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Bestseller Puts Freeze on Myanmar Garment Sourcing

Bestseller is hitting the pause button on Myanmar again.

The Danish retailer revealed Friday that it will not be placing orders in the troubled Southeast Asian nation until it has conducted an impact assessment and engaged in dialogue with labor experts, trade unions and other stakeholders with a “clear focus on the wellbeing on garment workers.”

The decision arrived shortly after the Industrial Workers’ Federation of Myanmar (IWFM), an affiliate of IndustriALL Global Union, reported that two of its members have died from Covid-19 as a result of lax and nonexistent health protocols. More than 100 factory-level union leaders, it added, have also been infected by the virus, worsening a humanitarian crisis in a country already reeling from the military’s brutal seizure of power seven months ago.

Following the junta’s broadside against the democratically elected government, Myanmar’s economy and healthcare system teeter on the edge of collapse. The country has racked up nearly 400,000 infections and more than 15,000 deaths to date, most of them within the past two months. Workers’ rights have also all but evaporated, calling into question if Western brands should still be boosting the military’s coffers, even inadvertently. The nation’s labor movement has been more unequivocal, urging companies, including fashion brands, to divest from Myanmar.

“There is no concrete action to remedy the worsening situation, and we have raised this with employers and brands several times. Some employers have even collaborated with the military to identify and persecute local union leaders,” said Khaing Zar Aung, president of the IWFM. “There are no workers’ rights, no justice and no remedy. That’s why we are calling all investors to isolate the regime, cut off their resources and drive them out.”

Bestseller—along with C&A, Benetton Group, H&M and Primark—had placed a moratorium on new orders from Myanmar in March, a month after the coup descended the country into a hotbed of chaos and bloodshed. At the time, the retailer said that the “escalation of violence and the unpredictability of the situation” made it difficult to operate safely in the country. Of the 36 factories that produced clothing for Besteller, only seven remained operational and even then at reduced capacity. Both inbound and outbound shipments were also “highly unstable” and the security situation was deteriorating “in a way and at a speed” that made it difficult to continue, the Jack & Jones and Vero Moda owner added.

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Two months later, Besteller, H&M and Primark resumed their sourcing, citing a desire to protect jobs and prevent Myanmar’s economy from imploding. A third-party audit, commissioned by Bestseller and published by independent lawyer Jonas Christoffersen, a former director of the Danish Institute for Human Rights, concluded that the retailer had complied with sanctions and not cooperated with the junta. This was despite its use of three factories in the Ngwe Pinlae Industrial Zone, which is operated by Myanmar Economic Holdings Limited, a military-owned conglomerate that is the target of sanctions from the European Union, United States and the United Kingdom. A report by Christofferson’s law firm, said there were no “reasonable grounds” to assume that the factories were owned, directly or indirectly, by the military or had paid administration fees, directly or indirectly, to the military.

“It is my assessment that Bestseller has lived up to the UN’s recommendations with regards to conducting responsible business in Myanmar,” Christoffersen had said. “They have fostered decent working conditions in the country and they have lived up to the highest international standards for corporate social responsibility. Bestseller has abided by the EU’s sanctions—including those that the EU enacted recently.”

News from the IWFM, however, appears to have swung Bestseller in the other direction once more. “We take this announcement from IndustriALL and IWFM very seriously,” the retailer said. “Local and international unions are one of our key partners in responsible sourcing, and we recognize the difficulties they have faced in Myanmar since February. We have a responsibility to assess the impact our business decisions may have on human rights, and this is a process we will now go through.”

Bestseller said it remains committed to all previously paid orders and will enable the “crucial payment” of wages to workers in the factories it has contracted. The duration of the impact assessment, it said, has yet to be determined, but it will not exceed the production time of the orders that have already been placed.

When asked about the status of its own sourcing in Myanmar, H&M said that the health and safety of the workers at its supplier factories remain a priority. “We are in contact with all our suppliers to support them in this work,” a spokesperson told Sourcing Journal. “We also remain in close dialogue with trade unions and other stakeholders on how to move forward.”

Primark is also taking stock of the situation, saying that the potential human-rights implications of any decision it takes are “at the forefront of [its] mind.”

“We are urgently considering our response to the call to action from IndustriALL,” a spokesperson told Sourcing Journal. “To guide how we can best conduct an impact assessment of this, we are consulting with third-party experts including the Ethical Trading Initiative. Meanwhile, we remain in ongoing dialogue with all relevant stakeholders, from our team on the ground to the U.K. government, and committed to our current orders [as we are] conscious of how critically important employment is to the people in our supply chain in Myanmar.”

Editor’s note: This story was updated on Sept. 3, 2021, to include a statement from Primark.