Five Years After Rana Plaza: the Way Forward
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Five Years After Rana Plaza: The Way Forward PAUL M. BARRETT, DOROTHÉE BAUMANN-PAULY AND APRIL GU Center for Business and Human Rights April 2018 Contents Foreword .................................................................................... 1 Executive Summary .................................................................... 2 Part One: Introduction ................................................................ 5 Part Two: Accord and Alliance .................................................. 11 Part Three: Gaps in Government Action .................................... 19 Part Four: Shared Responsibility and the Way Forward ............. 23 Part Five: Recommendations .................................................... 26 Endnotes .................................................................................. 28 Acknowledgments .................................................................... 29 On the cover: Sitting at their sewing machines, workers in a garment factory in Dhaka, Bangladesh, stitch together pieces of fabric to make clothing for leading brands in the U.S. and Europe. Photography by April Gu. NYU Stern Center for Business and Human Rights Leonard N. Stern School of Business 44 West 4th Street, Suite 800 New York, NY 10012 +1 212-998-0722 [email protected] bhr.stern.nyu.edu © 2018 NYU Stern Center for Business and Human Rights All rights reserved. This work is licensed under the Creative Commons Attribution-NonCommercial 4.0 International License. To view a copy of the license, visit http://creativecommons.org/licenses/by-nc/4.0/. Foreword Founded in 2013, the NYU Stern Center for Business and Human Rights is the first human rights center established at a business school. The Center does research and advocacy aimed at promoting practical industry-wide solutions to human rights challenges. We describe our approach as pro-business, high standards. This report expands on our past efforts1 to explain what has made many garment factories in Bangladesh dangerous and what can be done about it. Michael H. Posner In the five years since the collapse of Ultimately key stakeholders in Bangladesh— Jerome Kohlberg Professor of Ethics and the Rana Plaza factory complex, safety including the government, factory owners, Finance; Director, Center for Business and overall has improved in Bangladesh, trade unions, and civil society groups— Human Rights, Stern School of Business, the world’s second-largest clothing must play central roles in this process. New York University manufacturer, after China. Most notably, But they alone do not have the needed in an unprecedented example of industry resources. International public and private collaboration, nearly 250 global brands actors, and especially those who benefit and retailers have joined either the Accord from the Bangladeshi garment industry’s on Fire and Building Safety in Bangladesh low-cost, high-volume model, also have and its union partners or the Alliance for an obligation to do more. We propose Bangladesh Worker Safety. Through a strategy of “shared responsibility,”2 these collective initiatives, the companies which involves global brands and retailers, have inspected some 2,800 factories governments from Western Europe and The fifth anniversary of and encouraged a series of remedial North America, international financial steps to address unsafe circumstances institutions like the World Bank and the Rana Plaza calls “for a in those factories. Despite this progress, International Finance Corporation, civil renewed commitment however, much remains to be done to society organizations, labor representatives, ensure safe workplaces for garment and philanthropic groups. to making all clothing industry employees. By bringing together local and interna- factories safe. The Center for Business and Human tional institutions with a stake in supporting Rights has identified two broad gaps in Bangladesh’s garment sector, shared factory safety where significant resources responsibility offers a potential path toward still need to be applied. First, there are addressing some of the country’s central unsafe conditions in factories that are human rights challenges. If it succeeds, ” not covered by the Accord or Alliance but it can serve as a model for addressing instead are overseen by the government complex supply chain challenges in other of Bangladesh under its National Initiative. countries. The fifth anniversary of Rana Second, unsafe circumstances exist in Plaza calls for a renewed commitment to many of the subcontracting factories that making all clothing factories safe. are not covered by the Accord, Alliance, or National Initiative. This report draws on the Center’s work over the past five years, culminating in a In preparing this report, we have deve- research trip to Dhaka in early 2018 by loped a cost estimate for addressing Deputy Director Paul Barrett, Research these areas of concern, which we explain Director Dr. Dorothée Baumann-Pauly, in Part Four. While our estimate—$1.2 and Associate Director April Gu. While in billion—is preliminary and inexact, it Bangladesh they met with government provides a broad sense of the scope officials, factory owners and workers, of the need. We intend our tentative representatives of the Accord and calculation as a catalyst for conversation Alliance, union representatives, and local and a starting point for a process for executives with global brands and retailers. addressing gaps in coverage. FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 1 Executive Summary The collapse of the Rana Plaza factory complex in Bangladesh in April 2013 killed 1,134 people and refocused attention on working conditions in the global garment industry. This report marking the fifth anniversary examines the forces that contributed to the disaster, the response since 2013, and what needs to happen in the future. One of the questions we raise is whether Bangladesh offers lessons for protecting human rights in international supply chains. We conclude that to a degree it does, but more work needs to be done to make the country’s export factories safe. In the wake of Rana Plaza, major While there is no consensus on the clothing brands and retailers formed two precise number of subcontractors, we unusual initiatives in Bangladesh. Hennes and others have estimated that the figure Foreign initiatives & Mauritz (H&M), Primark, and other is in the thousands—perhaps as many “have improved European companies joined with trade as 3,000. Whatever the exact number, union partners to create the Accord on existing inspection and remediation conditions in many Fire and Building Safety in Bangladesh. regimes will not prove sufficient. Walmart, Gap, and other North American Bangladeshi factories. companies set up the Alliance for This conclusion seems self-evident, They are not, Bangladesh Worker Safety. While as the industry programs initially were there are important differences between designed to last for only five years. however, panaceas. these two initiatives, both did factory The Alliance is essentially phasing out inspections and oversaw remediation. by the end of 2018. The Accord has Accord and Alliance members agreed announced it will continue provisionally to cease all business with Bangladeshi for up to three additional years, through manufacturers that declined to comply. 2021. Once the foreign-run programs ” pull out, the Bangladeshi government As we explain in Part Two, the foreign will inherit responsibility for all factories initiatives have improved conditions in and workers. many factories. They are not, however, panaceas. Today they cover only about In response, we propose in Part Four 2,300 active factories serving their that an array of international actors member companies. The Bangladeshi joins with Bangladeshi stakeholders government separately retains oversight to form a “shared responsibility” for another 1,650 or so. But this still task force whose members would leaves out a very large number of contribute needed funds to ensure additional factories—and their workers. the repair of all garment factories in the country. Depending on how many Many of the left-out factories primarily subcontracting factories turn out to do subcontracting work for export, or a be in business, we estimate that it combination of production for the local would cost $1.2 billion to remediate and global markets, and thus do not remaining dangerous conditions. While have direct relationships with the large our calculations are necessarily rough, Western buyers. Subcontractors play we offer this figure in hopes that it will a crucial role, helping larger “mother” provide a catalyst for discussion and factories manage their export workload. ultimately action. 2 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Our Findings A large number of factories covered by the Accord and Alliance have installed fire doors, added fire extinguishers 1 and sprinkler systems, improved electrical wiring, instituted fire-safety training programs, and made structural upgrades that protect workers’ lives. We commend them for taking these important steps. But, as the staff of the Accord candidly acknowledged in a recent update, “major life-threatening safety concerns 2 remain outstanding in too many factories and need to be fixed urgently.”3 These include outstanding structural problems that require retrofitting. The laudable progress on safety has widened the bifurcation of the industry. An elite segment of suppliers 3 can afford to make improvements and continues to enjoy relationships