US retailers agree to Bangladesh safety pact

Accord seen as step forward but raises fears over duplication with European efforts

PUBLISHED : Friday, 12 July, 2013, 12:00am
UPDATED : Friday, 12 July, 2013, 4:01am

Seventeen United States retailers, including Wal-Mart, Target and Macy's, have signed on to a five-year agreement to help improve safety at garment factories in Bangladesh.

The accord is separate from a legally binding plan finalised earlier this week by more than 70 mostly European companies such as H&M and Inditex.

The US apparel sellers said on Wednesday that their coalition would seek inspections at all member-supported factories in Bangladesh within a year. The group promised transparency for the results.

In the next three months, a set of safety standards would be developed, the newly formed alliance said, and by November the group plans to set up an anonymous worker hotline, administered by a third party.

Member companies have provided US$42 million for the initiative, with an additional US$100 million in loans for plant owners to improve their facilities and workforce. Companies are to continue contributing financial support in the next five years, based on how much product they source from Bangladesh. Businesses with more than US$250 million of product will pay US$1 million a year.

The impetus for the safety proposals was the April collapse of the eight-storey Rana Plaza factory near Dhaka, the capital of Bangladesh. More than 1,100 workers died in the tragedy.

The factory made goods for brands such as Wal-Mart, Benetton and J.C. Penney partner Joe Fresh. Other participants in the US pact include J.C. Penney, Nordstrom, Kohl's, Gap, Sears, Nine West owner Jones Group, L.L. Bean, Hudson's Bay, IFG, Public Clothing, Canadian Tire, Carter's and VF.

Mike Posner, a business and human rights professor at New York University's Stern School of Business, said the safety goals represented "a collective step forward" by American retailers.

"But it does not make sense for there to be two competing initiatives, an American one and a European one, that run the risk of duplication and confusion at the local factory level," he said. "What's needed in Bangladesh is a comprehensive industry-wide effort aimed at building a sustainable sourcing model that will ensure the workers in those factories … have a voice and assurance that they can work in a safe space."