Refusing to sign onto a union-backed safety upgrade plan in Bangladesh’s garment factories, 17 U.S. retailers, including Walmart and Gap, announced their own plan on Wednesday. The plan commits $42 million to inspections and other safety steps and more than $100 million in loans and financing to help factory owners correct problems. But unlike the mainly European-backed plan, the companies are not legally bound to pay for the improvements and puts more of the burden on the Bangladeshi factory owners.
As Steven Greenhouse and Stephanie Clifford report at the New York Times, “Unlike the European group, the North American retailers are not promising to finance needed improvements, outside of the loans.” Instead, they will withdraw business if a factory is found to be subpar but fails to fix the problems itself. The plan calls for “shared accountability” in responding to safety problems among the factory owners, the Bangladesh government, and other government and aid agencies. The companies are free to leave the alliance whenever they like, although if they do so within the first two years they must still pay whatever remains of their five-year financial commitment.
Calls for large clothing brands to invest in safety upgrades began with the garment factory collapse in April that killed 1,127 workers. The official cause of the collapse is attributed to poor building materials and building regulation violations.
The American proposal, which also has backing from such large American companies as Target, Macy’s, J. C. Penney, Kohl’s, and the Children’s Place, calls for them to inspect the estimated 500 factories that they use within a year and then develop plans to make fixes. The retailers will develop a common safety standard by October and create a clearinghouse to share information about which factories have been approved and which need upgrades.
The retailers told the Times that their plan contains many of the elements of the European one, including inspections, plans to make upgrades where needed, sharing information, and training workers on safety issues.
Yet the big difference is that the plan signed by 70 retailers, including mostly European brands such as H&M; and Inditex, owner of Zara, but also U.S. companies Abercrombie & Fitch and PVH, owner of Calvin Klein, Tommy Hilfiger, and Izod, is legally binding and that the brands themselves will underwrite the cost of upgrades in the factories they use.
Either plan will still run into challenges in inspecting all of the country’s garment factories. An engineering team has found that three-fifths of the buildings inspected thus far are vulnerable to collapse. Yet there is a big shortage of inspectors, even with the engineers, the development authority of the capitol city of Dhaka, and industry trade groups working to conduct them. The total cost of safety upgrades is estimated to be $3 billion.