Skip to main content

National Retail Federation Pushes Alternative to Bangladesh Safety Deal

The National Retail Federation (NRF), the largest organization of retailers in North America, has joined Gap Inc., Wal-Mart, Sears and JCPenney in their resistance to an accord drafted by labor activists in response to the multiple, deadly incidents in Bangladesh  garment factories.

The pact, called the Accord on Fire and Building Safety in Bangladesh (available to the public here), requires retailers to develop, finance, and establish specific fire and building safety program in factories producing their wares. The accord, sponsored by labor activist group IndustriALL, includes a “binding arbitration” clause which could restrict participating companies from appealing pertinent court decisions.

The pact has been met by almost total resistance from U.S. retailers, even as rescue workers respond to a similar factory tragedy in nearby Cambodia.

According to Women’s Wear Daily, the NRF explained their anti-accord position after consulting via conference call with Johan Lubbe, an expert on international labor law at law firm Littler Mendelson.

Lubbe told the NRF that the pact “unduly increases the role of corporate stakeholders” and unduly transfers responsibility from the Bangladesh government to North American retailers. Lubbe also expressed concerns about the pact’s required installation of a safety inspector, which would “usurp the role of the Bangladesh government inspectors.”

According to Lubbe, the pact “shifts a huge number of responsibilities on retailers” but fails to address questions about liability, enforceability and conflict resolution. Ambiguities should be cleared in the initial drafts, Lubbe said, citing concerns that for want of clarity, specifics would be developed through later litigation.

He also told the NRF that, although the accord specifies a cap of $500,000 in damage liability to retailers, “the door could be open to substantial additional financial risks,” depending on a given court’s interpretation, especially when third-party contractors are involved.

As an alternative, the NRF has joined with six trade groups to form the North American Bangladesh Worker Safety Working Group. Last week, the group unveiled their Safer Factories Initiative, with the goal of establishing “a sustainable funding mechanism for training, upgrades of factory structures and ensuring the safety of new construction.”