2013’s disaster served as a wake-up call to the garment industry. How have factory conditions changed and how are we tackling related risks through engagement?
The 2013 Rana Plaza disaster in Bangladesh was the worst industrial accident in fashion history with over 1,000 people killed, serving as a wake-up call for the garment industry about the poor safety and working conditions of workers in garment factories. In the aftermath, a coalition of investors convened by Interfaith Centre on Corporate Responsibility (ICCR)1 formulated the Bangladesh Accord2 – a legally binding agreement to be signed by global garment companies committing to improve the working conditions of garment makers in 1,600 factories of Bangladesh. More than 200 fashion brands, including Inditex, Punto and H&M signed this Accord in 2013. Since then, the Accord has resulted in improvements such as building and fire safety inspections, increased trainings, and remediation of safety issues at garment factories in Bangladesh, leading to significant improvement in worker safety.
Brand awareness and support of this model has grown, with the International Accord established in 2021 and the Pakistan Accord launched in 20234.
The Accords have brought about significant structural changes in factories. Through our Responsible Investment team’s engagements, we discuss with brands to consider signing these Accords where they have material exposure to garment factories in these regions. As part of our related active ownership efforts, we also discuss adherence to responsible purchasing practices such as fair and timely payments, committing to long term business relationships with suppliers and installing comprehensive grievance remediation processes to ensure a safe, healthy, and productive workforce.
Looking ahead to the future of fashion production
Commemorating the Rana Plaza disaster’s 10th anniversary last year, a coalition of 194 global investors representing $2.1trln in AUM, including Columbia Threadneedle Investments, released a statement5 encouraging apparel companies to strengthen their implementation of human rights due diligence in their global supply chains.
The investor statement references the prioritization of health, safety and living conditions of garment and textile workers in Bangladesh, Pakistan and other garment producing nations by:
- Accelerating and strengthening the implementation of human rights due diligence as defined by the UN Guiding Principles on Business and Human Rights
- Signing either the International Accord or Pakistan Accord if sourcing or planning to source suppliers in Bangladesh or Pakistan, respectively
- Joining the Employee Injury Scheme Pilot – a unique social protection scheme for adequate compensation in case of occupational injuries and diseases – in the garment sector of Bangladesh
So far, we have seen some brands improve efforts around enforcement of better labour standards by signing and upholding the provisions of the Accords, participating in tripartite labour-related negotiations, and going beyond social audits to the identify root-cause of problems, implementing systemic change. We will continue to include this matter in our engagements where relevant.
1https://www.iccr.org/
2Bangladesh Accord (now extended to International Accord)
3Employee turnover and its impact in RMG sector in Bangladesh: An Empirical Study;
Employee Turnover in the Garment Industry in Bangladesh: An Organization-level Perspective
4List of signatories to the Accords can be found here.
5ICCR led Investor Statement