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Bangladesh Alliance Provides Funding for Factory Safety Upgrades

Bangladesh may be working to better its ready-made garment (RMG) industry, but many factory owners simply can’t afford the necessary remediation. Now, in its ongoing effort to improve the sector’s working conditions, the Alliance for Bangladesh Worker Safety says it is developing a credit facility to provide funding required for improvements.

The Alliance, a five-year undertaking between brands and retailers like Walmart, Macy’s, Gap and VF Corp, to better the safety of Bangladeshi factories, released its 18-month update Monday, reporting that it is working with international finance institutions to offer low-cost loan programs or changes to factory payment terms to help ease the cost of remediation.

“Our goal is to create a credit facility of $20-35 million via five local banks. The facility would be in U.S. dollar denominated currency, enabling lower interest rates,” the report noted. “To encourage these banks to extend loans to Alliance factories—especially small and medium enterprises—the Alliance will provide technical assistance to the financing organization on remediation progress and also cover administrative and startup costs and up to $2 million in a first-loss guarantee.”

The Alliance has also inspected all of its nearly 700 member factories, partially or fully closed 19 of them for substandard conditions, and each factory has taken on some form of remediation.

Factories found to have immediate risks were put before a government-established review panel, which determines whether a factory should remain in operation or be allowed to operate under reduced capacity. All member factories are now in the process of addressing safety concerns and upgrading safety equipment, according to the Alliance.

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In January, the Alliance launched it pre-approval policy, which requires all new factories to be registered, inspected and evaluated to be “sufficiently in compliance with key building and fire safety standards set by the Alliance before our members will source from them,” the report noted, adding that the move will mean members aren’t doing business with factories that have poor safety records.

With regard to transparency, which will be vital to restoring brands’ faith in Bangladesh, the Alliance has published more than 1,500 inspection reports outlining factory safety on its website, and the organization plans to have all reports uploaded to a government-run website by the end of June 2015.

In terms of training, more than 1.2 million workers have been trained through the Alliance Basic Fire Safety Training Program, and review training for new and existing workers will be rolled out at factories by July.

“Training was conducted through a “Train-the-Trainer” model, in which the Alliance trained a group of facilitators and provided training tools that were then delivered to factory workers. While this has substantially improved the understanding of fire safety and risk, a single training is not enough. We are developing a review course on fire safety for all factoriesto administer to new and existing employees,” according to the report.

The country’s current unrest, however, is causing concern among Alliance leaders.

“As we face the substantial challenges ahead, we look to our partners and collaborators to guarantee that the reforms being implemented will be sustainable beyond the time horizon of the Alliance,” Ellen O. Tauscher, independent chair of the Alliance board of directors, said. “The Alliance is concerned that our efforts have been slowed during the current violence, turmoil and uncertainty in Bangladesh. We call upon all parties who are committed to a vibrant and successful Bangladesh to resolve differences through dialogue rather than violence.”