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What Does ‘Transparency’ Mean? 74% of Bangladesh RMG Manufacturers Aren’t Sure

The 2013 collapse of Rana Plaza in Bangladesh marked a watershed moment for accountability in the garment supply chain, ushering in a new level of transparency for fire, electrical and building safety conditions and driving a significant—even unprecedented—degree of improvements.

Despite the proliferation of social initiatives such as the Fair Wear Foundation and innovations like Brac University’s Mapped in Bangladesh, clothing brands, manufacturers and workers in the South Asian nation continue to face “significant barriers” to achieving greater transparency, a new report says.

Commissioned by the Laudes Foundation, the philanthropic arm of retail chain C&A, research for “Transparency Assessment: Examining the Transparency Journey for the Bangladesh Apparel Sector” was conducted before the Covid-19 pandemic hit. Yet “its conclusions and recommendations are more relevant than ever” for the world’s second-largest exporter of garments after China, its authors wrote.

One key finding: “Transparency,” which the study defines as the public disclosure of data, can suggest different things to brands, manufacturers and workers, resulting in a “lack of shared vision” among stakeholders.

In a survey of 104 apparel manufacturers in Dhaka, Gazipur, Narayanganj and Chattagra, for example, 74 percent said they’re uncertain what transparency means. For 87 percent of those polled, transparency is defined as the “public disclosure of information on some labor issues/working conditions and safety-related compliance.” Nearly two-thirds of manufacturers (65 percent) consider transparency to be the “public disclosure of all information by different stakeholders in the supply chain,” and 58 percent believe transparency is the public disclosure of “any” information that can make stakeholders more accountable. More than half (55 percent) think transparency refers to the creation of a platform where buyers, factory owners and workers can “interact and communicate for a win-win situation.”

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Many manufacturers also said they consider information to be transparent if they disclose it to their respective brand customers or to monitoring authorities such as the Accord on Fire and Building Safety in Bangladesh (replaced by the RMG Sustainability Council), the Alliance for Bangladesh Worker Safety (now Nirapon) and the Department of Inspection for Factories and Establishment.

“Greater consensus is therefore needed among stakeholders regarding which issues should be disclosed,” the authors wrote, since misalignment can build barriers to the degrees of disclosure.

More than 67 percent of manufacturers indicated that information sharing tended to flow one way: Buyers may know manufacturers’ costs, for example, but manufacturers do not know what brands pay in their respective segments of the supply chain. Roughly half of manufacturers reported a scarcity of data about brands’ purchasing practices in the public domain, along with insufficient information about procedures for matters such as dispute settlement. Manufacturers also pointed to a dearth of factory-specific safety information in one consolidated public platform (26 percent) and a lack of effective dialogue between factory management and workers and worker representatives (42 percent).

One concern raised by the report is the mixed feelings many manufacturers have about transparency. Most of those surveyed expected more public disclosures to bring positive impacts: 73 percent believed greater transparency will result in more favorable terms from brands, 67 percent said it will improve trust among managers, workers and business partners, and 66 percent said it will attract new orders.

There are limits, however, to what manufacturers are comfortable sharing in public. Most of the time, manufacturers only want to be more open with the specific brands with which they do business. In addition, 74 percent said greater transparency could result in a loss of business. Just under two-thirds (64 percent) worried transparency could lead to increased worker dissatisfaction, since employees might compare their income with revenue earnings without accounting for the non-negotiable costs of operating the business. Half of respondents (52 percent) said brands may use disclosed information to bargain for lower prices.

“Despite growing efforts to expand the depth and breadth of transparency in Bangladesh, this study reveals a confusing landscape where there is still insufficient understanding of transparency and its benefits,” the authors wrote. “Along with targeted actions for each stakeholder group, industry interventions should focus on the principle of reciprocity, coordinating effort and building consensus.”

Brands, manufacturers and workers, they added, are all in a position to provide, receive and benefit from transparent information. Wherever possible, the principle of reciprocity should be applied when examining opportunities for greater transparency.

As the Bangladesh garment industry emerges from the coronavirus crisis, new standards of transparency will serve it well in the future, they said, noting that the absence of “critical, transparent information” about factory re-openings and wage payments contributed to “considerable human suffering.”

“Across the supply chain, transparency does not always mean the same thing,” the authors said. “A cultural change is required so all stakeholders share the same understanding and participate in promoting transparency. This will help maintain a balance in the RMG value chain so that transparency is not used by one party to disadvantage another.”