38Tragedy in Bangladesh—the Rana Plaza Factory CollapseOn April 24, 2013, an eight-story garment factory building collapsed in Rana Plaza, which is on the outskirts of Dhaka, Bangladesh. The Rana Plaza building is located in Savar, near Dhaka. The collapse occurred just after work had begun that morning in several companies that were all housed in the building. Roughly 5,000 workers, mostly women, worked in the complex. By that evening, 1,000 people had been rescued and it was reported the next day that at least 119 were killed. This building collapse occurred months after more than 100 workers had died in a fire at the Tazreen Fashions factory near Dhaka.As the weeks passed, the death toll continued to rise. By a month later, it was apparent that over 1,100 garment workers perished in the collapse of the substandard factory building. The gruesome calamity already has been called the worst industrial accident since the Bhopal disaster in 1984 and the worst ever in the garment industry.What makes the tragedy such a monumental story is that it is the worst event to occur in the decades-long debate over the use of sweat shops and related labor rights issues in these controversial links in supply chains typically used by well-to-do multinational industries to manufacture cheap products for the Western world. At issue are the safety, health, and security of the employees at these work sites.Since the building collapse occurred and the total costs in lives, injuries, and property losses have been tallied, the logical questions about responsibility for the tragedy have been raised. In a complex disaster such as this, there is considerable finger pointing and the parties being identified as responsible continue to multiply.Reports are that the owners of the building had been warned that it was unsafe and one response by the owners was to threaten to fire the people who didn’t just keep working. Within a month of the building collapse, the government created a panel to study the accident and the panel issued a 400-page report claiming that substandard building materials, failure to comply with building regulations, and the use of heavy equipment on upper floors were key factors in the disaster. The panel also recommended that the owner of Rana Plaza, Sohel Rana, and the owners of the five garment factories located in the building should be charged with “culpable homicide” for allegedly forcing the employees to return to work on April 24 after cracks had been seen on the exterior of the building the previous day.The Bangladeshi government has been pressured by many diverse groups to take action to overhaul workplace safety in the aftermath of the building collapse. A more serious problem viewed by others has been the lack of acceptable regulations and their enforcement on the part of the government itself. Many blame the government for not setting and enforcing safety standards in much the same way these type regulations work in more developed countries. The government has taken some steps in the aftermath of the tragedy. It shut down 20 sites for safety improvements. One reason the government started working quickly after this tragedy is because it feared losing millions of jobs to another poor country if companies exited en masse.The government also said it would broker talks for higher garment industry minimum wages, residing at $38 per month on average at the time of the accident. The country of Bangladesh is second only to China in terms of garment manufacturing for the developed world; however, its minimum wages are paltry in comparison to the $138 per month received on average by workers in China at the time.As so often is the case involving sweatshops and their consequences, however, the primary public discussion about the Rana Plaza disaster quickly turned to U.S. and other wealthy nations’ corporations who have taken advantage of the low costs in Bangladesh and thought to be indifferent to the working conditions in the low-cost providing countries. Product remnants of two companies were found in the rubble of the building collapse: Primark, a cut-rate British brand and Canada’s Loblaw, including its Joe Fresh brand.Other national brands, though they have not been significantly linked to the Rana Plaza fire, are also under the gun to take some substantial action on the worker safety front. Among these companies are such familiar names as Walmart, Gap, Dress Barn, H&M, Benetton, J. C. Penney, Mango, Target, Sears, Walt Disney Co., and Nike. These companies are not new to sweatshop allegations and challenges as they have been using them for decades. And, many of them have been striving for years to improve workplace conditions but the challenges posed in countries such as Bangladesh are formidable.To ensure safe and good practices, does a company need to check the supplier of its supplier’s supplier? Is seeing a certificate that a factory is safe an adequate assurance? Should the company send people in to check every safety feature of the building and to observe working conditions? If so, how often and for how long?According to The Economist, Western firms can decide to respond to the Bangladeshi tragedy in one of three ways: they can overlook attempts at CSR and just take advantage of cheap labor wherever it exists; they can exit countries like Bangladesh and operate only in countries where risks are less; or, they can stay and try to improve upon conditions there. Interestingly, some companies had already been working to improve conditions there. Walmart had started a fire-safety training academy there even before the disaster. Gap had already announced a plan to help factory owners upgrade their plants. The clothing industry had already held meetings with NGOs and governments seeking to develop a strategy to improve safety in Bangladesh’s 5,000 factories. Another reason why companies might stay in Bangladesh is because the world is running out of low cost countries to turn to for their production.Two major approaches surfaced for companies to respond to the serious workplace safety situation in Bangladesh—(1)form a group, or an accord, and act together or(2)each company act independently and go its own way.European Accord on Fire and Building Safety in BangladeshIn mid-May 2013, some of Europe’s largest retailers took the first approach and decided to create and sign an accord to improve fire and building safety conditions in Bangladesh. The accord would be a legally binding five-year agreement not to hire manufacturers whose factories failed to meet safety standards. The group also agreed to pay for necessary factory repairs and renovations. This agreement was negotiated with global worker-safety advocates, overlapping with the Bangladeshi government in its efforts to raise the minimum wage and making it easier for workers to join unions. Leaders of the accord said they need wide-spread participation to make the agreement work.Two of the companies leading the proposed European accord were Sweden’s Hennes & Mauritz AB (H&M), and Spain’s Inditex. H&M is the leading buyer of clothing from Bangladesh’s $20 billion garment industry. Observers have said that H&M had no choice but to take the lead since the volume it requires from there is so large. Other signers of the accord include Italy’s Benetton Group, Spain’s Mango MNG Holdings SL, France’s Carrefour SA and the U.K.’s Marks & Spencer.Companies Acting IndependentlyWhen the European-led accord was being developed, two leading companies, Walmart and Gap, indicated they would not join the accord but would put together their own safety plans for improving conditions in Bangladesh. One major objection they had to the accord was that it was legally binding and it was unclear what all that might mean. Other companies have been reluctant to sign the accord for the same reason.Walmart’s initial plan, which it called a commitment, would involve hiring outside auditors to inspect 279 Bangladesh factories and publish the results on its Web site. When warranted, Walmart said it would require the factory owners to make needed renovations or risk being removed from its list of authorized factories. Walmart said that it believed its safety plan would meet or exceed the accord’s plan and would get results faster. The company also reported that it had already met and revoked authorization for more than 250 factories in the country. Another part of Walmart’s plan was to set up an independent call center for workers to call and report unsafe conditions. Walmart also planned to conduct safety training for every worker in plants making its products.Though Gap did not agree with the European-led accord, the company indicated that if certain revisions were made to the legally binding agreement, it may join the accord. Other companies initially indicating they would craft their own safety plans for Bangladesh included JCPenney, Sears, and Japan’s Fast Retailing Co., operator of the Uniqlo casual clothing chain.Several companies decided to downplay their use of manufacturing in Bangladesh because of the risks involved. Nike, for example, said that Bangladesh is a high-risk country for them and they plan to keep their footprint very limited there. Nike said that only eight of the 896 factories it worked with were in Bangladesh. To ensure compliance with its safety requirements, Nike has its own system of grading or judging the suppliers. Walt Disney Co. had told its licensees in March, before the building collapse, that they could no longer produce Disney branded products in Bangladesh because some boxes of Disney sweatshirts were found at the site of the major Tazreen factory fire that had occurred in Bangladesh the previous November. Disney and Walmart claimed that they did not know their goods were being produced at the plant that burned and that it was not an authorized manufacturer. It is difficult for companies to always know or control where their products are sometimes made because subcontractors hire subcontractors, and so on, often without the company’s knowledge.United States’ Retailers Alliance FormedJust over a month after saying they would act alone, it was announced in late June 2013 that Walmart, Gap, Inc., VF Corp., Macy’s, Sears Holdings, and other large U.S. retailers would establish their own accord to improve safety conditions in Bangladesh garment factories. The agreement became known as the Alliance for Bangladesh Worker Safety. The agreement would be a $50 million, five-year fund for improving safety conditions. There were several key differences between the European-led and the U.S.-led proposals. Whereas the European plan does not require participation of the Bangladesh government, the U.S. plan does require the government’s participation. Another major difference is in the realm of legal liability. The European plan requires signatories to accept broad legal liability whereas the U.S. plan calls for limited legal liability.The $50 million U.S.-led plan would be contingent upon the Bangladesh government meeting certain criteria ensuring accountability and compliance for safety improvements. This was included because many safety codes were often ignored by governmental officials responsible for enforcing them. As for legal liability, the U.S. proposal stipulated that signatories to their plan not have broad but rather limited legal liability. In the U.S. proposal, firms could be held legally liable if they agree to commit resources and then renege or if they continue to use the unsafe factories. Another major difference between the two plans is the amount of resources required for improvements. Under the European plan, companies would be required to pay for all upgrades to factories at an estimated cost of $600,000 per factory. In the U.S. plan, companies would set up a $50 million fund to help cover the upgrade costs.Are Consumers the Responsible Party?By implication, the world’s consumers of “fast fashion” and other cheaply produced products are identified by some as responsible parties in the tragedy in Bangladesh. Though surveys report that consumers will reward responsible business practices or punish violators, this doesn’t happen very often. USA Today writer Jayne O’Donnell reported on a 23-year-old woman who said she would pay a little more for her clothes if she knew the companies were “socially responsible in the way that they gave their workers safe conditions and adequate pay.” But, O’Donnell observes that this woman may be the exception; consumers will be troubled by these news accounts, but they quickly forget. Consumer psychologist Kit Yarrow is quoted as observing that “denial is a pretty powerful thing if something is beautiful and you really want it.”The European Accord Continues Its WorkThe European Accord continues it work and reports periodically on its progress on its Web site. The Accord’s initiatives include inspections, remediation, and workplace programs. The remediation process requires the factory owner and the companies to develop a Corrective Action Plan that specifies what remedial actions will be taken along with clear deadlines and a financial plan signed off by each party. In its March 2016, quarterly report, the Accord showed that real and important progress was being made in the remediation of safety hazards identified. In spite of progress being made, the report indicated that the majority of factories monitored by the Accord are behind schedule with remediation. The Accord reports that it has been accelerating the pace of remediation.The U.S.-Led Alliance for Worker Safety Makes ProgressThe Alliance for Bangladesh Worker Safety is a collaborative process involving apparel companies and stakeholders including the U.S. and Bangladeshi governments, policymakers, NGOs, labor organizations and members of civil society. The Alliance’s initiatives include standards and inspections, remediation, worker empowerment, worker helpline, training, and sustainability/capacity building. The Alliance claims it coordinates and collaborates with all groups that are committed to bringing about the sustainable transformation of the garment sector in Bangladesh. In its June 2016 report, the Alliance provides a snapshot of the progress being made along with key statistics in its programmatic areas.The European Accord has over 200 signatories and the U.S.-led Alliance has 28 signatories. This may be why Triple Pundit, in its report that that worker safety has improved in the three years since the Rana Plaza tragedy, focuses exclusively on the efforts of the Accord. Despite the progress being made, safety inspections in Bangladesh continue to report several dozen safety violations, on average, at the plants inspected. This may be why the Rana Plaza event occurred in the first place; unfortunately, something like it may occur again. Bringing about a high level of safety in the sweatshop industry in underdeveloped countries will be an ongoing challenge for large global buyers and smaller suppliers alike.Questions for Discussion1. Who are the stakeholders in this case and what are their stakes? What are the ethical issues?3.What role does the government of Bangladesh assume in this building collapse and other safety violations?4. Do Western companies have an obligation to safeguard the safety of workers in foreign lands where the products they sell are made?