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 with international brands and retailers. Much of the rest of the industry either cannot or will not make expenditures to enhance safety and, as a result, workers in this segment remain at risk.

Even some of the factories that have seen improvements are in danger of backsliding when foreign initiatives 4 conclude and all oversight responsibility reverts to the Bangladeshi government, which continues to move very slowly on the safety front.

Adhering to their limited jurisdiction, the Accord and Alliance did not address problems in thousands of facilities 5 that do subcontracting work for larger export-oriented factories supplying Western brands and retailers.

Based on extrapolations from existing per-factory remediation expenses, we estimate that it would cost 6 $1.2 billion to remediate remaining dangerous conditions in the industry.

Finally, given the large expense of making the garment trade truly safe, we recommend the formation of a new 7 locally led multi-stakeholder task force to fund and oversee the effort. This initiative would operate under the principle of shared responsibility. For this effort to be financially viable, contributions would need to come from Western companies and their Bangladeshi suppliers, the governments of Bangladesh and Western countries that import Bangladeshi-made apparel, international development and financial institutions, and private philanthropies.

See Part Five: Recommendations, p. 26.

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 3 Workers make their way to Babylon Garments, a factory that recently finished remediation. Babylon supplies brands such as H&M, Inditex, Tesco, and Walmart.

Rana Plaza once stood in the gap between these buildings near Dhaka. Although the site is now overgrown with vegetation, scraps of fabric and buttons are still scattered on the ground.

Residents cross a small lake near an urban slum in Gazipur District, Dhaka.

4 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Part One: Introduction

An Unspeakable Disaster It has been five years since the horrific collapse of a Bangladeshi garment factory complex called Rana Plaza. The dead numbered 1,134, mostly young women; the injured, some 2,500. It was the worst accident in the history of the apparel industry and one of the deadliest industrial disasters of any kind.

This report marking the fifth anniversary operating on floors three through of Rana Plaza describes the economic eight produced t-shirts, pants, and forces that contributed to the catastro- blouses for such Western brands phe and evaluates what has happened as Benetton, Bonmarché, Joe Fresh, since. It then charts a path toward a Mango, Primark, and Walmart. Called Bangladesh deserves safer and more secure future for the to the scene, a local engineer declared Bangladeshi garment sector. the building unsafe. Police ordered it attention, not only because“ emptied pending further inspection. it ranks as the world’s Bangladesh deserves attention, not But the owner, Mohammad Sohel only because it ranks as the world’s Rana, insisted that, despite indications second-largest clothing second-largest clothing manufacturer, his building had begun to come apart, behind only China, but because the manufacturer, behind only all was well. Factory managers ordered human rights concerns affecting its employees to return the next day or China, but because the workers also affect workers in garment- risk losing their jobs. manufacturing countries around the human rights concerns world. Since the 2013 disaster, Most did return. Just before 9 a.m. affecting its workers also Bangladesh has served as a laboratory on April 24, a power outage stopped for international brands and retailers, work. On the upper floors, diesel affect workers in garment- unions, and civil society organizations generators weighing several tons seeking to address factory safety. One apiece rumbled into action. Vibrations manufacturing countries of the central questions posed by this rippled downward. Built illegally, the around the world. report is whether Bangladesh offers top four floors lacked necessary support lessons for protecting human rights in walls. The building’s foundation rested global supply chains for apparel and on swampy ground that compromised other goods. We conclude that to a its integrity. Destabilized by the degree it does, but the experiment is generators, the entire structure incomplete, and more work needs to crumpled inward, story by story, ” be done. creating a nightmare pile of concrete slabs, shattered columns, mangled Before looking at the responses to sewing machines, and crushed bodies.4 Rana Plaza or the industry’s future, the disaster itself warrants recalling. Rana, the owner of the fatally flawed building, made a run for the Indian On April 23, 2013, workers at the border, but Bangladeshi authorities massive eight-story structure on the caught up with him four days later. outskirts of Dhaka, the Bangladeshi So far, he has been sentenced to three capital, noticed deep cracks forming years in prison on corruption charges in the building’s walls and support and still faces prosecution for murder. pillars. Five separate factories

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 5 Blame also shadowed the Western International Responses fashion brands and retail chains that patronized Rana Plaza’s factories— and Their Limitations Whatever the precise and thousands of other manufacturing To their credit, Western brands and facilities in Bangladesh. The catastrophe number of garment-“ retailers responded swiftly to the humani- raised anew questions first posed in tarian and public relations crises of April exporting factories in the 1990s about the global garment 2013. Within months, they formed a pair industry’s responsibility for working Bangladesh—the figure of unusual initiatives—the European-led conditions in places like Dhaka: Accord on Fire and Building Safety in shifts as facilities open By driving down prices they pay to Bangladesh and the American-led suppliers, do corporations such as Alliance for Bangladesh Worker Safety— and close—we remain Gap, Walmart, and Inditex create designed to get garment factories up to incentives for factory owners to convinced that existing international standards. The initiatives scrimp on safety and put worker were different in some important inspection and remediation lives at risk? How far would Western respects, such as the involvement of companies go to please consumers regimes are not sufficient European-based trade unions and in the United States and Europe who non-governmental organizations in the to protect all of the demand ever-cheaper casual clothes? Accord. But they shared the basic goal And in a country such as Bangladesh— country’s workers. of leveraging the economic power of whose economic fortunes turn on the member companies to see that factories success of its apparel sector, but whose were inspected and then made safe. government so far has proven unable Bangladeshi suppliers that refused to or unwilling to protect workers—how comply with the process faced a can foreign corporations ensure the draconian punishment: being cut off safety of supply chains made up of ” by the participating Western buyers. factories they don’t own or operate Nothing quite like this had been tried to prevent more Rana Plazas? before, certainly not at this scale.

How Bangladesh Stacks Up Globally Top clothing exporters*; US$ billion and (percentage of merchandise exports)+

China $161 (8.0%)

Bangladesh $28 (80.9%)

Vietnam $25 (13.0%)

India $18 (5.5%)

Hong Kong $16 (3.9%)

Turkey $15 (10.6%)

Indonesia $7 (4.4%)

Cambodia $6 (54.3%)

USA $6 (0.4%)

050 100 150 200

*2016 statistics, most recent available; +2014 statistics Source: World Trade Organization

6 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD The foreign initiatives have improved Other researchers at such institutions conditions in many factories. They are as Pennsylvania State University have not, however, panaceas. In two earlier contested NYU Stern’s analysis, Western brands gravitated reports, published in April 2014 and estimating that the figure is between December 2015,5 the NYU Stern Center 4,000 and 5,000.9 “to Bangladesh because for Business and Human Rights pointed out some of their built-in limitations. Whatever the precise number of export of its extraordinarily low The chief constraint is that between them, factories in Bangladesh—the figure prices, which over time the they now cover only about 2,300 shifts as facilities open and close— active factories serving their member we remain convinced that in the long brands drove even lower. companies. The Bangladeshi government run, existing inspection and remediation separately retains oversight for another regimes are not sufficient to protect all of 1,650 or so. But that total of nearly the country’s workers. This conclusion seems self-evident, as the industry- 4,000 leaves out thousands of additional What made Bangladesh successful as backed programs initially were designed factories—and their workers. a supplier of casual fashion, however, to last for only five years. The Alliance ” has also historically made its garment Many of the left-out factories primarily is essentially phasing out in 2018. business dangerous. Western brands do subcontracting work and don’t have The Accord has announced it will gravitated to Bangladesh because of direct relationships with the large continue provisionally for up to three its extraordinarily low prices, which Western buyers, which often are not additional years, through 2021. Once over time the brands drove even lower. even aware of the subcontracting of their the foreign-funded programs pull Rock-bottom prices reinforced low orders. “Unauthorized subcontracting is out, the Bangladeshi government will wage levels and translated into paltry a significant challenge in Bangladesh’s inherit responsibility for all factories investment in factory safety. Even before [garment] industry,” the U.S. Senate and workers, despite widespread Rana Plaza, Bangladeshi garment Committee on Foreign Relations said in a concern that it lacks the resources facilities were perilous: Between 2005 report in November 2013. The committee and determination to meet the need. and 2012, more than 500 workers died went on to describe “unknown factories in fires and building collapses.11 that operate in the shadows” and are The Deeper History of a “often the most dangerous in terms of To understand how apparel making 6 worker safety.” While some subcontrac- Vital Business evolved into such an economically vital tors have closed down in recent years but often-hazardous business, one has to The ready-made garment sector, or RMG, because of greater vigilance by Western go back to the decade after Bangladesh’s as the industry calls itself, has fueled the companies, others have opened, and the War of Independence in 1971, when Bangladeshi economy for three decades. practice remains common. Networks of the country broke away from Pakistan. With annual sales now exceeding $28 subcontractors play a vital role in helping The Bangladeshi military, which took billion, the sector generates 80 percent larger mother factories handle the ebb over by coup in 1975, reversed an initial of Bangladesh’s export revenue and and flow of export orders. Operating on move toward socialism and instead employs close to five million people. very slim margins, subcontractors also encouraged private enterprise and Since the mid-1990s, it has helped help maintain low production costs. foreign investment. Later in the report, we describe our propel, on average, a 6% overall annual recent visits to subcontracting facilities. growth rate. Despite a reputation for Bangladesh wasn’t an obvious place government corruption, monsoon- to start a new industry. Its roads were In part because of uncertainty over the season floods, and rural destitution, poor, its electrical grid unreliable; it number of subcontractors, there isn’t a Bangladesh actually presents a case lacked raw materials and a deep-water consensus on how many factories in study of successful development. port. But a global export-quota system Bangladesh make clothing for export. Largely because of the garment industry, worked in Bangladesh’s favor. The system The government has not done an the portion of Bangladeshis living below exempted the south Asian country from industry census. Comparing various the poverty line has fallen from more restrictions on sales to Europe and the databases, the NYU Stern Center in than 44 percent in 1991 to less than United States. And when Korean and 7 2015 calculated a total of about 7,100. 13 percent. In 2014, the World Bank Taiwanese companies hit limits on how Using a similar methodology, BRAC promoted Bangladesh to “lower middle- much clothing they could sell in the West, 10 University’s Centre for Entrepreneurship income country status.” The country they began opening factories in places 050 100 150 200 Development in Dhaka in 2016 generated today has a population of 165 million, like Bangladesh. Scores of educated a count of more than 8,000.8 more than Russia.

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 7 Bangladeshi Garment Factory Accidents by the Numbers*

Total Number of Factory Accidents by Year Number of Significant* Accidents by Year

40 38 34 20 17 35 30 26 15 25 21 20 20 10 15 5 5 4 10 2 3 5

0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

*Resulting in more than five deaths and/or 10 injuries.

Factory Accidents by Cause Repeat Incidents in the Same Factory

5 Factories Fire Boiler False Alarm have had more 130 5 1 than one incident

100% Machine Building Collapse Water of reoccuring incidents 1 1 1 at factories are fires

*The statistics on this page refer not only to export-oriented cut-and-sew factories, but also to facilities performing such tasks as knitting, weaving, spinning, washing, dyeing, printing, and making accessories.

Data visualization by Hovsep Agop, based on information compiled by the NYU Stern Center

8 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Bangladeshis were sent to Korea for The Cost of ‘Fast Fashion’ authorized the factory to do this work— management training and went on to an illustration of the shadowy arrange- start their own factories back home. Low Bangladesh’s extreme low-wage, ments that characterize significant parts barriers to entry amounted to the cost of low-price approach to manufacturing of the industry.15 buying a batch of sewing machines and intersected with a consolidating global renting a building in which to put equip- apparel industry aggressively searching The sudden disintegration of Rana ment and workers. The country had few for cheap, plentiful labor; high-volume Plaza, snuffing out so many lives all industrial premises, so many entrepreneurs production; fast turn-around times; at once, brought home the need for a opened factories in flimsy tenements. and light regulation. Beginning in the dramatic departure from past practices. 1990s, retailers and brands increasingly How garment manufacturers, their Promoting the garment industry used point-of-sale technology to follow North American and European clients, became Bangladeshi national policy. consumer trends in what became known and the government of Bangladesh In the 1980s, military rulers made it as “fast fashion.” Chain stores kept reacted to Rana Plaza has helped easier for factory owners to finance smaller inventories and changed orders determine the future of the country’s fabric purchases and warehouse their more frequently, putting pressure on their most important industry. goods duty free. The government suppliers in Bangladesh and elsewhere Other forces are shaping that future, signaled to foreign fashion brands that to comply or risk losing business. as well. Ethiopia, Myanmar, and other the country’s poor rural population Consumers in the U.S. and Europe grew new challengers are seeking larger provided a large labor pool eager for accustomed to choosing from ever- shares of the global garment business. $1-a-day jobs. “They used words like changing arrays of inexpensive clothing. Automation, meanwhile, may eventually ‘value,’ ‘good bargain,’ and ‘reliable The real dollar price of apparel entering displace hundreds of thousands, even workforce,’ and the brands understood the U.S. declined 48% from 1989 to 2010, millions, of low-skilled employees in what they meant—low wages and low squeezing the already-slight margins of Bangladesh, creating a daunting social prices for the clothes,” says Sanchita Bangladeshi factory owners.12 One study challenge for the country. But for the Saxena, director of the Chowdhury Center that focused on men’s and boy’s cotton foreseeable future, Bangladeshis in large for Bangladesh Studies at the University pants produced in Bangladesh for export numbers will continue to make clothing. of California, Berkeley. to the U.S., found that prices fell 41% Worker well-being will remain a concern. from 2000 to 2014.13 Growth continued when civilian demo- And as a result, the response to Rana cratic government was reestablished Small profit margins, usually hovering Plaza and current gaps in factory safety in the early 1990s. From 384 factories in the low single digits, exacerbated a deserve urgent attention. employing 120,000 workers in 1984, tendency on the part of Bangladeshi the industry expanded to 2,000 factories suppliers to cut corners on safety. employing more than 1 million in 1994. Making matters worse, Bangladesh’s As garment manufacturing eased extraordinarily weak regulatory apparatus Bangladesh’s poverty, the country provided inadequate oversight. And Small profit margins, saw gains in a wide range of human- an underdeveloped, highly politicized “usually hovering in the low development measures. Life expectancy, local union movement did not provide literacy, and per-capita food intake workers with widespread protection. single digits, exacerbated increased, while child mortality decreased. a tendency on the part Unemployed young rural women streamed A grim litany told the resulting story: into Dhaka and other cities to take jobs The Spectrum Sweater factory collapse of Bangladeshi suppliers that brought previously unimaginable in 2005 killed 64. Twenty-two died in the economic and social independence. Phoenix Garments building collapse in to cut corners on safety. 2006. The Garib & Garib sweater factory Making matters worse, Not that anyone gets rich laboring in a fire left 21 dead in 2010. Later the same garment factory. Bangladeshi wages year, a fire at That’s It Sportswear killed Bangladesh’s extraordinarily have long been the lowest among major 29. In November 2012, five months weak regulatory apparatus apparel-exporting countries. Rana Plaza before Rana Plaza, a fire at the nine-story led to an impressive-sounding 77% Tazreen Fashions factory resulted in 112 provided inadequate increase in the minimum wage, but that 14 deaths and more than 200 injuries. oversight. translates to the equivalent of only $64 Tazreen made clothes for Walmart as a month, or 31 cents per hour. Higher a subcontractor, although the giant prevailing wages still do not cover the American chain said it had not living needs of many workers. ” FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 9 As a result of remediation efforts, workers in compliant factories are better protected by access to fire extinguishers and other safety equipment.

A worker operates a machine to cut fabric, which traditionally was done by hand. Mechanizing dangerous tasks can increase both efficiency and safety.

Workers, who wear masks to prevent inhalation of loose thread and small bits of fabric, bundle clothing as part of the production process.

10 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Part Two: Accord and Alliance

Innovation Out of Crisis The collapse of Rana Plaza sparked rage and disbelief. Media worldwide covered the disaster. Activists demonstrated outside European and American stores. Bangladeshi garment workers rioted. Despite a decade of lethal factory collapses and fires, Western brands and retailers insisted they were shocked by the catastrophe. Primark, a Dublin-based budget-fashion chain, which sourced clothing from Rana Plaza, never “considered structural integrity of buildings as a risk,” Paul Lister, head of the company’s ethical trade team, told Reuters. “You would look inside the building, but not onto the floor above or below.”16 This kind of obliviousness could not be sustained after Rana Plaza.

Moving with uncharacteristic speed, Just weeks after the disaster, some of the government strengthened safety Europe’s largest clothing companies— requirements and ordered that all including Swedish-based H&M; Inditex, The contractual relationship garment-exporting facilities be inspected the Spanish parent of Zara and Massimo between Western clothing“ using a new standardized checklist. Dutti; and the British retail chain Tesco— In practice, though, overstretched agreed to inspect the factories operated companies and suppliers government inspectors—drawn from by their Bangladeshi suppliers and work provided the leverage the same bureaucratic ranks that didn’t with manufacturers to make the facilities flag the failings of Rana Plaza—lacked safer. To give the agreement teeth, the the Accord and Alliance the resources, training, and determi- European companies committed to nation to police the garment industry cutting off any suppliers that failed exercised—namely, the aggressively. According to the Centre for to comply. The innovative arrange- threat that suppliers could Entrepreneurship Development in Dhaka, ment made the companies collectively “the loosely regulated nature of the ready- accountable for factory conditions and lose crucial export business made garment industry allowed flagrant established the potential for them to from the largest fashion and devastating human rights violations.”17 be held legally liable if they failed to Corruption played a role, too, as some uphold their obligations.19 Known as the companies in the West. manufacturers paid bribes to avoid Accord on Fire and Building Safety in enforcement actions. Transparency Bangladesh, the pact represented what International’s Corruption Perceptions some scholars have called “a major Index ranks Bangladesh 143rd on a list challenge to the footloose ‘cut and run’ of 180, tied with Guatemala, Kenya, sourcing model typical of today’s global and Lebanon.18 garment industry.”20 Ultimately, 220 ” clothing companies signed the Accord, Into the vacuum created by weak which includes on its steering committee government stepped a coterie of representatives of two European-based international trade unions and other international unions—UNI Global Union European and American non-govern- and IndustriALL Global Union—and two mental organizations. For several Bangladeshi labor federations. years, these groups had been trying to persuade Western fashion brands About 64% of Bangladesh’s clothing and retailers to take more responsibility exports go to Europe; about 18%, to the for making Bangladesh’s garment U.S. With a few exceptions, American factories safe. Rana Plaza created the brands and retailers refused to join the opportunity to act on plans previously Accord, complaining that they did not thwarted by corporate intransigence. want to be exposed to what they perceived as open-ended liability.

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 11 A Phony Fire Plan Ninety minutes northwest of center city Dhaka, the NYU clad in colorful saris emit a constant buzz. On this day, Stern Center team visited a small subcontractor factory the fabric pieces move down three assembly lines of 25 in the Savar district, not far from where the Rana Plaza people each, gradually taking shape as men’s athletic complex once stood. The factory’s 150 employees are shorts. (Some large factories have more than 100 lines busily working on a 40,000-piece job—t-shirts, zippered operating simultaneously.) sweatshirts, and athletic shorts—assigned to the sub- contractor by a much larger “mother” factory which had The owner does not disguise his disdain for safety more work than it could handle. Headed for Italy, the precautions. Over tea in his cramped office, he brings clothing being stitched together bears labels of Italian out an extensive set of blueprints describing a fire- brands such as Athl Dpt and Sweet Years. The owner prevention system for his facility. He procured the of the subcontracting factory describes all of this on plan as a condition of registering with the Bangladesh the condition that neither he nor his business would Knitwear Manufacturers and Exporters Association, be identified. one of two trade groups representing the garment industry. But the owner admits he has not installed any He explains that he opened the shop only 18 months of the equipment described by the blueprints. There is earlier, an indication that while some subcontractors no fire door at the emergency exit. The staircases have have closed amid greater scrutiny following Rana Plaza, no handrails. The factory lacks smoke or heat detectors, others have continued to open. There are several an automatic alarm, or a fire-pump-and-hose system. similar factories on his street alone, the owner says. Jumbled electrical cables running to the breaker panel Mother factories need subcontractors to fill orders that do not have proper separation and insulation, creating change frequently, he adds. The owner explains that the danger of sparks. An industrial boiler, used to he rents the first three floors of a four-story former generate steam for ironing and other tasks, sits in a residential building, an arrangement that could raise corner of the main sewing floor, rather than being structural safety concerns because the building was walled off, as it should be. not designed to bear the weight of so many people and the machinery with which they work. A local consulting engineer hired by the NYU Stern Center to look over the subcontracting factory estimates On the quiet third floor, men clamber over huge expanses the cost of only fire and electrical remediation—excluding of navy blue fabric layered a foot thick. They use card- any potential structural renovation—at $130,000. The board models and chalk to mark shapes that they then owner says he could not come close to affording his slice away using a cutting machine. On the second floor, own fire plan. He does not seem troubled by the situation. sewing machines operated mostly by barefoot women

Subcontracting has continued despite a crackdown after Rana Plaza. Workers in subcontracting factories, such as the man cutting fabric on the left and the sewing machine operators on the right, are often not protected by the safety measures that are mandatory for Accord- and Alliance-affiliated facilities.

12 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD (Continued from p.11) Bangladeshi government retained Walmart, Gap, and others formed a jurisdiction over these non-Accord/ second pact, the Alliance for Bangladesh Alliance factories. But public regulators Worker Safety, which lacked the same kind moved haltingly in 2013 and 2014 to More than 70% of Accord- of liability provision and did not have union fulfill their responsibility. “ representation on its board of directors. affiliated factories had The Accord’s union participants harshly Yet another group of factories operated undocumented structural criticized the Alliance. “Walmart are outside the scope of either the foreign- bringing their discount practices to industry initiatives or Bangladeshi author- additions, among other factory safety,” Christy Hoffman, deputy ities. These were mostly subcontractors inconsistencies between general secretary of UNI Global, said at that lacked direct relationships with the time. “This is not a price war; this major Western buyers (see sidebar, p.12). design documents and is about people’s lives.”21 But in truth, Manufacturers that do have direct ties the actual buildings they the Alliance, although smaller, with 29 to foreign companies sometimes offload member companies, would function work to subcontractors for several purported to describe. much the same way as the Accord: reasons. One is that Western brands conducting inspections, overseeing and retailers, adhering to the dictates remediation, and ceasing to do busi- of fast fashion, routinely change orders ness with noncomplying manufacturers. on tight deadlines. A manufacturer that Neither initiative agreed to pay directly can’t handle extra volume or amended says Rob Wayss, the Accord’s executive for repairs or renovation; that burden designs will send some of the extra ”director. Overall, he adds, “the factories would fall to local manufacturers, who work to one or more subcontractors. weren’t safe.” Inspectors quickly concluded were promised they would receive help Another reason for subcontracting is that dozens of facilities presented an financing remediation, as needed. that manufacturers push lower-margin imminent threat of collapsing. They work down to subcontractors that pay referred these facilities to the Bangladeshi In its early days, some leaders of lower wages and take fewer safety government for evacuation orders. the Accord overstated its reach. “Our precautions. In its July 2014 annual mission is clear: to ensure the safety of report, the Alliance acknowledged To appreciate the variety of problems the all workers in the Bangladesh garment the supporting role subcontractors inspectors found, consider these statistics industry,” Jyrki Raina, then the general play in serving the export market: from the Accord: Ninety-seven percent secretary of IndustriALL Global, said in “Lack of transparency, price pressures, of the facilities lacked a safe means July 2013.22 But that wasn’t correct. and/or limited production capacity within of escape in case of fire. Exits in many The Accord and the Alliance would individual factories foster an environment cases were blocked by locked gates or directly benefit only employees of those where unauthorized subcontracting heavy storage boxes. Nine out of ten Bangladeshi factories with which their continues.”23 Lack of transparency factories lacked adequate fire-detection member companies did business. and price pressures can also foster and alarm systems, if they had any at The contractual relationship between subcontracting that takes place in all. Three-quarters had electrical cables Western clothing companies and dangerous facilities. draped dangerously from ceilings and suppliers provided the leverage the walls, creating yet another fire hazard. Accord and Alliance exercised—namely, We will return to subcontractors and About two-thirds had deficient circuit the threat that suppliers could lose factories overseen by the government breakers and unsafe grounding systems crucial export business from the largest after taking a closer look at the Accord for electrical equipment.24 fashion companies in the West. The and Alliance. manufacturing facilities covered by the Inspectors also discovered structural Accord and Alliance—today the total Inspect and Remediate concerns in a large majority of factories. approaches 2,300—constituted a big More than 70% of Accord-affiliated swath of Bangladeshi factories, but far Working from factory lists provided factories had undocumented structural from all of them. by their member companies, the additions, among other inconsistencies Accord and Alliance in late 2013 began between design documents and the Some factories weren’t covered by dispatching inspection teams looking for actual buildings they purported to the Accord or Alliance because they hazards in three broad categories: fire, describe. (These were the sort of didn’t produce for members of the electrical, and structural. “Every single anomalies that would have marked two organizations. Theoretically, the factory had at least several findings,” Rana Plaza as an extreme example

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 13 After a supplier’s factory had been Both initiatives set up programs to help inspected, the Accord or Alliance suppliers with financing. Alliance members would require the owner to agree to a said they would extend up to $100 million From the factory “corrective action plan,” or CAP, which in direct loans, loan guarantees, and other “owners’ point of view, laid out the steps necessary to make forms of assistance. Accord participants the facility safe and allow its owner to also offered to back loans, invest directly there is a painful irony continue to do business with the Western in safety equipment, and make other buyers. CAPs included a wide range of arrangements such as accelerating in brands and retailers measures—some relatively easy, some payment for future garment shipments. offering financing help onerous. Removing lockable gates that But relatively few suppliers have taken could impede escape during a potential advantage of this financing. Walmart at the same time as fire did not cost much or consume a lot alone made available $50 million in loan they apply relentless of time. Neither did cleaning up dust and guarantees, says Sridevi Kalavakolanu, lint accumulated on electrical wiring and senior director for responsible sourcing. downward pressure equipment, creating a fire hazard. Much But “after initial interest, facilities ended on garment prices. more challenging and expensive were up using other, local financing,” she says. the installation of fire doors and modern Joris Oldenziel, the Accord’s deputy fire-detection and alarm systems—all of director for implementation, confirms which had to be imported because they that many suppliers preferred to seek are not made in Bangladesh. Structural loans on their own or pay out of available retrofitting needed in some factories to cash rather than request help from their ”of structural danger, had anyone been shore up inadequate pillars or walls also Western customers. The Accord has looking at the five-factory complex.) presented costly challenges. facilitated financial assistance from In addition, nearly 70% of factories buyers at only about 100 factories. lacked a load management plan or Other obstacles cropped up. Manufactur- were poorly implementing one. Load ers operating as tenants in rented space In some instances, large buyers have management plans prevent structural often had difficulty getting their landlords to stepped in to pay for remediation cracks and building collapses by pay for improvements. Compounding that directly. C&A did that with two of its avoiding the placement of excessive problem, fellow tenants from outside the suppliers-manufacturers with whom weight on certain parts of a building. garment industry typically lacked motivation the Belgian-based retailer has long- In another important structural area, to push for safety improvements. In its July standing business relationships, says inspectors found 62% of factories 2014 annual report, the Alliance stated Aleix Gonzalez Busquets, the company’s vulnerable to “lateral instability,” that “40 percent of ready-made garment head of external stakeholder engagement. meaning they were potentially at risk factories are based in shared/multi-tenant In other cases, he adds, C&A helped in the face of severe wind, such as that buildings, making it difficult to ensure by extending improved commercial associated with the cyclones that are overall building compliance or coordinate terms, such higher-volume orders. common in Bangladesh. All told, Accord safety programs.”27 Gonzalez Busquets attributes the inspectors identified 130,211 safety unusually high 92% remediation rate problems in 2,024 factories,25 for an Then there was the challenge of paying C&A suppliers have achieved to the average of 64 violations per factory. for repairs and renovation. “The cost company’s extra assistance. of remediation is still prohibitive for some Combined with the unsafe physical factories, especially smaller enterprises From the point of view of many factory conditions, many workers displayed operating in rented buildings,” the owners, however, there is a painful ignorance of the hazards all around them. Alliance said in the July 2014 report.28 irony in brands and retailers offering Few, if any, had received safety training. On average, the Accord says remediating financing help at the same time as they The Alliance conducted a study in 2013 a single factory costs roughly $250,000, apply relentless downward pressure that found that only 2% of workers could while the Alliance estimates the figure at on garment prices. As one illustration of correctly identify common fire hazards. $250,000 to $350,000. The Alliance’s that pressure, the price for cotton men’s Fully one-third did not believe it was their deputy director and chief safety officer, pants has declined 13% since the Rana obligation to report unsafe conditions to Paul Rigby, notes that significant struc- Plaza collapse.29 Suppliers’ average profit their managers. And at the same time, tural repairs alone can cost $300,000, margin declined between 2012 and 2016 25% said that most of the time they and total remediation in some very large from 6.6% to 6%, according to a study by didn’t feel safe working in the factory.26 factories has exceeded $1 million. the Centre for Policy Dialogue in Dhaka.30

14 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Rubana Huq, managing director of the Safety Gains In 2013, there were 17 accidents, Mohammadi Group, one of the largest including Rana Plaza, that resulted in garment manufacturers in Bangladesh, Despite sparse use of buyer-offered at least five deaths and/or 10 injured expressed the frustration over pricing financing and supplier resentment workers. Each year from 2014 through in a column in 2016 for The Daily Star, over low-ball pricing, a lot of factory 2017, this number has hovered between an English-language newspaper in remediation has occurred. This activity two and five such accidents. The annual Dhaka. “The plea is just to give us can be measured several ways. One is by number of fatalities has remained well 32 15-20 cents more per piece, so that spending. The Alliance’s Rigby estimates under 30. we can make ends meet,” she wrote. that the roughly 670 active suppliers his “We don’t need prescriptions, guide- organization is supervising have spent Making serious accidents less likely, lines, or counseling. We just need a $250 million to $300 million on safety factory owners are fixing many individual few extra cents. Just pay us more, improvements. The Accord’s Wayss safety problems. The Accord reports that 31 and we will be fine.” declines to offer a comparable estimate, 85% of such issues have been resolved saying that it has not done the calcula- in the 1,631 active factories it is oversee- 33 Asked about this sort of complaint, tion. But given that the Accord oversees ing; the Alliance cites 88%. To be sure, Walmart’s Kalavakolanu says that the more than twice as many factories as the percentages are less impressive when giant chain expects its manufacturers the Alliance, the figure could exceed one looks at the number of facilities that to take responsibility for the expense $600 million, for a joint Accord/Alliance have remedied all of the shortcomings of making their factories safe. “Our total of roughly $900 million. in their original corrective action plans. message to suppliers is: The cost of Only 127, or 8%, of Accord factories goods should include safety prepara- Another measure of progress is the fit that description; 330, or nearly half, tions,” she says. falloff in the number of catastrophic of Alliance factories have achieved accidents. There has been no recurrence “substantial completion” of remediation. of a building collapse on the scale of Rana Plaza; nor has there been a The data reveal that the most improve- fire comparable to Tazreen Fashions. ment has been made on electrical issues, followed by fire hazards, and

Factory Safety by the Numbers Progress by the European-dominated Accord on Fire and Building Safety in Bangladesh and the American-dominated Alliance for Bangladesh Worker Safety

Accord Alliance

Initial inspections* 2,022 836

Active factories now under supervision 1,631 666

Safety issues remediated 85% 88%

Factories that have completed more than 90% of remediation 699 27

Factories that have completed all remediation from initial inspection 127 330

Factories suspended for failure to remediate 96 168

*Many factories initially inspected subsequently closed or were transferred to the supervision of the Bangladeshi government. Sources: Accord, Alliance

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 15 then structural problems. Accord records had invested more than $100,000 to show that 96% of factories with unsafe make upgrades. But Siddiqi says that the dust on electrical equipment have removed Accord repeatedly and arbitrarily changed One group of it; 84% that had inadequate protection its demands. “The building was not going eight garment factory“ and support for electrical cables have to fall down,” she adds. “Workers were remedied the problem; and 82% with not at risk.” Today, Siddiqi is building a workers unanimously say deficient circuit breakers have done the new state-of-the-art three-story factory same. Significant variation crops up within that already has nine sewing lines produc- they have seen safety each category. Accord fire statistics show ing for export (out of an anticipated 24), improvements at the two that 96% of factories with lockable gates even as construction continues. The new have removed them, but only 41% that business, Eske Clothing, will eventually factories where they are had inadequate fire detection and alarm have its own 20-bed medical clinic, employed. Exits that were systems have installed and verified daycare for toddlers, an early-learning suitable replacements. center for slightly older children, and a blocked are now open. skills-development program for women Fire doors and sprinkler On structural matters, a majority of the employees. “We will have only the best factories initially evacuated because of and latest safety equipment,” Siddiqi says. systems have been a danger of imminent collapse were installed. Support pillars later reopened after retrofitting or load In addition to policing the hardware in reduction. Of the Accord factories lacking factories, the Accord and Alliance are have been strengthened a load management plan, 66% now have training workers, managers, and security and enlarged. one; 34% do not. Sixty-one percent of guards on basic fire safety. The Alliance facilities with undocumented structural found that after coaching more than 1.5 additions and inconsistencies with build- million people, the proportion of employ- ing plans have updated their blueprints; ees who could correctly identify common 39% have not. And of factories vulnerable fire hazards rose from 2% to 45%. The to lateral instability from severe wind, share of workers who said they felt an 56% have corrected the vulnerability; obligation to report unsafe conditions ” 34 44% have not. increased from 67% to 90%.

Both the Accord and Alliance have followed One group of eight garment workers through on their threat to exclude factories gathered at our request by Nazma Akter, that have failed to remediate. The Accord president of the Sommilito Garments has terminated 96 suppliers; the Alliance, Sramik Federation, a trade union organi- 168. Factories blocked from doing business zation, unanimously say they have seen with Western brands and retailers do not safety improvements at the two factories necessarily shut down. Some suppliers where they are employed. Exits that were have cleaned up their acts and success- blocked are now open, says Urmi Akter fully applied for readmission to the foreign (no relation to Nazma), who works in initiatives. If terminated factories find other Gazipur. Fire doors and sprinkler systems customers—in Russia, for example, or in have been installed. Support pillars have Asia, or domestically in Bangladesh— been strengthened and enlarged so that they may continue operating under the “even three people can’t get their arms supervision of the government. around them,” she adds.

In some cases, termination has pre- Generally, the Alliance’s Rigby says, ceded a fresh start. The Accord cut off a his organization is nearing the end of supplier called Sidko in February 2016, its remediation work. “We are more or saying that the factory in the Gulshan less there,” he adds, with its factories North district of Dhaka had failed to having purchased almost all of the major undertake a range of safety measures. equipment they need. By “there,” he Sadaf Saaz Siddiqi, a co-owner of the means getting factories “to the starting facility, located in a 1980s-vintage rented line” in what amounts to a never-ending six-story building, says her family actually marathon to stay ahead of safety perils.

16 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Originally scheduled to close at mid- Calls for Help year 2018, the Alliance now plans to An Alliance factory helpline gets 500-700 serious calls per month. continue operations through the end of This chart shows urgent safety calls placed by garment workers, by issue. the year while it works with representa- tives of the government, suppliers, and 4.9% other stakeholders to establish an Fire - Active 0.1% independent Bangladeshi-run “safety 0.9% monitoring organization.” The SMO Fire - Danger 26.8% will keep track of remediated factories Locked Exit/Blocked Route 15.2% and aim to prevent backsliding. “It’s something new to them,” Rigby says, Sparking/Short Circuit referring to Bangladeshi regulators Structural - Cracks and businesspeople. “It’s something 3.9% they’re going to have to get used to.” Structural - Shaking Details of the SMO were being finalized Unattended/Bare Wires 30.0% as we finished this report 15.6% Unauthorized Subcontracting Accord factories, by contrast, still 2.6% have a lot of work to do, says Wayss. Other The 15% of unaddressed safety problems include “a lot of big-ticket items,” such as structural retrofitting and installing sprinkler systems, he adds. The Accord It is worth noting that even if the Accord “We allowed the Accord and Alliance has announced plans to remain in busi- persists for some period of time past to operate for five years,” says Siddique ness for up to another three years, or the end of 2018, both foreign initia- Rahman, president of the influential through mid-2021. Wayss says a joint tives will conclude their business in the Bangladesh Garment Manufacturers committee including representatives from foreseeable future. In the eyes of senior and Exporters Association (BGMEA). the Accord, the Bangladeshi government, leaders of the Bangladeshi government “Then it was agreed they would go and the garment industry will reassess and business establishment, that will be back.” He adds: “They are unnecessarily the situation every six months, with an not a moment too soon. With the horror disturbing us.” With a similar tone of eye toward whether the government has and shame associated with Rana Plaza irritation, Bangladesh’s Commerce developed a factory-oversight bureaucracy beginning to fade in Bangladesh, public- Secretary, Shuvashish Basu, says: that meets the Accord’s stringent stan- and private-sector leaders are asserting “They are finished with their mission, dards. The criteria include creation of what they see as their prerogative to and they will go back to their countries.” an effective government inspection operate without Westerners setting the Leaders of the Accord insist that the service, enforcement of the law against rules and exerting discipline. BGMEA and government have agreed non-compliant factories, and fair resolu- to its extension beyond five years. tion of workers’ safety complaints. It is One executive with a prominent com- not clear how the Accord’s demands pany that operates multiple factories One question raised by the Bangladeshi acknowledges that the Accord/Alliance will mesh with the Alliance’s hoped-for assertions of sovereignty is whether the process changed Bangladeshi attitudes SMO. And Wayss indicates skepticism government has the capacity to handle toward safety. “It was needed, and now of the government’s current ability to oversight of the export factories it inherits it has taken place,” says the executive, meet the Accord’s criteria. “A significant from the Accord and Alliance. Another who asks that he and his company not amount of work needs to be done,” he question concerns what will happen to be identified. Now, he continues, the says. “I don’t think there is a culture of two additional categories of suppliers: Bangladeshi government ought to safety in this country.” those the government acknowledges exert its authority: “Government has its it has been responsible for all along role to play: to overlook and oversee.” So far, 125 of the Accord’s 220 member and subcontractors, which the govern- This company has completed the vast ment wants to wish away. Parts Three brands and retailers—which buy from majority of its Accord-mandated reme- 1,275 Bangladeshi factories—have signed and Four examine these questions diation but is at a standstill over one and propose a strategy for bolstering on for the organization’s up-to-three-year modern factory’s glass-enclosed building. extension. The Accord’s union affiliates future inspection and remediation of The owners say the glass is heat- and Bangladeshi garment factories. are pressuring laggards to join as well. fire-proof, but the Accord requires that factory walls be built of solid brick.

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 17 Many workers, including this woman trimming fabric, are employed in facilities that have fewer financial resources and Western brand connections. These employees are being left out of efforts to improve factory safety.

At the end of the production process, workers in a subcontracting factory fold athletic shorts for shipment to a European brand.

Many women, who make up the vast majority of apparel factory employees, move to Dhaka and environs from small rural villages. The wages they are paid remain the lowest among major garment-manufacturing countries.

18 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Part Three: Gaps in Government Action

National Initiative One way to make sense of Bangladesh’s complicated garment factory landscape is to view it as a tale of two industries. In one, the industry supervised by the Accord and Alliance, larger, better-run factories focusing on exports to Western countries have become safer since Rana Plaza. The Accord and Alliance show that collective initiatives can make a difference on the factory floor. Western brands and retailers ought to consider collaborating elsewhere with unions, civil society organizations, and local businesses. Global apparel companies should not wait until another Rana Plaza forces them to take action.

In Bangladesh, however, the Accord 513, as unsafe. The National Initiative and Alliance have addressed only one oversees factories that don’t have segment of the apparel sector. In the business relationships with members In an ideal world, second of the country’s two garment of the Accord and Alliance. The 513 the Bangladeshi“ industries, the government presides closures should leave a balance of over a collection of subcontractors, 1,036 National Initiative factories, but government would domestic producers, and exporters to the ILO says the government is now places such as Turkey and Russia. Far doing follow-up work with only 754. competently oversee less progress has been made in this That leaves 282 factories in a statistical the entire industry, realm. When it comes to safety, the two limbo we could not resolve.35 industries have diverged further over the without need of past five years. Bangladesh now has a ILO officials tell us of another anomaly: foreign intervention. deeply bifurcated garment sector. that an additional 900 factories “popped up” recently on the rolls of the National The world, of course, In an ideal world, the Bangladeshi gov- Initiative, some of them apparently newly ernment would competently oversee the opened facilities. So for the moment, the is not ideal. entire industry, without need of foreign official government number appears to intervention. The world, of course, is not be 1,654 factories, soon to be sup- ideal, and the government has not done plemented by roughly 2,300 from the its job vigorously. Known as the National Accord and Alliance for a new grand Initiative, the government’s regulatory total under government supervision of apparatus for garment manufacturing has nearly 4,000. ” worked since Rana Plaza in cooperation with the International Labour Organiza- The National Initiative has not made tion (ILO). Still, progress has been slow; much headway. The most recent ILO information disclosures, sparse and update, posted in February 2018, shows sometimes inconsistent. that, of the group of 754 factories, only 109, or 14%, have been remediated The most reliable source of data on the more than 50%. Only 21, or about 3%, National Initiative is not the requisite have been remediated fully.36 There has government website pages, which are been no official (or unofficial) word on outdated and contradictory, but instead whether any of the additional 900 the ILO. That body has noted that the factories have even begun inspection National Initiative has inspected 1,549 or remediation. factories and closed a third of them, or

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 19 By most accounts, the National Initiative inspected, or not inspected at all. There has been understaffed. But according is a valuable lesson here that goes far to the ILO, the government is assembling beyond boilers. Factories that are reme- Factories that are a new team of fire inspectors, engineers, diated may become safe for a moment remediated“ may and case handlers that will total 235 in time. But they won’t stay safe under people. That group presumably would the government’s supervision if oversight become safe for a cover some 4,000 factories after the is lax and factory conditions deteriorate. Accord and Alliance handoff. For compar- Ensuring safe operation and maintenance moment in time. But ison, the Accord has 250 staff members will be one of the government’s main they won’t stay safe for roughly 1,600 factories. “The gov- tasks, and one it may not be well ernment will do its job,” says Commerce suited to fulfill. under the government’s Secretary Basu. “We are compliant, and supervision if oversight we will be maintaining that.” In exercising its regulatory authority over garment factories, the government is lax and factory Many disagree. The degree to which lacks the leverage the Accord and the government is overmatched Alliance have wielded: the ability to conditions deteriorate. becomes clear from a look at one deny a supplier’s access to valuable Ensuring safe operation concrete example: industrial boilers. Western buyers. The government’s Every garment factory needs a boiler for tool in this regard is the threat to pull a and maintenance will be pressurized steam, and there are more factory’s export license or shut it down one of the government’s than 30,000 in use across all industries. altogether. In fact, the National Initiative But only 10 government boiler inspectors has warned the facilities it is already main tasks. serve the entire country, according supervising that they must complete to A.K.M. Monjur Morshed, a boiler all remediation by April 2018 to avoid authority and associate professor of cancellation of export licenses—a threat mechanical engineering at Bangladesh widely viewed as empty. Says the University of Engineering and Technology. Alliance’s Rigby: “I have more chance “Ten is not enough,” Morshed says with of buying a house on the moon” than ” some understatement. Compounding seeing the National Initiative remediation the situation, there are only 300 fully finished that quickly. It seems unlikely, certified boiler operators, Morshed notes. moreover, that the government would cancel hundreds of export licenses, The results are predictable and some- denying the country hundreds of millions times fatal. Since 2012, there have been of dollars of foreign exchange revenue. 35 boiler explosions in all industries in Bangladesh, resulting in 77 deaths and The Subcontracting hundreds of injuries. In one of the more severe incidents, in July 2017, a boiler System blast at the Accord-affiliated Multifabs factory in Gazipur killed 13 workers and In some people’s telling, the story of injured more than 50.37 (The Accord to garment factories in Bangladesh ends date has not inspected boilers directly, with the Accord/Alliance cohort and instead confining its attention to whether facilities covered by the National Initiative. the devices are walled off from workers. According to this view, the traditional The Alliance began inspecting boilers practice of subcontracting—whereby in 2017.) mostly smaller factories receive orders from larger mother factories—abruptly Bangladesh imports most of its industrial ended in the post-Rana Plaza era, when boilers, Morshed says, and the original Western buyers made it clear to their quality of the equipment is not a problem. primary suppliers that they disapproved of Trouble ensues when boilers are operated the custom. “There is no subcontracting or maintained improperly and then hastily system,” says Commerce Secretary Basu.

20 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD “That is over and done with.” The a network of 15 subcontractors in BGMEA’s Rahman is only slightly less Dhaka. These relationships underscore definitive. “You can forget about the how reliant some larger factories are on small facilities,” he says. “They will be subcontracting. A representative of the closed down in one to two years.” export-oriented mother factory says it is affiliated with both the Accord In fact, subcontracting continues and the Alliance. and shows no sign of disappearing. If properly managed, the practice The owner of the Badda subcontractor accommodates the peaks and valleys of explains that he is a former mathematics production demands and the industry’s teacher who started his business after low-cost, high-volume business model. Rana Plaza in 2013. He employs about In 2015, the NYU Stern Center found 200 workers who lately have cut and in a field study in Dhaka that out of 479 stitched shirts for a German brand called factories surveyed, 153, or 32%, were New Yorker; a California-themed British subcontractors; nine out of 10 of those outfit named SoulCal & Co.; and the subcontractors were producing at least globally famous Pierre Cardin of France. partly for the export market.38 The follow- The owner speaks to us on the condition ing year, BRAC University’s Centre for that we not name him or his business. Entrepreneurship Development found in a similar field study that out of 455 Subcontractors are forced to accept factories surveyed, 140, or 31%, did paltry margins, he complains. A bright subcontracting.39 The Accord notes on red polo shirt the subcontractor makes its website: “Unauthorized subcontracting for SoulCal will sell in London for 17.95 is one of the many recognized challenges British pounds, according to its label. for the Accord, and it is impossible for But the owner says he sometimes makes the Accord alone to end the practice of a profit as slim as 15 Bangladeshi taka unauthorized subcontracting.”40 per piece, or the equivalent of 18 U.S. cents. In 2017, he lost money, although Many small factories produce mostly for so far 2018 is looking up, and he has the domestic Bangladeshi market and six months of work already booked. occasionally pick up subcontracting One advantage of subcontracting, he work from exporters. “There are very adds, is that he does not have to spend unsafe manufacturing units all over the time and money forging relationships Inspectors with the inner city of Dhaka. I’ve seen them with foreign customers. He focuses “ myself,” says Oldenziel, the Accord’s exclusively on production. The represen- National Initiative recently deputy director for implementation. tative from the mother factory, overseeing visited one subcontractor “They have very small exits, no fire work at the subcontractor, listens to the protection, electrical wires hanging all conversation, nodding. and left behind a long list over the place.” He emphasizes that of fire-safety requirements, the unsafe shops he describes are Inspectors with the National Initiative not covered by the Accord or Alliance. recently visited the subcontractor and the owner says. He admits left behind a long list of fire-safety he has lost the list and, During its field research in 2018 in requirements, the owner says. He admits Dhaka, the NYU Stern team was he has lost the list and, in any event, in any event, cannot introduced to a subcontractor on a cannot afford to carry out the govern- afford to carry out the dirt road in the Badda section of the ment mandate. He does not expect to city, practically around the corner from be put out of business as a result. To the government mandate. the Accord’s offices. Providing the contrary: In a few years, when the factory introduction was the owner of a larger is more profitable, he hopes to expand mother factory that does business with and move to a larger building. ”

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 21 Paul Barrett and Dorothée Baumann-Pauly observe work at a shop that does printing for a nearby subcontracting factory.

Many workers specialize in a small part of the garment-production process. This woman bends over her sewing machine to assemble elastic waistbands for men’s shorts.

Employees in a subcontracting facility in Dhaka work in assembly lines to meet the demand for fast fashion in Europe and North America.

22 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Part Four: Shared Responsibility and the Way Forward

Putting a Price on Safety As we have seen, more needs to be done to make the garment industry in Bangladesh safe. Although they have brought about important improvements, the Alliance and Accord were never designed to cover all Bangladeshi factories and never did. Their eventual withdrawal underscores the remaining safety gap, as outside attention paid to factory safety could diminish with the departure of the foreign initiatives.

The Bangladeshi government faces a the access or capacity to provide daunting challenge in overseeing the complete answers to these questions. More needs to be done factories now under its supervision, let “ alone the 2,300 or so it will inherit from But the calculation is still worth doing. to make the garment the Alliance and Accord. And then there It offers the potential of estimating the are the subcontractors, whose numbers order of magnitude of the challenge that industry in Bangladesh are debated but include thousands of remains in Bangladesh. Moreover, it pro- safe. Although they have additional factories. vides an aspirational goal around which a renewed campaign to make Bangladeshi brought about important To address the challenges that remain, factories safe needs to be organized. improvements, the Alliance we propose the formation of a locally Think of the estimate as a catalyst for led international task force that operates further discussion and, ultimately, a spur and Accord were never under the principle of shared responsibi- to action by a multi-stakeholder task designed to cover all lity. We will explain the task force in two force that would oversee the raising steps, first estimating how much money and spending of the money. Bangladeshi factories and it would have to raise and then explaining never did. what shared responsibility would look Implicit in this exercise is a major change like in practice. in how factory remediation would be financed in the near future. Before and Step one requires approximating how since the Rana Plaza disaster, suppliers much it would cost to make two catego- themselves have been expected to pay ries of factories safe: subcontractors and for remediation. That has been true under those overseen by the National Initiative. the Accord and Alliance and the National ” We have sought to determine what the Initiative. But many of the factories that bill would look like, roughly speaking, so far have not been remediated fully— to protect workers in each category from or at all—cannot afford expensive safety the most serious risks. We are assuming improvements on their own. They lack that the Accord and Alliance will finish the direct relationships with Western brands jobs they set out to do, and therefore and retailers. Their margins often are we have not assigned a dollar value to even slimmer than than those of Accord/ completing work on the factories affiliated Alliance suppliers. And because of their with those organizations. shaky financial profiles, they do not have access to local bank loans. Without We have engaged in a ballpark calculation, outside aid in the form of grants or low- not application of precise formulas. There interest loans, these factories simply are multiple variables in play, some of will not get safer. This reality motivates them elusive: Exactly how many factories our determination to raise a substantial in Bangladesh produce clothing for fund to be distributed by a task force to export? What is the average cost of those most in need. We approach this remediating subcontracting factories effort from the perspective of workers operating outside the jurisdiction of whose safety will be compromised until both the National Initiative and Accord/ improvements are made. Alliance? As outsiders, we do not have

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 23 The first component of our estimate then, an unknown number of factories Shared responsibility seeks to address is a per-factory approximation of the have both opened and closed. Still, we the underlying causes of the most cost of remediation. In June 2016, believe that approximately 7,000 remains serious human rights risks by requiring the ILO and the International Finance the best overall estimate of the total the collective action, influence, and Corporation (IFC), an arm of the World number of factories.The number to be resources of all major stakeholders in Bank, published a $189,000 average subtracted from the total is 4,000, or global supply chains. The ultimate goal cost estimate based on a study of 100 the sum of Accord/Alliance and National is to protect workers in producing sample factories drawn from the Accord, Initiative factories. The result, 3,000, is countries and spread the benefits of Alliance, and National Initiative.41 As multiplied by $250,000 for a subcontractor globalization more evenly. noted earlier, the Accord offers $250,000 remediation value of $750 million. as a rough gauge of average per-factory In proposing a shared responsibility task costs. The Alliance suggests a range Adding the costs of repairing these sub- force, we have drawn on experiences of $250,000 to $350,000. The higher contractor and National Initiative factories from other contexts where a similar values compared to the ILO/IFC may produces a grand estimate approaching approach has been used. One example reflect that the Accord and Alliance have $1.2 billion. Two important qualifications: from the United States is the Detroit overseen larger export factories and First, some older factories housed in Blight Removal Task Force. In 2013, have pressed more aggressively than former residential buildings probably a local business leader, Dan Gilbert, the National Initiative for thorough safety are not worth fixing. Ideally, their owners the founder and chairman of Quicken overhauls. Recognizing that all of these will have an opportunity to start over Loans, initiated a process that brought amounts are inexact, we have decided in purpose-built facilities, but such together private industry and community to use the Accord figure of $250,000 as situations will have to be evaluated on leaders to develop an ambitious joint the basis for approximating remediation a case-by-case basis. The number of plan to address urban blight. To tackle costs going forward. The Accord number factory closings and openings could the seemingly intractable problem of roughly splits the difference between the affect our $1.2 billion estimate. Second, abandoned homes, they raised more ILO/IFC figure and the high end of the we see $1.2 billion as a preliminary basis than $800 million from federal, state, and Alliance range. for approximating what is necessary to local governments; the private sector; undertake a comprehensive effort to and the philanthropic community. The next step is to determine the number address factory safety concerns today. of factories to be multiplied by $250,000. Once current gaps in safety have been In a very different setting, international In the case of the National Initiative, the addressed, the future assurance of organizations like the United Nations best guess of how many factories the factory safety and oversight of the Refugee Agency have responded for government is currently supervising is garment industry need to rest with years to mass humanitarian and refugee 1,650. Some of those factories have the government of Bangladesh. crises by developing comprehensive undergone a degree of remediation, plans of action and then convening donor but determining precisely how much A Locally Led International conferences that allow governments, seems impossible at present. Therefore, private voluntary organizations, and we are going to use the full 1,650 as Task Force charitable groups to work together to our multiplier, acknowledging, again, craft an effective collective response. that we are not capable of generating Offering a cost estimate in this fashion In yet another context, UNICEF is now precise cost numbers. The dollar value raises the crucial questions of where working in West Africa with governments, for the National Initiative remediation is the money would come from and who global agricultural companies, local $413 million. would control its use. Inevitably and farmers, and international development appropriately, Bangladeshis would lead agencies to begin to address the chronic To estimate the number of subcontractors, the process—including government problems of child and forced labor in we have to do some basic subtraction: agencies, manufacturers, and members cocoa production. the total number of factories minus those of civil society, such as trade unions. But overseen by the Accord/Alliance and neither the government of Bangladesh In each of these instances, the progress the National Initiative. As mentioned in nor the local manufacturing sector has that has been or is being achieved has Part One, approximations of the total the resources to meet this need. That depended on collective action and joint number of factories run from more than is why we propose the shared responsi- financial support. These are the core 4,000 to 8,000. Based on a comparison bility model, which would involve relevant attributes of the doctrine of shared of various factory databases, the NYU international actors willing to work with the responsibility. We believe this approach Stern Center in 2015 estimated the government, either because they benefit will be needed to maintain meaningful number at 7,100. We acknowledged from the Bangladeshi garment industry progress on factory safety in Bangladesh. when we published that figure that the or their mission dictates helping workers It seems only fair that the Western databases were imperfect. And since in countries such as Bangladesh.42 companies that profit handsomely from

24 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Bangladesh’s low-wage, low-price Bangladesh as a leading aid recipient, responsibility to the Bangladeshi manufacturing ought to continue to play providing billions of dollars in grants and government, 10% to Bangladeshi a role in ensuring worker safety. Since the interest-free credits in areas such as industry, 20% to Western governments, Rana Plaza disaster, these companies nutrition and population services. But it 20% to brands and retailers, 10% to the have paid for factory inspections has generally steered clear of the apparel World Bank, and 10% to international but shifted the much larger cost of industry. Our view is that now the World philanthropy. Within some of these remediation onto the shoulders of Bank and IFC can and should do more categories, certain shares could be Bangladeshi suppliers. At the same for factory safety by participating in a determined proportionally. The United time, the companies have continued shared responsibility task force. States, for example, might be assigned to push down the prices they are an 18% share of the amount allotted to willing to pay for apparel, making it There are, of course, numerous problems Western governments as a reflection more difficult for suppliers to manage that bear on the garment industry which of U.S. consumption of about 18% of repairs and renovations on their own. the organization we are proposing would Bangladesh’s total clothing exports. By contributing to a shared responsibility not directly address. This report—and fund, the Western brands and retailers remediation efforts in Bangladesh— As noted, we view this as a stopgap would signal their recognition that they, have concentrated on export-oriented process aimed at addressing the most too, have a duty to promote the well- factories engaged in cutting and sewing. urgent factory safety concerns today. being of all Bangladeshi workers and the The industry also encompasses facilities Longer term, Bangladeshi business stability of an industry that contributes that do washing, dyeing, printing, and leaders and their government will need to reliably to their bottom line. other tasks. Employees of these second- take full responsibility for assuring factory ary facilities face safety challenges, as safety. Some factory owners we spoke Other stakeholders that have, or ought well. Within both export factories and to expressed interest in joining a task to have, an interest in the state of the other facilities, worker hardships range force designed to upgrade the entire industry include countries that import from inadequate pay to an absence of garment industry. “How could I say no?” clothes from Bangladesh; international compensation for injuries to harassment says Rubana Huq of Mohammadi Group. financial institutions such as the World by supervisors. Outside, poor roads Another accident even approaching Bank and its affiliate, the IFC; and hamper transportation of goods, and the scale of Rana Plaza could kill the philanthropic institutions. an unreliable electrical grid complicates country’s reputation as a sourcing production. To maintain coherence and destination, she adds, and must be The case for governments to get involved prevent overreach, however, the task avoided at all costs. rests on the interests of their citizens. force would confine itself to the pursuit With 64 percent of Bangladeshi exports of safety in cut-and-sew factories. We support a strong and vibrant shared among European nations and garment sector in Bangladesh. We also 18 percent consumed in the U.S., these The parties to the Bangladeshi-led task encourage global brands and retailers governments have a special obligation to force would undertake a more rigorous making long-term commitments to source help improve the workplaces producing assessment of the costs of remediation their products in Bangladesh. Seeking popular low-priced clothing for so many for which we have provided the first to maintain and build on Bangladesh’s consumers in their countries. estimates. This assessment would be important place in clothing manufacturing, based in part on a thorough census our proposal for a shared responsibility The IFC already provides assistance of all garment factories in Bangladesh, task force supports the ongoing roles on a limited scale to the Bangladeshi one that reveals not only an accurate of the government of Bangladesh, local garment business via the Better Work overall count, but also a delineation of factory owners, industry associations, program, a partnership with the ILO which factories produce for the Western and unions in building a sustainable that provides assessments and train- export market. The resulting remediation model for garment production and ing aimed at boosting competitiveness. fund could be administered by an entity factory safety. We stand ready to help Although well intentioned, Better Work in Bangladesh, an international entity, in that effort. reaches only about 140 factories.43 or some hybrid arrangement. It will be On another front, the IFC has provided up to the participants to decide these $40 million in financing to local banks important questions. with the goal of spurring loans for factory remediation—another well- The task force members would also meaning initiative but one that does allocate responsibility for raising money. not affect the many factory owners, One possible approach would be to especially subcontractors, who cannot assign each category of participant a qualify for substantial bank loans. His- percentage share. As an illustration, torically, the World Bank has identified the task force might ascribe 30%

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 25 Part Five: Recommendations

Despite significant improvement in factories associated with the Accord and Alliance, major safety problems remain in thousands of additional factories in Bangladesh. Substantial financial resources are needed to bridge this gap. The NYU Stern Center recommends a model of shared responsibility based on five core elements:

• End-to-end visibility of the universe of factories producing for export • Expanded industry-wide collaboration • A credible system for determining the costs of remediation • A cooperative model for raising funds in a fair and proportional way • Distribution of those funds in a manner ensuring financial transparency and integrity

We make the following recommendations to the key constituencies that should be involved in creating and implementing the shared responsibility model.

To the Government of Bangladesh: To Western Brands and Retailers: Create a Shared Responsibility Task Force Expand Industry-Focused Collaboration The government needs to take a more active, Some 250 Western brands and retailers have engaged assertive role in ensuring factory safety. In the long in an unprecedented collaboration through the Accord term, regulators will bear this obligation on their and Alliance, resulting in improvements in 2,300 factories own. As a starting point, though, the Bangladeshi where they have direct business relationships. They government should convene a shared responsibility now need to take additional steps, via the task force, task force comprised of local factory owners to expand their collaboration to address factory-safety and industry trade associations, Western brands issues in thousands of subcontracting facilities that and retailers, European and North American also are producing their apparel. These subcontracting governments, civil society organizations and factories are central to the garment sector in Bangladesh, unions, the World Bank and its affiliate the IFC, and to the low-price, high-volume business models from and philanthropic organizations. which the Western companies profit.

Map Factories to Provide Address Purchasing Practices End-To-End Visibility On a parallel track, global brands should reconsider The task force first needs to conduct a their purchasing practices, with a view toward ensuring comprehensive census of all garment factories. that suppliers have the resources and ability to address Existing data are weak and unreliable. To aid core safety issues in their factories. Some brands like this process, the government should call on the H&M have formed strategic partnerships with local two trade associations, local unions, and a pair suppliers that allow more regular forecasts of orders of civil society organizations that have made a and help suppliers plan more effectively. These buyers good start at mapping factories: BRAC University’s reward high-performance suppliers with longer-term Centre for Entrepreneurship Development and contracts, larger order volumes, and more favorable the separate Centre for Policy Dialogue. pricing. Such business initiatives warrant further study and broader application in Bangladesh and elsewhere.

26 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD To All Members of the Shared Responsibility Task Force: Develop a Credible Cost-Accounting System Members of the task force ought to use the results of the factory census to develop a credible and comprehensive cost-accounting system to assess the expense of addressing unmet factory-safety needs. We have estimated the price tag for these remedial measures at approximately $1.2 billion. This is a rough estimate which now requires refinement depending on the parameters of the cost-accounting model the task force adopts.

Use the Shared Responsibility Model to Allocate Costs and Raise Needed Funds The task force will have to develop an equitable model for determining the financial responsibility of each stakeholder group in meeting the overall funding requirement. Separately, some of the constituent groups will need to negotiate an allocation model among their own members. Western governments, for example, may adopt a model that mirrors the percentage of Bangladeshi products imported into each of their countries.

Protect the Integrity of the Allocation Process The model we propose is aimed at correcting the most serious gaps in factory safety today. The ultimate success of this approach will rest on the ability of the task force to devise and implement a fair allocation and distribution system that ensures financial transparency and integrity. We recognize the challenges both in deciding where the money goes, and once allocated, seeing that it reaches its rightful destination. But we are confident that, once the key actors come together, these challenges can be addressed.

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 27 Endnotes

1 Sarah Labowitz and Dorothée Baumann-Pauly, “Business as Usual Is Not an 19 The Accord’s legally binding nature is illustrated by a pair of arbitration cases Option: Supply Chains and Sourcing After Rana Plaza,” NYU Stern Center for resolved in late 2017 and early 2018. In those cases, the Accord’s European Business and Human Rights, April 2014; Labowitz and Baumann-Pauly, “Beyond union participants achieved settlements requiring two multinational apparel the Tip of the Iceberg: Bangladesh’s Forgotten Apparel Workers,” NYU Stern brands to push their suppliers more forcefully to remediate. The names of the Center, December 2015 (https://bhr.stern.nyu.edu/manufacturing). brands were kept confidential. One settlement, announced in January 2018, revealed that one of the brands agreed to pay $2 million toward remediation of 2 “Shared Responsibility: A New Paradigm for Supply Chains,” World Economic 150 factories, or $13,333 per factory. Forum Global Agenda Council, November 2015 (http://www3.weforum.org/docs/ WEF_GAC_Supply_Chains_%20A_New_Paradigm_2015.pdf). 20 Bair, Anner, and Blasi, “Sweatshops and the Search for Solutions,” p. 30 (2017). 3 “Quarterly Aggregate Report,” p. 3, Accord on Fire and Building Safety in 21 Richard Smallteacher, “Rival Safety Agreements for Bangladesh Garment Bangladesh, January 24, 2018 (http://bangladeshaccord.org/wp-content/ Factories Announced,” CorpWatch Blog, July 8, 2013 (http://www.corpwatch. uploads/Quarterly-Aggregate-Report-January-2018.pdf). org/article.php?id=15852). 4 See, e.g., Hasan Ashraf, “Beyond Building Safety: An Ethnographic Account of 22 Ibid. Health and Well-Being on the Bangladeshi Garment Shop Floor,” pp. 250-257 23 “Protecting the Lives and Livelihoods of Bangladesh’s Garment Workers: The First in Unmaking the Global Sweatshop: Health and Safety of the World’s Garment Annual Report of the Alliance for Bangladesh Worker Safety,” p. 23, Alliance for Workers, ed. by Rebecca Prentice and Geert De Neve. Philadelphia, PA: Bangladesh Worker Safety, July 2014 (http://www.bangladeshworkersafety.org/ University of Pennsylvania Press (2017). en/progress-impact/progress-reports). 5 Labowitz and Baumann-Pauly, “Business as Usual Is Not an Option,” (2014) and 24 Statistics for Accord-affiliated factories come from “Quarterly Aggregate Reports” Labowitz and Baumann-Pauly, “Beyond the Tip of the Iceberg,” (2015) (see note 3) and progress updates available on the Accord website: http:// 6 United States. Cong. Senate. Committee on Foreign Relations. Worker Safety and bangladeshaccord.org/. Labor Rights in Bangladesh’s Garment Industry, 113th Cong. 1st sess. S. Rept. 25 The figure of 2,024 factories includes facilities that have been closed and those 113-22, Washington: GPO, 2013. transferred to government supervision. 7 Labowitz and Baumann-Pauly, “Beyond the Tip of the Iceberg,” p. 4 (2015) 26 “Impact of the Alliance Basic Fire Safety Training,” Alliance for Bangladesh Worker 8 “Participatory Factory Mapping Research,” Centre for Entrepreneurship Safety, 2015 (http://www.bangladeshworkersafety.org/files/ut/Alliance_Training_ Development, BRAC University, April 2016 (http://ced.bracu.ac.bd/wp-content/ Impact_Assessment_Infographic.pdf). uploads/2015/08/PFMR-Research-Brief-April-2016_Edited.pdf). BRAC is 27 “Protecting the Lives and Livelihoods of Bangladesh’s Garment Workers,” p. 23, continuing its mapping work. See “Digital RMG Factory Mapping in Bangladesh Alliance, July 2014. (DRFM-B),” BRAC University, July 2017 (http://ced.bracu.ac.bd/wp-content/ uploads/2017/07/Project-Brief-DRFM-B.pdf). Another Dhaka think tank, the 28 Ibid. Centre for Policy Dialogue (CPD), has also done research on the number of 29 Anner, “Binding Power,” p. 5 (2018) garment factories. In an interview, Dr. Khondaker Golam Moazzem, CPD’s research director, reports that after analyzing a variety of factory databases and 30 Moazzem, “Dialogue on Ongoing Upgradation in RMG Enterprise,” March 3, eliminating duplicate mentions of certain factories, the CPD in 2017 arrived at a 2018 (http://cpd.org.bd/wp-content/uploads/2018/03/Ongoing-Upgrdation-of- total of 6,900 facilities. The organization then attempted to contact each factory RMG-Enterprises.pdf). by telephone and was able to verify the existence of 3,596 factories. Moazzem 31 Rubana Huq, “The Unstoppable,” The Daily Star, September 28, 2016 (http:// notes that some factories lack listed phone numbers and others may have just www.thedailystar.net/op-ed/politics/the-unstoppable-1290610). not picked up. For more background, see “Dialogue on Ongoing Upgradation in RMG Enterprise: Results from a Survey,” March 3, 2018 (http://cpd.org.bd/wp- 32 We compiled information about factory accidents from several sources, including content/uploads/2018/03/Ongoing-Upgrdation-of-RMG-Enterprises.pdf). the Solidarity Center, an AFL-CIO affiliate, and the Bangladesh Occupational Safety, Health, and Environment Foundation. In addition to the export-oriented 9 Mark Anner and Jennifer Bair, “The Bulk of the Iceberg: A Critique of the Stern factories engaged in cutting and sewing—on which most international attention Center’s Report on Worker Safety in Bangladesh,” p.1, Center for Global Workers’ has focused–our accident figures include facilities doing knitting, spinning, Rights, Pennsylvania State University, February 10, 2016 (http://lser.la.psu.edu/ weaving, washing, dyeing, printing, and making textiles, accessories, and gwr/documents/CGWRCritiqueofSternReport.pdf). Anner and Bair assert that footwear. Data are available at https://bit.ly/2GScXcN. the NYU Stern estimate of 7,100 “is inflated by at least 2,000 factories.” In a more recent report, Anner says there are “more than 4,000 suppliers”: Mark 33 Accord statistics come from its “Quarterly Aggregate Report,” (see note 3). Anner, “Binding Power: The Sourcing Squeeze, Workers’ Rights, and Building Alliance statistics come from its website: http://www.bangladeshworkersafety. Safety in Bangladesh Since Rana Plaza,” p. 5, Center for Global Workers’ Rights, org/progress-impact/alliance-statistics. We have updated certain statistics based Pennsylvania State University, March 22, 2018 (http://lser.la.psu.edu/gwr/ on interviews with Accord and Alliance staff members. documents/CGWR2017ResearchReportBindingPower.pdf). 34 “Impact of the Alliance Basic Fire Safety Training” (2015). 10 “The World Bank in Bangladesh,” The World Bank, 2017 (http://www.worldbank. 35 “RMG Programme Update,” International Labour Organization, February 18, org/en/country/bangladesh). 2018 (http://www.ilo.org/dhaka/Informationresources/WCMS_595065/lang--en/ 11 Jennifer Bair, Mark Anner, and Jeremy Blasi, “Sweatshops and the Search for index.htm). Solutions, Yesterday and Today,” p. 44 in Prentice and and De Neve (2017). 36 Ibid. 12 Ibid, p. 43. 37 Syed Mansur Hashim, “Boiler Blast Kills Again!” The Daily Star, July 8, 2017 13 “Cotton Trousers Prices Down By 41% in U.S. Market in 14 Years,” Dhaka (http://www.thedailystar.net/opinion/no-frills/boiler-blast-kills-again-1429813). Tribune, June 25, 2015 (http://www.dhakatribune.com/business/2015/06/25/ 38 Labowitz and Baumann-Pauly, p. 23 (2015). cotton-trousers-prices-down-by-41-in-us-market-in-14-years/). 39 “Participatory Factory Mapping Research,” (April 2016). 14 See, e.g., Bair, Anner, and Blasi, “Sweatshops and the Search for Solutions,” pp. 44-45 (2017). 40 “Frequently Asked Questions,” Accord on Fire and Building Safety in Bangladesh, undated website page (http://bangladeshaccord.org/about/faqs/). 15 Steven Greenhouse, “Documents Reveal New Details About Walmart’s Connection to Tazreen Factory Fire,” The New York Times, December 10, 2012 41 “Remediation Financing in Bangladesh’s Ready Made Garment Sector,” (http://www.nytimes.com/2012/12/11/world/asia/tazreen-factory-used-by-2nd- International Labour Organization and International Finance Corporation, walmart-supplier-at-time-of-fire.html). June 2016 (https://www.ifc.org/wps/wcm/connect/650e70d9-3744- 41ff-875a-a790840b23b8/Report_Remediation+Financing_Bangladesh. 16 Rina Chandran, “Three Years After Rana Plaza Disaster, Has Anything Changed?” pdf?MOD=AJPERES). Reuters, April 21, 2016 (https://www.reuters.com/article/us-bangladesh- garments-lessons-analysis/three-years-after-rana-plaza-disaster-has-anything- 42 “Shared Responsibility: A New Paradigm for Supply Chains” (2015). changed-idUSKCN0XJ02G). 43 “IFC Engagement in the Bangladesh Apparel Sector,” International Finance 17 “Digital RMG Factory Mapping in Bangladesh,” Centre for Entrepreneurship Corporation, 2017, (https://www.ifc.org/wps/wcm/connect/06b74285-a1bc- Development, January 2018 (file:///C:/Users/pbarrett/Downloads/DRFMB%20 4c21-afa7-f64b2a836c10/Brochure.Bangladesh-03.pdf?MOD=AJPERES) Update_2018%20(2).pdf). 18 “Corruption Perceptions Index 2017,” Transparency International, 2017 (https:// www.transparency.org/news/feature/corruption_perceptions_index_2017).

28 FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD Acknowledgements

We would like to thank the following people for their assistance in our research:

Kazi Anis Ahmed and Zafar Sobhan James Moriarty, Paul Rigby, Quamrunnessa Babli, and Dhaka Tribune Md. Yazdani Ul Islam Alliance on Bangladesh Worker Safety Babul Akter Bangladesh Garments and Industrial Workers Federation Anuradha Nagaraj Thomson Reuters Nazma Akter and Khadiza Akter Sommilito Garments Sramik Federation and Awaj Foundation Luis Pinedo Caro International Labour Organization Kim Anderson CP International Clothing Thomas Pope and JJ Joria Embassy of the United States of America—Dhaka Secretary Shuvashish Basu Bangladesh Ministry of Commerce Tuomo Poutiainen International Labour Organization—Bangokok Doug Cahn The Cahn Group Siddique Rahman Bangladesh Garment Manufacturers and Exporters Association Repon Chowdhury Occupational Safety, Health and Environment Foundation—Dhaka Md. Rashadul Alam Raju Bangladeshi Independent Garment Workers Union Federation Bernardo Contri Consultant to International Finance Corporation Professor Ali Riaz Illinois State University Bishawjit Das British Broadcasting Corporation Eleonore Richardson International Finance Corporation—Bangkok Sabina Dewan Just Jobs Sunny Sanwar University of Missouri—Kansas City George Faller ARUP Professor Sanchita Saxina Chowdhury Center for Bangladesh Studies, University of California at Berkeley Aleix Gonzalez Busquets C&A Sadaf Saaz Siddiqi Eske Clothing David and Amir Hasanat Viyellatex Group Gabriel Sku Prodip H&M—Dhaka Anne-Laure Henry-Gréard, Maurice Brooks, and Steve Needham International Labour Organization—Dhaka Subcontracting factory owners and managers who requested anonymity Fazdul Hoque Plummy Fashions Dr. Rahim Talukdar BRAC University Rubana Huq Mohammadi Group Louis Vanegas Hasbro—Asia Dr. Md. Ashikur Rahman Joarder and Dr. A.K.M. Monjur Morshed Bangladesh University of Engineering and Technology Auret van Heerden Equiception Sridevi Kalavakolanu, Venkatesh Mallan, and Marco Reyes Walmart Christian von Mitzlaff GIZ—Dhaka Md. Abdul Khabir TÜV SÜD—Bangladesh Farhana von Mitzlaff Meena—Dhaka Jennifer Lynn Kuhlman, Christopher Johnson, Rukshana Yasmin, A.K.M. Nasim, and Tim Ryan Rob Wayss and Joris Oldenziel Solidarity Center, AFL-CIO Accord on Fire and Building Safety in Bangladesh Richa Mittal Fair Labor Association Dr. Khondaker Golam Moazzem Centre for Policy Dialogue Hasan Mohammad Babylon Group

FIVE YEARS AFTER RANA PLAZA: THE WAY FORWARD 29 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