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Can a ‘Factory Social Score’ Improve Garment Factory Conditions?

A digital trade-finance platform has inked an agreement with four garment factories in Bangladesh to pilot a new system that tracks changes in the social, environmental and governance (ESG) performance of workplaces in real time.

The so-called “​​factory social score” system, said England’s PrimaDollar, is akin to a Trustpilot rating for manufacturers, except it’s derived from anonymous worker feedback rather than customer ratings. A key component of the program is a smartphone app through which workers can discretely report on several dimensions, including wages, conditions, safety and treatment.

“We have carefully designed the worker app and factory social score system so that it is acceptable and useful for factory owners, whilst delivering important transparency to international buyers,” Tim Nicolle, Group CEO of PrimaDollar, said in a statement. “Bangladesh is leading the way already with its legislation and regulation of the garment industry—and now our worker app can showcase the results to the world.”

The system is being rolled out at Alib Composite, Bengal Knittex, Climax Garb and Zoom Sweaters, which collectively employ more than 2,000 workers. Robi Axiata, one of the South Asian nation’s largest mobile network operators, will be offering both the devices and data connectivity to workers who need them.

Factory social scores, PrimaDollar said, are increasingly becoming a must-have for large buyers who seek to manage ESG risks in their supply chains. Its app delivers ratings that are standardized, meaning that they are comparable across geographies and industries. The scores are also continuously updated, generating a “data flow” that is “profound for transparency,” Nicolle wrote in a LinkedIn post.

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Mahfuz Ikbal, director of Zoom Sweaters, agreed. “Our international buyers are very interested to understand how we look after the workers in our factories which are the lifeblood of our business,” he said. “We will be sharing our scores with them directly [and are] confident that this will lead to a significant boost to our reputation and standing with our existing clients and new clients that are in discussion.”

Abdulla Hill Amin, chief operating officer of Bengal Knittex, called the worker app a “good thing for Bangladesh” since it will allow suppliers to showcase the strides they’ve made since the 2013 collapse of the Rana Plaza factory complex, while MA Matin, chief operating Officer of Alib Composite, said the initiative will allow the company to “win more business and satisfy our international customers on our standards here.”

Writing on LinkedIn, Nicolle said factory owners have generally been receptive to the app. The only resistance PrimaDollar encountered was around worker pay. “Two key questions in our panel assess (a) whether workers are being paid on time, and (b) whether they are being paid the full amount that they have earned,” he said. “And here, factory owners are expressing significant concern.”

With the Covid-19 pandemic wreaking unprecedented supply-chain havoc, first with order cancelations and payment delays, then with sky-rocketing freight costs, suppliers are facing significant liquidity challenges, Nicolle noted.

“The factory owners that have had problems are still having problems, as some powerful international buyers continue to play fast and loose with payment terms, on POs and shipments, especially given the logistics’ challenges everyone is currently facing,” he said. “And this brings us full circle to the whole point of worker-monitoring apps. With real-time information, we can see where the problems are. And sometimes the problems are partly on the buyer side, rather than purely on the factory side.”

Nicolle said it’s important to realize that supply chains are made up of both buyers and sellers, not just sellers.

“And so, the picture is more complicated than it first appears—and head office policies on how suppliers should be treated are clearly part of the equation,” he added. “Factories can only deliver appropriate standards around worker treatment if their customers are also aligned.”