The garment industry in Bangladesh has been dramatically altered since the horrific tragedy five years ago at Rana Plaza, an illegally built factory that produced clothes for Mango, Walmart and other Western retailers. The collapse of the eight-story factory killed 1,134 workers, mostly young women, who were pinned under layers of outright safety violations. While a global movement of a variety of actors, including such retailers, have made significant strides in bringing up the industry’s human rights standards, by the end of this year one of two major safety programs led by companies will expire, making the future of workers’ safety uncertain.
Leading up to the collapse of Rana Plaza, between 2005 and 2012, more than 500 workers died in fires and building collapses from poorly setup facilities in Bangladesh, according to the NYU Stern Center for Business and Human Rights. But it was the fall of Rana Plaza that finally set off the alarms for Western companies and consumers. On April 23, 2013, workers found cracks along the walls and a local engineer was brought in to assess the building. Even after the engineer found the building unsafe and police ordered it to be cleared for further inspection, the factory owner Mohammad Sohel Rana threatened employees that if they did not return to work the next day, they would risk losing their jobs.
The next day as employees settled in at their work stations, a power outage occurred, prompting heavy diesel generators located on the upper floors to turn on. The vibrations from the generators rippled down the weak structure, which then began to collapse inward, story by story.
Government findings after the event are simply maddening. Built illegally, the top four floors of Rana Plaza lacked proper support and the building stood on top of swampy grounds. Moreover, the building was “constructed with substandard materials and in blatant disregard for building codes,” according to the New York Times. Rana was caught by Bangladeshi authorities at the Indian border several days after the tragedy. He has been sentenced to three years in prison on corruption charges and still faces prosecution for murder, according to NYU Stern Center for Business and Human Rights.
The collapse of Rana Plaza was a test of commitment for brands to corporate social responsibility. Bad press has historically driven companies to adopt social responsibility that often felt no more than a weak line of defense against human and environment rights questions. But the event spurred a deeper self-reflection: did corporate social responsibility mean a responsibility not only to a direct supplier but also to that supplier’s supplier? How much due diligence were companies expected to do as part of their duty to their social mission?
Shortly after the collapse, corporations banded together to create two programs that would identify and remediate factory safety issues. The Accord on Fire and Building Safety in Bangladesh was spurred by over 200 mainly European brands, such as H&M and Tesco, as well as NGOs and unions. The U.S. counterpart became the Alliance for Bangladesh Worker Safety and includes brands like Walmart and Gap. Both the Accord and the Alliance stepped into the void left by a weak and corrupt Bangladeshi government and became committed to conducting inspections and cutting ties with non-compliant factories.
In their inspections, the Accord found that 97 percent of more than 2,000 affiliated facilities lacked a safe means of escape in the case of fire, such as exits blocked by heavy storage boxes and locked gates. Other common risks included a lack of adequate fire-detection and alarm systems, exposed electrical cables and a general unawareness about safety considerations. The structures themselves were another story. 70 percent of Accord-affiliated factories had undocumented structural additions, including inconsistent design documents, and a same percentage of factories did not have a load management plan, or plans to distribute factory weight around the building to prevent weakening the structure. Conclusively, the Accord’s initial inspections found that there was an average of 64 violations per factory.
The lack of regard for safety in the Bangladeshi factories, where 80 percent of the country’s exports are generated, is mainly attributed to the high demands of fast fashion companies. As the cheaper side of the coin that is high fashion, fast fashion changes course abruptly based on celebrities, social media and otherwise unpredictable viral trends. This volatility in the industry has driven companies like Zara and Forever 21 to pinch their supply chains, looking for the quickest and cheapest turnaround to dress their mannequins.
Despite how quickly fast fashion seems to be moving, it doesn’t seem to be slowing down anytime soon. Last week, H&M, seen as the founder of fast fashion, noted in their March 27 quarterly report that they are carrying $4.3 billion in unsold apparel. Furthermore, stock price has dropped by more than 40 percent in the last six months and the company announced that it will be closing 170 stores this year, more than it has in two decades. The woes of H&M however, aren’t attributed to the slowing down of the industry. In fact, it’s stating the opposite, that the sales crunch is becoming worse. H&M is now, in fact, too slow.
Shoppers looking for a cheap throw on and bloggers looking for the perfect one-time post on Instagram are no longer looking to the more established giants. They welcome the new players like ASOS, who carry little inventory and thrive on online revenue. The new digital entrants are pushing down prices and wooing customers away from fast fashion retailers. Here’s just how bad this price-tag game between brands has defined fast fashion: according to the American Apparel and Footwear Association, in 2015 Americans bought on average more than 68 garments and eight pairs of shoes with an overall average price of just $19.
It’s no surprise then that it’s the factories producing the garments that are put under most pressure, to speed up production at a lower price. According to the NYU Stern Center of Business and Human Rights, the real dollar price of apparel entering the United States declined 48 percent from 1989 to 2010; men’s and boy’s cotton pants produced in Bangladesh for export to the United States, for example, fell 41 percent from 2000 to 2014. With profit margins in the single digits and on a continuous decline, producers have been forced to deprioritize workers’ safety.
The Accord and Alliance have univocally changed the safety landscape in the Bangladeshi garment industry. For instance, there are initial and consistent follow-up inspections of factories to measure their remediation progress. If anything, the programs have made safety a mandatory factor in developing relationship with Western clients, no longer seen as a “Western luxury,” as said by Arun Devnath at Bangladesh News 24. Furthermore, the programs have even suspended operations at a combined total of 264 factories for failure to remediate safety violations identified during inspections.
After years of ignoring safety investments, the cost of meeting compliance requirements has caught up to factory owners, posing complicated issues to the enhancement of industry standards. The programs estimate that an average of approximately $250,000 per factory is needed to remediate safety violations, with significant structural repairs requiring between $300,000 and $3 million upfront costs. Neither the programs nor any independent companies have stepped up to eat some of these compliance costs. Although some companies, like Walmart, have financing programs for suppliers, the general mood is that remediation money must come from factory owners’ pockets. Companies’ refusal to share the cost of remediation has frustrated factory owners who find Western demands ironic: lower your prices and also own the costs to fix your factories, otherwise we won’t work with you. This paradox has put factory owners in a difficulty financial position, which is a key reason why just 8 percent and 47 percent of Accord and Alliance factories have completed remediation to date. The Accord’s quarterly update from January this year states that while only 25 factories have completed their Corrective Action Plans (CAP), 1,247 factories are behind schedule, with 84 percent of them lagging behind for more than two years.
Furthermore, the NYU Stern Center of Business and Human Rights estimates that fixing the factories of subcontractors, who help to fill orders in the shadows, would cost at least $1.2 billion. Five years ago, companies had no clue about subcontractors and today, they still don’t. In 2016, BRAC University’s Centre for Entrepreneurship Development found that out of 455 factories surveyed, 31 percent were involved in unauthorized subcontracting. Although the Accord and Alliance realize that subcontracting exists, the Bangladeshi government continues to think otherwise. The Commerce Secretary Shubhashis Basu, according to the NYU Stern Center of Business and Human Rights, was resolute in saying “there is no subcontracting system. That is over and done with.”
Turning a blind eye to subcontractors echoes a recurring approach taken by the Bangladeshi government as it looks to inherit the over 2,000 factories from the Accord and Alliance. The Accord announced last year that the program will be extended for another three years. The Alliance, however, does not seek to extend its tenure after May. Companies made a rare call to action that has done significantly more than stir the dust in Bangladesh. However, it’s apparent that their efforts are not enough. While the programs have filled a much needed gap, more permanent measures need to be taken to change supplier and company behaviors. Some recommendations put forth by the NYU Stern Center of Business and Human Rights include the creation of a locally-led task force to monitor compliance and for brands to form strategic partnerships with local suppliers to strengthen long-term relationships.
Consumers can help drive the commitments made by companies simply by paying attention. There’s no call for a national boycott on brands or to picket outside of stores. It’s just a matter of looking beyond the label for size. By demanding companies to be transparent regarding where clothes are sourced, consumers can play a powerful role in strengthening a given brand’s moral compass; in fast fashion, where options are constantly increasing, consumers can be picky. And choosing to be picky about where and how our clothes are made can genuinely impact the process.