U.S. Retailers Tout Bangladesh Safety Deal, But Is It Enough?

retail bangladesh walmart factory collapse
retail bangladesh walmart factory collapse

On Monday, dozens of retailers signed an accord aimed at tightening safety standards in factories in Bangladesh, a move that came in response to an April factory collapse that killed more than 1,100 people.

The Bangladesh Fire and Safety Accord will compel its 70 signatories to disclose the factories from which they source their goods, and mandate safety inspections of those factories. It will also be legally binding, making the companies legally responsible for safety at the factories and financially responsible for any needed repairs.

But notably missing from the list of sponsors was ... well, everyone you've actually heard of.

The vast majority of the signatories to the pact were European brands; the only U.S. companies to join the pact were Abercrombie & Fitch, Sean John and PVH, the parent company of Tommy Hilfiger and Calvin Klein. Major American retailers like Walmart, Gap and J.C. Penney opted out, criticizing the European accord for giving too much power to unions. They promised their own safety plan.

That plan materialized today. Calling itself the Bangladesh Worker Safety Initiative, it boasts the participation of 17 American retailers, among them Walmart, Sears and Target. The retailers have pledged more than $42 million over the next five years to fund factory improvements, worker training and other initiatives.

IndustriALL and UNI, the unions behind the European plan, weren't impressed with the U.S. plan. In a statement, they called it a "pale imitation" of their own accord, saying that it was created with no input from workers. They also say that it's vague on enforceability and silent on whether workers can refuse to enter an unsafe building.

Money is another issue. While the American retailers say that their $42 million fund is bound to grow, it seems that the pact has more of a cap on available funds for safety improvement. The European accord, by comparison, pledges to make available whatever funds are necessary to guarantee safety.

It's clear is that the factory collapse has galvanized public scrutiny of the industry's Bangladesh problem, and the major players are responding on both sides of the pond. But throwing money at the problem won't resolve retailers' supply-chain issues overnight. And if the North American plan proves as toothless as the unions claim, it may not be enough to prevent the next disaster.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.