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Bangladesh Resetting the Bar on Compliance Standards

Bangladesh has been continuously bad-mouthed for its at times woeful compliance standards, but some say the country is now raising the bar on working conditions.

At Sourcing Journal’s “Sourcing Summit 2014: Insight and Outlook,” Tuesday, panelists discussing emerging markets in the industry touched on how compliance requirements are reshaping the sector, and how certain nations, namely Bangladesh, are faring.

Ian Spaulding, senior partner for social and environmental performance improvement firm ELEVATE Global Limited, said, in light of the Tazreen and Rana Plaza tragedies, and requisite negative press, Bangladesh is raising the bar for other countries to see how to do things. “What is being done in Bangladesh is a test case for a new model for improving working conditions, empowering workers and driving shared responsibility for success,” Spaulding said.

Rana Plaza, the building that collapsed in Bangladesh killing more than 1,000 apparel workers in April 2013, provoked a general awareness about safety and health standards in the apparel industry, and inspired a need for brands to be more transparent about where and how they source.

The Southeast Asian nation has been working to improve structural and labor conditions in the past year, and the country eased its trade union laws following the Rana Plaza tragedy to allow garment workers to form trade unions without permission from factory owners.

“It has only been one year and change since Rana,” Spaulding said. “After the Triangle Shirtwaist fire, it took the U.S. 26 years to have the right to unionize nationally; the Bangladesh government did it in four months.” Prior to the building collapse, there were 10 apparel sector trade unions in Bangladesh, Spaulding said, and now there are close to 250.

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Some brands balked at continuing to source in Bangladesh, and moved operations elsewhere, but the compliance-related tragedies didn’t send retailers fleeing as much as some may have thought. According to Spaulding, the Bangladesh apparel industry grew 15 to 20 percent more in 2013 than in 2012.

And factories in the country aren’t as unsafe as some perceive—2 percent of factories in the low-wage nation are reportedly structurally unsafe, compared to the 20 percent many believed it to be following the Rana Plaza tragedy, Spaulding explained.

Things are moving along with regard to compliance upgrades in Bangladesh, Spaulding said. Inspectors are checking concrete structures to determine safety, and because fire doors aren’t manufactured in Bangladesh, the country has eliminated tariffs on the imported doors to facilitate factories keeping compliant, for example. Factories are beginning to upgrade and buildings are becoming safer, he said.

The Alliance for Bangladesh Worker Safety and the Bangladesh Accord on Fire and Building Safety, two initiatives geared toward improving working conditions in the country, may still be discussing the best ways to share factory inspection results, but Spaulding, who made the disclaimer that ELEVATE is the management firm responsible for the implementation of the Alliance, said that despite having individual initiatives, the industry has never before mobilized so many people for change.

Combined, the Accord and Alliance include more than 200 brands, which have signed on to better Bangladesh’s ready-made garment industry. Accord signatories include apparel companies like Inditex, H&M and Fast Retailing, while Alliance members include Gap, Macy’s and VF Corporation.

Both the Alliance and Accord have conducted inspections of their respective member factories and made those results publicly visible online, but for the roughly 300 factories producing goods for both Accord and Alliance signatory brands, duplicitous audits have been a concern.

Sharing audit reports among brands can become problematic, as each company trusts its own inspections, and some may have different priorities when determining what constitutes full factory safety. And on the factory side, when one audit counts for several companies, falsifying audit results or engaging in unlawful behavior because of the pressure to pass becomes an increasing concern as business from multiple brands is at stake.

“The traditional CSR auditing model is broken,” Spaulding said. “It’s not giving brands and retailers greater visibility, and it’s not rewarding good behavior and leading to genuine risk mitigation.”

One answer, according to Spaulding, is that the industry must shift from that policing audit model to one of performance and continuous improvement.

“Bangladesh deserves a fair amount of criticism, but we need to look at how we source,” Spaulding said. “All of us have to ask: What role did we play in Rana?”