engaged over the last 10 years that the industry has grown, and faces its own internal political issues and challenges.”

Darling said Bangladesh’s national building code has been in place for 10 to 15 years and was “pretty adequate” until Rana Plaza exposed the government’s weak enforcement mechanism.

“So the sad thing about this whole process is the laws were in place — the fire safety codes were in place…and they were never enforced,” Darling said. “So while the industry is taking on the role of government — it has hired civil engineer firms to do inspections, for example — it isn’t sustainable in the long term. It might be sustainable for five years. I don’t see it sustainable for 10, 15, 20 years. At some point between now and this first five-year program, there has to be engagement with the government to build capacity and to have them understand that the long-term responsibility and health of their economy relies on their own ability [to enforce].”

Avedis Seferian, president and chief executive officer of Worldwide Responsible Accredited Production, stressed the need for more government involvement and industry incentives that reward the good players.

“You can talk about improving in-factory conditions and circumstances, and better fire equipment and new fire engines, but if those fire engines can’t get to the factory because the traffic does not allow that to happen, this conversation ends up being fairly moot,” Seferian said. “You have to have more capacity building and more government involvement.”

That being said, Seferian said the industry can’t rely on the Bangladeshi government alone, but needs to create more incentives for good practices and compliant factories. He said the “silver lining” in a “very dark cloud” in Bangladesh is that other apparel producing countries have taken notice.

“Countries like Cambodia are taking steps [to raise the minimum wage and improve conditions],” he added. “Myanmar is looking to have capacity building up front. They all want to head this off at the pass.”