The Divide Between the Two Bangladesh Safety Plans

Ever since the deadliest accident in garment industry recent history, which occurred in Bangladesh in April, large retailers around the world have forced the confront and tackle the issue of how to prevent future accidents. Two distinct plans have surfaced as the retail industry's answer to improving factory worker safety and working conditions.  Just how different are they?

The Bangladesh safety accord was the first plan to come about and has been signed by many large European retailers including, H&M, Inditex (which owns Zara), Benetton and only a few U.S. retailers such as  Abercrombie & Fitch and PVC (which owns Calvin Klein and Tommy Hilfiger).  The safety accord is a legally binding pact which carries a five year commitment to conduct inspection of the factories and contribute up to $500,000 a year to fund and implement the accord.  There will be greater worker rights and fire training as well as greater transparency for unsafe factories.  Further, there are legal penalties for failure to adhere to the pact and binding dispute resolution procedures.  

However, many other big U.S. retailers have been holding out and hoping to find their answer in something less binding.  Wal-Mart, Gap, Target, Macy's and Sears have created their own accord which calls for establishment of a $50 million fund to improve factories and working conditions. Critics say that is a minuscule compared to the fact that Bangladesh's exports $20 billion worth of exports a year.  Further, there is very little legal liability which would only come about if a company agreed to commit money then backed out or they continue to produce garments in unsafe factories.

Protesters have been targeting Wal-Mart and Gap for not signing the accord.  Gap claims that it is ready to sign but the binding arbitration provision needs to be changed.  Bangladesh has about 5,000 factories; Wal-Mart does business with almost 300 of them and Gap with 80 of them.  That's quite sad and discouraging when the U.S., which is supposed to be a beacon of human rights, U.S. companies cannot agree to something more firm and cannot put their money where their mouth is as their European counterparts have done.

WSJ has a simple table which lays out the two plans:

What do you think about the two plans?

Read more:
WSJ: U.S. Retailers Near Pact on Bangladesh Factory Safety