According to the Accord on Fire and Building Safety published in August 2019 and based on inspections carried out between 2014 and 2019, only 200 out of 1,600 garment factories in Bangladesh meet the safety standards for workers. Out of this, 400 factories failed to comply with the new safety rules, thus being banned from taking further orders from international brands such as H&M, Esprit, and Primark that are members of the Accord.
The Accord is an independent organization formed in 2013 for a five-year period, as a legal binding agreement between trade unions in Bangladesh and more than 200 international apparel brands and retailers from Europe, North America, Asia, and Australia. Its primary aim is to ensure a safe working environment for Bangladeshi garment workers in the aftermath of the Rana Plaza incident that killed 1,134 people when a commercial building comprising of clothing factories collapsed in 2013. Although it was originally due to expire in May 2018, the government granted a three year extension to complete the remaining safety fixes and to help it transition to a national regulatory body.
However, following a complaint by a local factory owner after he was banned from working with fashion brands from the Accord, the Supreme Court ordered the entity to cease all operations by November 30, 2018. After months of negotiations and delays, a Memorandum of Understanding was signed in May 2019, in which the Accord’s operations were allowed to be extended for 281 working days. After this period, a new local body called the Readymade Garment Sustainability Council (RSC) will take over the Accord.
Impact on the global apparel sector
Before the MoU was signed, the Accord warned its members that they may have to stop sourcing from about 500 factories with safety problems if the Accord can no longer inspect them. Twenty French retailers including Auchan, LaRedoute, Naf-Naf, and Galeries Lafayette and 16 others that source from Bangladesh wrote an appeal letter to Prime Minister Sheikh Hasina to express concern about the “lack of readiness” of the new regulatory organization. Esprit, which manufactures about a third of its garments in the country, wrote to its Bangladeshi suppliers that the Accord’s closure would undermine the industry’s reputation and may ignite protests among activists and consumers in European countries.
Several western retail brands are worried that the ending of the Accord may jeopardize their brands’ image and increase production risks, as firms may face pressure to cut business ties with factories that are deemed insufficiently prepared in their safety measures.
Under the binding agreement, members of the Accord are obliged to cease operations with any factory that violates or refuses to implement workplace safety measures. It is a complicated process for the retailers because while there are alternative sources, retailers are bound by the agreement to not do business with factories that have not been vetted by the Accord. It is uncertain at this stage, if the same agreement will remain in effect when the RSC takes over or whether a new set of terms and conditions may apply with a renewed agreement.
Concern for garment workers’ safety
The European parliament has expressed “serious concern” with regards to the Accord’s impending closure as reports suggested that around 1,450 factories still need to upgrade fire alarm systems. Since its establishment, the Accord has reportedly inspected over 2,000 factories and assisted in plans to fix 150,000 structural and fire hazards, especially electrical remediation, as most factory fires are caused by electrical hazards.
Despite this, most factories are still dodging compulsory safety requirements. This was the case in the Anzir Apparels Ltd.’s fire in March 2019, which injured 8 people in Baipail, Ashulia. The factory was closed and reopened a few times under different names despite being listed by the Alliance for Bangladesh Worker Safety factory for failing to make progress in remediation during an inspection in 2014. According to Clean Clothes Campaign, the factory has resumed operations after the Bangladesh Department of Inspection for Factories and Establishments failed to take action on the safety deficiencies at the factory.
What to expect next
In less than a year, the Accord’s chapter will come to an end in Bangladesh and the question of whether it will release a fresh list of factories that are deemed safe or unsafe for workers remains unclear. Reports in late 2018 suggested that the Accord will continue to operate from the Netherlands and will remain legally bound to its signatory firms. While challenges are inevitable during the transition period, the impact of the Accord’s closure on global apparel companies operating in Bangladesh is likely to be less severe.
While there are possibilities that some garment factories may attempt to evade stringent factory safety standards during the transition due to lack of inspections, threats by retailers to move elsewhere are not feasible as retailers have already committed to improving workplace safety in Bangladesh over the years. Although reports suggest that various brands are looking into Ethiopia as an alternative source, this is unlikely to happen soon as Ethiopia does not have the capacity that Bangladesh does as the second largest world’s garment exporter after China. H&M, the first Accord signatory and the biggest buyer from Bangladesh, has announced that it does not have plans to pull out even after the Accord’s departure due to the impact it would have on the country’s garment industry. Instead, the firm intends to continue its efforts to improve factory safety in Bangladesh.
Resilience360 customers with garment industry ties in Bangladesh are advised to monitor developments through liaising with local contacts. In order to ensure that brand image as well as production is intact, apparel manufacturers are advised to work with their suppliers to instate workplace safety rules and standards in accordance with the Accord and the national regulatory requirements.