Jan 31

2014

Accords and Alliances: competing health and safety initiatives in the Bangladeshi garment industry after the Rana Plaza tragedy

The Rana Plaza collapse in April 2013 triggered several supply chain management discussions in the fashion industry. European retailers and international NGOs responded with an agreement, called the Accord on Fire and Building Safety (“Accord”), while North American companies refused to sign the accord as the deadline passed and created, instead, their own Alliance for Bangladesh Worker Safety (“Alliance”). Both agreements implemented programmes for reasonable health and safety measures to ensure a safe Bangladeshi Ready Made Garment industry for a period of five years.

The main difference between the two agreements is found in the labour-management relations. The Alliance, a company-developed and company-controlled program provides that worker representatives are not part of the agreement and have no role in its governance. In contrast, the Accord on Fire and Building Safety (“Accord”) recognises a central leadership role for worker representatives; therefore gives the latter a seat at the decision-making table and reflects transparent cooperation between labour and management.

Safety Inspections, Repairs and Renovations

Under the Alliance, brands and retailers are not required to fund the renovation and repair of their factories in Bangladesh. Companies are only obliged to pay administrative fees to cover a training programme and overheads. The mandatory costs for brands and retailers are covered from the start and limited to a maximum of $1 million per year. Beyond this, there are no financial obligations for Alliance members. The Accord includes contractual commitments by signatory companies to ensure funds are available for all necessary safety renovations and repairs, based upon need, with tripartite system of checks and balances. While the Accord requires that brands and retailers finance the cost of renovations and repairs at every covered factory, under the Alliance Plan, it is factory owners who bear the responsibility of financing improvements; the only assistance for renovations is a voluntary loan program over which the companies have complete control.

Under the Alliance, individual brands and retailers control the factory inspections. The brands and retailers choose the auditors, pay the auditors and control the inspections. The Accord requires that all factories covered by the Accord be subject to independent and impartial inspections. Inspection reports are immediately disclosed to worker representations and released publically. Remediation plans are completed within nine months of inspections.

Membership Obligations

The Alliance imposes few unenforceable obligations on its members. There are no major implications for a company that walks away from the agreement. The sole penalty for doing so is that the company has to pay part or all of its administrative fees, depending on how soon it quits. The total potential cost is a maximum of $5 million; a penalty that, for a company with billions of dollars in revenue, is not a serious deterrent. This brings to mind what labour rights advocates have been claiming: at a time of major public and media scrutiny, companies are willing to make commitments, out of which they can later walk away ‘untouched’. The Accord is a binding, legally enforceable contract to which worker representatives, who have a strong interest in enforcement, are signatories. Binding arbitration, backed up by the courts of the home country of the company in question, is used to resolve disputes and enforce company commitments. This ensures that companies must follow through on their commitment to make all of their factories safe. Under the Accord, worker representatives have the power to initiate enforcement proceedings against companies that fail to comply with their obligations. In contrast, the only recourse workers have under the Alliance is to call a “hotline” to communicate their concerns to the brands and retailers.

The Alliance scheme makes no mention of the right of workers to refuse dangerous work. Under the Accord, the right of workers to refuse dangerous work, including the right to refuse to enter a dangerous building, is protected.

Endorsement

The Alliance has been endorsed by profit driven apparel industry groups, such as the National Retail Federation, the American Apparel and Footwear Association and the Retail Council of Canada. The Accord is supported by the UN Secretary General, the ILO, in addition to the Bangladeshi Government, the European Parliament and numerous organizations representing garment workers in Bangladesh.

In general, both initiatives are considered a step forward in the Business and Human Rights arena, since companies showed unprecedented willingness to discuss vital human rights matters. However, the Alliance has received plenty of criticism, directed at industry-driven corporate social responsibility programmes that manage reputation rather than impact. Some have argued that the scheme preserves the very model that has failed workers and led to the Rana Plaza tragedy. On the other hand, it could be said that a multi-stakeholder initiative such as the Accord is more likely to be cumbersome, considering the divergent interests represented within it. Coordination and comprehensive dialogue will remain a critical issue.

Although for the time being the Accord and the Alliance have refrained from any form of cooperation, members of the Accord publically urge all brands to join them and reassure their commitment to working with all relevant stakeholders, including members of the Alliance. It remains to be seen whether these two parallel initiatives can ever be integrated in the future.