The Crisis in Bangladesh and the Accord on Fire and Building Safety May 28, 2013

Building Collapse in Bangladesh Garment factory producing for major Western retailers Poorly constructed building, located on a drained swamp, with additional floors added illegally Workers notice cracks in walls, express fear to management Management tells workers building is safe and they must work The next day, the building collapses, crushing workers en masse Some escape, many die. Rescue workers pull bodies out of the rubble for days

Spectrum Sweater Factory - 2006 Massive building collapse 64 dead Hundreds injured Major buyer: Inditex Retailers, factory owners, government all vow to move urgently to improve safety practices Nothing changes: industry continues down the road to Rana Plaza

A horrific rash of events for garment workers in Bangladesh…factory collapse, explosion and fires... The Bangladesh garment industry is notoriously stricken with labor violations, but the recent tragedies have incited international pressure and investigations…” Yahoo News, 2006

Major Bangladesh Factory Disasters: 2005/2006 Moon Fashion Fire Biswas Garment Fire Shan Knitting Fire Phoenix Garment Collapse Shamim Spinning Fire Sayem Fashions Stampede Spectrum Sweater Collapse Cumulative Death Toll: 205

Response to Spectrum and other disasters Inditex: “Although the factories of the suppliers in Bangladesh were being audited when the catastrophe occurred, Spectrum was not included in the review-normalization process for two reasons: first, the contractual manufacture relationship had taken place through a trader in India, and secondly the supplier did not provide the name of its subcontractors.” “The audit of the Asian manufacturers, carried out in accordance with BSCI methodology and by SAI-certified auditors, is in progress and is expected to be complete by the end of May.” BGMEA/Government/ILO : “In February 2006, BGMEA began a programme of factory inspections to ensure there are fire exits, no locked exits, and to conduct fire drills. Since March 2006 BGMEA has recruited 20 staff in addition to the existing 20 to carry out these inspections. 1042 factories in Dhaka and 253 in Chittagong have been inspected in April 2006.”

After the Gharib & Gharib fire: February 2010 “The teams will make surprise visits and immediately inform BGMEA if they find any factory lacking adequate safety measures…BGMEA and BKMEA will take actions against the non-compliant factories…all garment factories must keep their rooftops accessible; the rooftop doors, factory entrances, fire escapes, and emergency gates must always remain unlocked; fabrics and other flammable materials cannot be kept laying around on factory floors; and all factories must arrange fire drills on a regular basis.”

After the Hameem fire: December 2010 Unions, NGOs convene meeting in Dhaka, April 2011, and implore brands and retailers to commit to an urgent program of independent inspections and to pay for renovations are repairs. Industry response, as conveyed by Walmart and Gap: “Specifically to the issue of any corrections on electrical and fire safety, we are talking about 4,500 factories, and in most cases very extensive and costly modifications would need to be undertaken…It is not financially feasible for the brands to make such investments.”

Death Toll in Garment Factory Disasters Since 2010 Year Factory Brand Deaths 2010 Gharib & Gharib H&M 21 2010 Hameem/TIS Gap, Target, VF, PVH, others 29 2012 Ali Enterprises KiK 262 2012 Tazreen Fashions Walmart, Sears, ECI, others 112 2013 Smart Export Inditex/Zara 8 2013 Rana Plaza Benetton, WM, JC Penney, others 1,127 2013 Tung Hai Primark 8 Total Deaths: 1,601

Rana Plaza Five factories, owned by three companies: Ether Tex, New Wave Style, Phantom Apparel Buyers: Walmart, El Corte Ingles, Benetton, Inditex, JC Penney, Children’s Place, Carrefour, Primark, Joe Fresh, KiK, others Obvious warning signs of structural failure; workers pressured to work anyway; threatened with loss of one month’s pay Final toll: 1,127 dead; more than 2,000 injured, including many on-site amputations Worst factory disaster in the history of the global garment industry Three of the four worst have occurred in the last eight months

Rana Plaza

Tazreen Fashions

Triangle Shirtwaist

Triangle Shirtwaist to Rana Plaza Apparel sector in the Early 20th century: sub-poverty wages, minimal regulation, abusive conditions, dangerous factories 1911: Public revulsion over Triangle disaster spurs reform 1910s to 1930s: Unions and regulators progressively reform the US apparel sector: decent wages, unions, safe workplaces, reasonably tough regulation; “golden age” for apparel workers through 1960s 1970s to 2000s: Brands and retailers outsource most US apparel production to the Global South Apparel sector in the early 21st century: sub-poverty wages, minimal regulation, abusive conditions, dangerous factories

Contemporary Apparel Production: The Model Brands and retailers place relentless price and delivery pressure on local contractors Local contractors meet these demands by ignoring worker rights and safety standards to cut costs, speed production Local government looks the other way; industry auditors are ineffectual Result: poverty wages, oppressive conditions, dangerous factories Not a “Bangladesh problem,” but a problem of the global apparel industry The problem manifests itself in a particularly destructive way in Bangladesh, because local regulation is especially lax and most factories are in multi-story buildings.

Bangladesh Garment Industry: Thousands of Deathtraps Many poorly constructed buildings with weak foundations; floors added illegally after original construction Most factories lack proper fire exists: Open stairwells, which act as chimneys rather than escape routes No external fire escapes Missing safety systems No emergency lighting Missing fire extinguishers No worker role in safety management, no unions, weak or no safety training Managers restrict egress: lock doors to control workers; delay exit to avoid loss of production, hoping alarms are false

Lethal Partnership: The Global Apparel Brands and Bangladesh Conditions: Minimum wage: $37/months (18 cents an hour) Routine harassment and intimidation as management strategy to speed production Unionists are fired – or worse Most dangerous place in the world to be an apparel worker The industry’s response to deteriorating labor conditions in recent years? They have poured orders into the country. Bangladesh now 2nd largest apparel producer after China 5,000 factories; 3 million workers (far more than US peak) More than 2,000 killed in fires and collapses since 2005 Buyers are getting what they pay for: an industry of Triangle Shirtwaist factories Bangladesh is winning the race to bottom, with room to spare

The Bankruptcy of Industry Auditing and the Voluntary “CSR” Model All factories where major disasters have occurred had been repeatedly audited under industry audit regimes Ali Enterprises, 262 dead: SA-8000 certified – 3 weeks before fire Tazreen, 112 dead: Audited by WM (UL Responsible Sourcing), others Hameem/TIS, 29 dead: Audited by Gap, A&F, VF, others Gharib & Gharib, 21 dead: Audited by H&M Rana Plaza, 1,127 dead: Passed audits by BSCI, multiple buyer audits Industry auditing: massive conflicts of interest, no transparency Industry auditors don’t have expertise/time for proper inspections: no fire safety training, no electrical or structural expertise Industry auditors do not even look at biggest hazards No assessment of emergency exit structures, despite deadly fires No assessment of structural integrity, even after Spectrum Auditors can’t ask brands to raise prices, pay for repairs BSCI: “You can’t expect too much from social audits.” Yet brands have claimed for years that audits are adequate to protect workers.

"It's very important not to expect too much from the social audit…BSCI and other initiatives contribute to improve the situation. ... But it's a long way we have to go.“ Lorenz Berzau Managing Director Business Social Compliance Initiative (Two Rana Plaza factories passed BSCI audits)

Walmart: Don’t Worry – Workers Are Protected by Our Incompetent Inspections Walmart’s CEO, Mike Duke, in a public statement: “We will not buy from an unsafe factory.” Walmart’s head of labor rights compliance, in an internal memo: “Fire and electrical safety are not currently adequately covered in ethical sourcing audits.”

What is needed? A radical shift away from voluntary self-regulation to binding labor-management agreements Not just inspections – industry-wide program of renovations and retro-fitting to make unsafe structures safe Many factories can’t pay: progress can’t be achieved without financial support from buyers Buyers must accept that safe factories cost more Renovation program must be backed up by inspections with public reports Workers must be able to fight for their own protection

Development of the Accord Dec. 2010 WRC, CCC, others propose plan after TIS fire kills 29 Apr. 2011 Plan promoted at ITG- led meeting in Dhaka; brands reject financial responsibility for safety upgrades Mar. 2012 PVH signs agreement after ABC News story Apr-Sep 2012 Unsuccessful negotiation with Gap, which refuses any binding safety commitments Sep. 2012 German retailer Tchibo signs agreement Nov. 2012 Tazreen Fashions fire kills 112 Jan. 2013 Smart Export fire kills 8 Apr. 2013 Rana Plaza collapse kills 1,127 May 2013 Tung Hai fire kills 8 May 2013 40 brands and retailers sign revised safety agreement, renamed Accord on Fire and Building Safety in Bangladesh June 2013 Implementation begins

Why is it a huge challenge to get companies to sign? Because the agreement is real, not the usual non-binding, feel-good CSR fluff Binding, enforceable and transparent Companies must pay for repairs and renovations Companies must end business with factories that refuse to undergo renovations and operate safely Companies must stay at least two years at safe factories Imposes higher costs and constrains sourcing decisions, blunting the relentless push for lower prices and faster delivery that define industry sourcing strategy

Strategy Post-Rana Seizing the media moment to secure enforceable commitments Out-maneuvering the industry and its apologists and protectors

How Accord was achieved… Linking specific brands and retailers to recent disasters; proving these connections with documents and labels found on-site Focusing media attention on individual brand responsibility, the total failure of industry CSR programs to protect workers, and the small cost of saving lives (less than 10 cents per garment) Holding firm on the need for a binding, enforceable agreement with financial commitments from brands/retailers Contributions from numerous key players: Clean Clothes Campaign, UFCW, Machinists, Steelworkers, AFL-CIO, Change to Win, SEIU/Workers United, ILRF, Maquila Solidarity Network, Avaaz, SumOfUs, USAS, Corporate Action Network Crucial leadership of Industriall and UNI

The Accord: Unprecedented Commitments Thorough, independent inspections with full public reports Brands/retailers must require factories to undergo all necessary renovations and must pay for them Brands/retailers must end business relationship with any factory that refuses Brands/retailers must make 2-year commitment to safe factories Central role for workers and unions: union access, OHS committees, right to refuse dangerous work All commitments binding and enforceable

Unprecedented The first binding agreement ever signed by global corporations that forces them to pay to improve working conditions and to align their sourcing decisions with their labor rights obligations

Signatory Brands and Retailers 40 signatory companies, from 13 countries H&M – largest producer in Bangladesh Inditex – world’s largest fashion retailer Carrefour – world’s 2nd largest general retailer Most major apparel retailers in W. Europe North America: PVH/A&F/Loblaw Gaps: Gap, VF Walmart, Target JC Penney, Macy’s, Kohl’s Signatories represent: At least 1,500 factories and 1 million workers

Implementation Implementation plan in 45 days 12-member planning committee focused on swift implementation First priority: inspections and renovations to mitigate most serious widespread hazards

The road ahead. Accord implementation: A huge undertaking Goal to get repairs/renovations started in 3 months or less – immediate focus on swift mitigation of the gravest hazards Binding nature of Accord gives us the tools to ensure compliance, but there will be many battles Effort to bring on additional US retailers must be strengthened – will get boost from public inspection reports

A new model for labor rights reform in global supply chains 1980s to 1990s: No private regulation 1990s to 2010s: Self-regulation: the “CSR” Era Voluntary corporate initiatives Non-binding, minimal transparency No obligations on prices or supply chain practices 2013 to?: Regulation thru enforceable pacts Accountability to worker organizations through binding, enforceable agreements Supply chain practices aligned with labor rights obligations, including higher prices to factories or other means of paying for improved conditions Full transparency