WASHINGTON — The Accord on Fire and Building Safety in Bangladesh said in an annual report released Wednesday that it is projecting a budget shortfall by the end of the year and is seeking additional short-term funding from its 180 global brand and retail members to support a massive inspection program encompassing some 1,500 garment factories in Bangladesh.
In a director’s statement in the report, the accord said it will need more funding in its second year from its members to “meet the challenging target” of making its goal of inspecting 1,500 factories by the end of September.
Led by IndustriALL Global Union and UNI Global Union and signed by 180 companies, including H&M, Marks & Spencer, Carrefour, Primark and C&A, the accord was launched in May 2013 amid intense global scrutiny following a fire and building collapse in the country that claimed the lives of more than 1,200 workers.
The accord’s directors said they will seek to reduce member contributions in the latter years of the five-year commitment to compensate for the needed boost of funding in the second year.
The accord reported a surplus of $4.4 million for the year ending Dec. 31, 2013, noting that it was generated due to the “political instability” in Bangladesh between December 2013 and March, resulting in the “postponement of the rollout of the inspection programme.”
But the accord is estimating a shortfall of $7.8 million by the end of this year due to increased costs associated with the inspection program, which will leave a deficit of $3.4 million, the report said.
Despite the projected deficit, the accord’s directors said they expect to fully recover the $3.4 million by the end of the second year.
“The decision to seek additional funding for the inspection program is supported by the fact that we will have a cash fund of circa $1.35 million at the start of year three of the accord in June, 2015,” the report said.
“We are confident that the accord is well-positioned both financially and operationally to deliver on its stated purpose of delivering a safe and healthy Bangladesh RMG [ready-made garment] sector,” the directors said in the report.
The accord said it has completed inspections at more than 800 factories to date.
“In less than 2 percent of all inspected factories, the structural inspection findings led our chief safety inspector to request the authorities to evacuate the building until additional strength testing took place and/or until immediate remedial measures were taken to allow the safe resumption of production and re-occupancy,” the report said.
The accord also said 100 corrective action plans have been agreed to by factory owners.
A separate industry initiative known as the Alliance for Bangladesh Worker Safety, made up of primarily North American retailers, launched its initiative in July 2013. In its annual report released Tuesday, the alliance noted it has inspected all of the 587 factories its member companies use in Bangladesh.