By  on September 3, 2014

VF Corp. is collaborating with the International Finance Corp. unit of the World Bank Group to provide up to $10 million in financing for building upgrades in its vendors’ factories in Bangladesh.

The program is the final and largest piece of a $17 million funding commitment, made last month by the Greensboro, N.C.-based apparel giant, to assist Bangladesh plants and workers. This commitment is in addition to the company’s activities as a founding member of the Alliance for Bangladesh Worker Safety, in which its fellow members include Wal-Mart Stores Inc., Target Corp. and Gap Inc.

VF will provide a corporate guarantee for IFC remediation loans made to companies already providing production for VF’s various brands. Qualifying suppliers will have undergone structural, electrical and fire-safety assessments under the framework established by the alliance, as well as access to loans, expected to range from $100,000 to $1 million, to take any actions necessary to bring the production facilities into compliance with the alliance’s standards.

“The safety of the people making our products around the world is an imperative,” said Eric Wiseman, chairman, president and chief executive officer of VF. “Our program with IFC helps to ensure that our suppliers have access to the necessary capital to complete safety-improvement plans.”

Loans must be directed toward the improvement of at least one of three applicable performance criteria: assessment and management of environmental and social risks and impacts, labor and working conditions, and resource efficiency and pollution prevention.

“This financing model, which we think could work well for other buyers and suppliers, will help Bangladesh’s suppliers improve work conditions and strengthen the country’s ability to attract garment manufacturers,” said Serge Devieux, IFC director for South Asia.

VF said in March that it had contributed $5 million to a $50 million Worker Safety Fund, set up with the 26 alliance member companies for training and worker-empowerment tools. Another $1.5 million was earmarked for the establishment of a Dhaka-based compliance office that will employ about 15 people.

In its annual report released last month, on the occasion of its one-year anniversary, the alliance said it had inspected the 587 factories used by its members and provided fire and building safety to 1 million Bangladeshi apparel workers. Additionally, 10 facilities found to be structurally unsafe were fully or partially closed, and 1,000 displaced workers had their wage payments extended to four months from two months.

The alliance made $100 million in low-cost loans available to factory owners for improvements in their facilities.

The Accord on Fire and Building Safety in Bangladesh is a separate initiative, with 180 member companies, including H&M, Marks & Spencer, Carrefour, Primark and C&A. Both the accord and alliance were established following two factory tragedies in Bangladesh that claimed more than 1,240 lives.

VF doesn’t own production facilities in Bangladesh but has provided what it calls “third way” guidance to a plant in the country. Under this scheme, plants are established and operated according to the standards VF uses in its own factories. Last year, 27 percent of VF-marketed units were made in factories the company operates in the U.S., Mexico, Central and South America, the Caribbean, Europe and the Middle East. The remaining 73 percent were produced by independent contractors, the majority of them in Asia.

A VF spokesman said the company works with about 90 plants in Bangladesh.

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