VF Corporation and World Bank Group member IFC announced that they have administered loans to three Bangladeshi garment factories under a new program for funding fire and building safety improvements.
After the Rana Plaza factory in Bangladesh collapsed and killed 1,132 garment workers and injured more than 2,500 last year, VF wanted to invest in to prevent further tragedies in a country where it uses roughly 90 factories to make product. Thus, the loan disbursements have begun to ensure the safety of the factories and their workers.
The financing agreement guarantees that VF will provide up to $10 million which the IFC and its partner BRAC Bank will lend to VF’s contract suppliers. VF’s promise to back the loans will allow IFC to offer lower loan interest rates. The arrangement helps VF suppliers in Bangladesh conquer financial hurdles while improving safety conditions in the workplace.
Tom Glaser, VF’s president of supply chain, said, “Providing these loans to help supplier factories fund the necessary improvements is another positive step forward in VF’s efforts to ensure the safety of the people making our products in Bangladesh.”
IFC’S initial set of loans totaled $1.3 million and went to the three factory owners, Arunima Sportswear Ltd., Olio Apparels Ltd., and Radisson Apparel Ltd. The owners will use capital to invest in safety upgrades including installation of fire sprinklers, fire doors and detection systems, and other recommended repairs and safety precautions.
Sergio Pimenta, IFC director of manufacturing, agribusiness and services, said, “The apparel industry has provided employment and reduced poverty for millions of people in Bangladesh. This financing model, which we think could work well for other buyers and suppliers, will help improve work conditions and facilitate growth and development.”
The program is part of VF’s plan to assist suppliers in achieving the performance standards which assess and manage environmental and social risks and impacts, and labor and working conditions. The loans to VF’s supplier factories will range from $100,000 to $1 million.
While VF is doing its part to support bettering Bangladesh, Italian fashion label Benetton is getting backlash for not paying into a relief fund for Rana Plaza victims, causing a recent uproar with labor rights campaigners. The company admitted to occasionally sourcing from New Wave Style, a supplier inside Rana Plaza, but said its last and final order from the supplier was shipped prior to the building collapse.
Campaigners across the U.S. and Europe utilized International Human Rights Day to stage street and online protests for Benetton to pay $5 million for a relief fund. The Clean Clothes Campaign has set up a website to target the company, as well as calling on the Benetton franchise holders to back the campaign by asking the Benetton Group to take immediate action.
Deborah Lucchetti from Italy’s Clean Clothes Campaign, or Campagna Abiti Puliti added, “We are using International Human Rights Day to remind citizens that compensation is a right for all workers and that until compensation is paid in full there will be no justice for the Rana Plaza workers.” She concluded, “We are determined to continue our campaign until Benetton pays what it owes.”