A group of leading US responsible investors have criticized North American retailers’ new initiative on Bangladesh supply chain standards, a response to the Rana Plaza garment factory disaster and others, as lacking in sufficient worker protections and accountability.
The North American Bangladesh Worker Safety Initiative was launched yesterday (July 10) with the support of 17 retailers including Gap, Hudson’s Bay Company, J.C. Penney, Macy’s, Sears, Target and Wal-Mart Stores. The five-year, $42m programme is backed by former US Senators George Mitchell and Olympia Snowe.
But investors under the Interfaith Center on Corporate Responsibility (ICCR) banner say it is a “weaker alternative” to the existing Bangladesh Accord on Fire and Building Safety that is backed by 80 companies, NGOs and unions.
The earlier accord has the backing of some 200 global investors with $3trn in assets under management via an investor statement first released in May.
Indeed, Australia’s A$7bn (€4.9bn) Local Government Super become the first Australian superannuation fund to sign the investor statement yesterday, saying it was “taking a first – but important – step to support change for the better from an investment perspective”. LGS has around A$3.3bn in responsible investment strategies.The ICCR members’ initial concerns about the new North American initiative focus on a lack of worker involvement and around its governance – although they do acknowledge that it includes a number of key elements raised by investors.
The ICCR argues that the rival accord is legally and financially binding for companies where the new North American initiative is voluntary. And the prior plan features equal representation for trade unions and corporations as well as full disclosure of suppliers, inspection results and remediation plans.
“ICCR members regard the implementation of these elements as crucial to meaningful reform of the Bangladesh garment industry and the direct involvement of workers through their union representatives as key to ensuring their safety,” the 300-member, $100bn-assets-under-management group says.
Wal-Mart’s Chief Compliance Officer Jay Jorgensen was quoted by the Financial Times as saying the retail giant could not sign the European accord because it could leave it open to “potentially unlimited legal liability and litigation”. Union groups UNI and Industriall said the US plan was “another toothless corporate auditing programme”.
Going forward, the investor coalition is looking at collective engagement of these and other supply chain issues, with a “more thorough investor analysis” to be released on July 19.