US retailers agree on Bangladesh safety plan
They're joining a 17-company North American alliance aimed at heading off more disasters in the country's economically critical textile industry.
The facts are plain, and very stark: Western retail companies depend on cheap labor from developing countries, especially Bangladesh, to produce large volumes of clothing at competitive costs.
At the same time, Bangladesh has been rocked by two recent horrific disasters involving its garment industry. Over 1,100 people died this past April, when an eight-story factory building collapsed (pictured) in a Dhaka suburb, making it one of the worst industrial accidents in history. And last November, 112 garment workers died when fire swept through a Bangladesh factory that made clothing for Wal-Mart (WMT), Disney (DIS) and other Western brands.
Under intense international pressure, 17 North American retailers announced Wednesday the formation of the Alliance for Bangladesh Worker Safety and unveiled new safety plans as part of a five-year initiative.
"The safety record of Bangladeshi factories is unacceptable and requires our collective effort," said CEOs of the companies involved in a joint statement. "We can prevent future tragedies by consolidating and amplifying our individual efforts to bring about real and sustained progress."
The Alliance members have raised $42 million so far toward a fund meant to raise Bangladesh factory safety standards "across the board" and will use third-party experts to monitor any progress or setbacks. They will also offer over $100 million in loans and "access to capital," to help the factories improve safety conditions.
The North American retailers' alliance comes after news that 72 European companies -- including Swedish retailer H&M and Italian clothing company Benetton -- had signed a legally binding safety pact requiring the companies to fund safety inspections and renovations at the factories that have the biggest safety threats.
According to The Associated Press, U.S. retailers balked at the European pact "because they believe it exposes them to unlimited liability. They also say that the pact sought major funding by private businesses without providing accountability for how the money is spent."
The 17 current members of the alliance are:
Canadian Tire, Limited, Carters (CRI), Children's Place (PLCE), Gap (GPS), Hudson's Bay, IFG, J.C. Penney (JCP), Jones Group (JNY), Kohl's (KSS), L.L. Bean, Macy's (M), Nordstrom (JWN), Public Clothing, Sears (SHLD), Target (TGT), VF (VFC) and Wal-Mart.
More companies are expected to join in the near future. A Hong Kong-based sourcing company that currently does business with many of the alliance members, Li & Fung, is also taking part in an advisory role.
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