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Will Retailers Invest in Safer Work Conditions in Bangladesh?

July 15, 2013 at 12:00 AM EDT
Some retailers have set up an alliance to improve working conditions in Bangladesh, but what is their financial obligation to underwrite costs of improving factory safety? Jeffrey Brown talks to Avedis Seferian of Worldwide Responsible Accredited Production and Scott Nova of Worker Rights Consortium.

JEFFREY BROWN: And we fill in and debate the picture now with Avedis Seferian, president and CEO of Worldwide Responsible Accredited Production, or WRAP, an organization created by the American Apparel and Footwear Association, along with buyers and brands around the world, and Scott Nova, executive director of the Worker Rights Consortium, a labor rights monitoring organization. His group was involved in hammering out the agreement made by European and global retailers.

For the record, we invited a group specifically representing American retailers to participate, but our invitation was declined.

And, welcome, gentlemen.

Avedis Seferian, first, how important is this new effort by U.S. companies? In what ways may it make a difference?

AVEDIS SEFERIAN, Worldwide Responsible Accredited Production: Well, I think it is very important indeed.

The tragedy at Rana Plaza was such an immense one, and as you noted in lead-in section, the grieving still continues and there’s clearly so much work that needs to be done. Any effort that aims at improving factory conditions and making workers’ lives safer and working conditions better is one that ought to be welcomed.

JEFFREY BROWN: And yet, Scott Nova, when the announcement came out last week, your group called the effort a sham. Why?

SCOTT NOVA, Workers Rights Consortium: Indeed, because this is a supposed agreement in which none of the participating companies have any obligation to pay a single penny to renovate and repair these death trap factories to make them safe.

This is what has to happen in Bangladesh. You have thousands of factories in this country that are grossly structurally unsafe. The building need to be retrofitted, renovated and repaired to be brought up to the building code in order to prevent future building collapses and fires. This costs money.

The only way this is going to happen is if the major brands and retailers underwrite the costs. That is what the global agreement, the global binding agreement does, requires the brands and retailers to underwrite the costs of the renovations necessary to make the factories safe.

The U.S. brands and retailers have refused to make that commitment.

JEFFREY BROWN: Do you see that in that agreement?

AVEDIS SEFERIAN: No, actually, I don’t.

I think that agreement puts in a significant amount of money, as the lead-in section pointed out, over $42 million already, and that’s just based on the 17 members currently part of the Alliance. It will increase as more members join.

And that is a significant amount of money being contributed towards a specific plan to identify the factories with problems and make sure that the sourcing practices at those factories are terminated, thus sending a very strong signal to the industry that you only get to work with these major retailers if you have safe working conditions.

JEFFREY BROWN: And — well, I’m sorry.

AVEDIS SEFERIAN: Plus, on top of that, the Alliance has put aside $100 million as a funding mechanism for financing to make available to the factories to improve those conditions, on top of which, 10 percent of that $42 million has been earmarked to set aside as a workers fund to help workers who may be displaced while these reconstructions and refurbishments are being conducted in the factories.

JEFFREY BROWN: So, is it the money or is it the binding authority to cause the money to be used?


The $42 million is purely the administrative costs of the program. The only reference in the entire initiative that Gap and Walmart and others put forward to money to actually make the factories safe is a supposed $100 million loan program.

But if you read the documents that Gap and Walmart and the other companies put forward, it says very explicitly, this is voluntary. There is no binding obligation on the part of any of these brands and retailers to make loans or otherwise contribute to make the factories safe. Look …

JEFFREY BROWN: But why not a public spotlight? Why not give them the benefit of the doubt that the spotlight has been shown, that they have …

SCOTT NOVA: Sure, because we have been hearing the same promises from Walmart, Gap and other U.S. brands and retailers for more than a decade in Bangladesh.

For a decade, they have been promising to inspect their factories and protect worker safety. And they have failed grossly.

If you trust the CEOs of large corporations to do the right thing for workers purely out of the goodness of their hearts, then the Walmart/Gap scheme is a great plan.

If you recognize that we live in the real world, where if you want large corporations to do the right things by workers, you need to require them to do it, then you recognize that this Gap/Walmart scheme is not going to help workers in any way.

JEFFREY BROWN: Let me ask you to respond to that, because the incentives here of course are to keep costs down. That’s the reason why the companies are in Bangladesh to create the lower-cost apparel.


I think in fact it is precisely that if you are in the real world that you will recognize the value of the Alliance, as opposed to other efforts, because that is exactly built around the kinds of incentives that you are referencing.

This is a market economy and there is always going to be pressure on reducing costs. It shouldn’t follow from that that this should lead to unsafe working conditions in factories.

So you need to create the right kinds of incentives in form of a program aimed at identifying factories with problems and making sure those factories do not get sourced from and therefore again sending a very strong signal to everybody else in the industry you cannot get business if you are not keeping your workers safe.


AVEDIS SEFERIAN: On top of which, to a point raised earlier, the $42 million is not entirely administrative. As I mentioned, 10 percent of that, $4.2 million, has been earmarked precisely to go to workers to help them tide over that time when they might be without jobs while the factories in question are being refurbished.

JEFFREY BROWN: Let me ask you, no matter how you feel about these specific agreements, the two that are on the table, the global and the U.S., how difficult will it be to make a difference, given the number of factories, the enormous sort of structural issues in the way, the corruption, where the money goes, et cetera?

SCOTT NOVA: It can be done. It’s a question of money and binding commitments.

Look, we have known how to make an apparel factory safe for more than 100 years. How to do it is a very straightforward problem. There’s no huge technical obstacle.

The problem is that for years, the U.S. brands and retailers, European brands and retailers have demanded such low production costs in their factories in Bangladesh that the only way the factories could possibly meet those prices is to ignore worker safety.

That’s what created this current disaster. The only way to fix it is to put money in the system from the brands and retailers to pay to renovate and repair the factories and make them safe. This won’t happen, given the dynamics of the apparel industry, the cutthroat nature of the industry, the competitive pressures, unless the brands and retailers are contractually obligated to do it.

We can no longer trust promises from brands and retailers to protect worker safety in Bangladesh. They have been promising to do it for more than a decade, and they have failed.

JEFFREY BROWN: Do you think that the path to get there, whatever you think of these specific agreements, is as clear as he is suggesting?

AVEDIS SEFERIAN: No, I don’t think it’s quite so cut and dried.

I certainly reiterate the point I made earlier, that any plan being put forward to improve conditions in Bangladesh ought to be welcomed. So even though I have been presenting some of the details of the Alliance, that is not to suggest that I disagree with the accord’s vision. Both plans are ultimately trying to achieve the same thing, create a safe working environment for factory workers in Bangladesh.

The way to go about it is not quite as cut and dried, as I said. It is going to take money. And so both plans are putting forward serious money. It is going to take money applied in the right way, which is where I think some of the incentives and some of the way of distributing that money is going to become so important.

If you create business incentives, however much we can talk about, you know, mandating stuff, we all know that in the end voluntary efforts on someone’s parts are likely to be much more sustainable than being forced to do something.

You create the right business incentives, you create an environment in Bangladesh that makes clear to factory owners that you cannot work with these brands and retailers if you don’t have safe factories, you are more likely to achieve the end goal.

JEFFREY BROWN: All right, we are going to have to leave it there.

Scott Nova, Avedis Seferian, thank you both very much.

SCOTT NOVA: Thank you.

AVEDIS SEFERIAN: Thank you very much.