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Bangladesh Factory Audits Stir Calls for More Action

A large-scale audit released by Wal-Mart Stores outlined the failure and improvement rates in fire and building safety at 75 facilities.

WASHINGTON — The calls for more transparency in the safety of apparel factories in Bangladesh appear to be bearing fruit.

Wal-Mart Stores Inc. became the first major retailer to release a large-scale audit of factories from which it sources in Bangladesh, outlining the failure and improvement rates in fire and building safety at 75 facilities. The company manufactures in more than 200 factories in Bangladesh and said it plans to publicly release results from the audits of all of the factories it uses in the country.

The move by the retail giant drew praise from experts, who said they expect more companies to publicly release safety audits.

But the audit also sparked calls for more reform.

“It’s always good to have companies like Wal-Mart conduct and release the results of the factory audits,” said Richard Locke, a political science professor at Brown University and director of its Watson Institute for International Studies. “I think it is good that Wal-Mart stopped doing business with factories that failed both audits.”

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Wal-Mart executives said in an interview that the company stopped doing business with two factories that were unable to meet fire and building safety standards during remediation, although one factory owner plans to open a new facility.

“Having credible penalties is essential to the integrity and viability of these private compliance programs,” Locke said. “I also think it is good that the other factories are showing improvements on some issues.”

Locke said that audits alone are not enough, however, to exact true reform in Bangladesh. He said companies like Wal-Mart must invest to help owners develop more sophisticated management and health and safety systems to sustain a level of compliance. He also noted that retailers and brands should change the purchasing practices that may have contributed to the poor working conditions the companies are now trying to alleviate.

Of the 75 companies in the first round of safety assessment reports made public by Wal-Mart late Sunday night, nearly 10 factories failed the initial audit, according to Wal-Mart executives. However, in a second, follow-up safety audit, 34 factories improved their initial grades from a D (a high safety risk) or C rating to an A (the lowest safety risk) or B rating. In addition, the average electrical rating improvement was 54 percent and the average building safety improvement was 40.9 percent.

“This is the first time any retailer has published this breadth of information about their factory base,” said Jan Saumweber, vice president of ethical sourcing at Wal-Mart. “We were so encouraged to see [the rate of improvement] in such a short window of time. On average they had 60 days from the initial assessment to follow through.”

Jay Jorgensen, senior vice president and global chief compliance officer at Wal-Mart, said, “We see Bangladesh as a special safety situation. We are trying to take [public reporting and transparency] to the next level. We are doing this because we believe transparency is a key driver of safety. Being transparent in our supply chain will help us all make safer working conditions for the workers.”

Saumweber said Wal-Mart has completed the safety audits at all of the 200-plus factories it uses in Bangladesh and will work to release the results in the coming months. She also said the next phase of the process — a follow-up assessment of all of the factories — will begin in January.

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The Wal-Mart executive said they weren’t aware of any other members the Alliance for Bangladesh Worker Safety, of which they are a leading member, planned to release results of their inspections. Alliance officials were not available for comment.

While some experts credited the retail giant with taking a step toward more transparency, others remained skeptical about any long-term commitments and change.

“Clearly nothing would have happened had it not been for the Tazreen Fashions fire in November [that killed 112 workers] and the collapse of Rana Plaza [in which 1,132 workers perished],” said Charles Kernaghan, director of the Institute for Global Labor and Human Rights. “Even Wal-Mart couldn’t keep going down this path. They have taken some steps, which are somewhat minor, but it’s a step forward.”

Judy Gearhart, executive director at the International Labor Rights Forum, said: “Wal-Mart should ensure that the prices that it pays factories are sufficient for the factories to comply with labor laws, fire and building safety codes, as well as with Wal-Mart’s own code of conduct. Our main concern with Wal-Mart’s newfound transparency is that they not walk away from these factories, especially now that they’ve publicized their flaws. We hope Wal-Mart will now stand by the workers in these factories to ensure their jobs and the safety measures needed are put in place.”

Jyrki Raina, general secretary of IndustriALL Global Union, which helped create the Accord on Fire and Building Safety in Bangladesh that now has more than 100 member companies, said, “There is very little information in the Wal-Mart reports; no specifics on what kind of dangers workers faced. It is just a very general assessment through this scoring system.

“We are trying to identify the most dangerous factories as quickly as possible and develop remediation plans,” Raina said of a separate initiative IndustriALL leads. “I think that from the point of transparency, the accord audits will be pretty convincing. The good news is the brands and retailers have grown proud of the accord and there is a serious attempt to not whitewash or greenwash, but to stay in Bangladesh and make it safe and sustainable.”

In Geneva, Gilbert Houngbo, ILO deputy director-general, said Monday, “You can feel there is a momentum, quite frankly [in Bangladesh] that is quite different to what I saw six months ago.”

He told a news conference there are about 3,500 active garment factories in Bangladesh and pointed out that the accord is slated to inspect 1,500 factories, the North American-based alliance about 500 factories, and 1,500 factories are to be inspected by the national action program the ILO has launched.

The ILO accord calls for the appointment of 200 labor and factory inspectors to be appointed by the end of this year and an additional 800 in 2014. Houngbo told WWD the ILO is hiring about 100 engineers this year specifically for the factory inspections.