WRC Update: Renewal of the Bangladesh Accord

To:WRC Affiliate Universities and Colleges
From:Scott Nova
Date:June 30, 2017
Re:WRC Update: Renewal of the Bangladesh Accord

The global unions, brands and retailers, and non-governmental organizations involved in the Accord on Fire and Building Safety in Bangladesh announced an agreement yesterday to renew the Accord for an additional three years. The Accord was scheduled to end in May of 2018, but has now been extended to 2021. The renewal is a product of the recognition, by all of the parties, of the Accord’s effectiveness and the need to consolidate the progress it has achieved and continue its vital work on garment factory safety in Bangladesh. You can read the announcements of the renewed agreement here and here, and the text of the new agreement here.

The Content of the New Agreement

The new Accord is fundamentally the same agreement as the current Accord. The most critical elements are preserved: the binding and enforceable nature of the agreement, the brands’ obligation to negotiate prices for garments that ensure that factories can afford to operate safely, the power of the Accord’s independent inspectorate to direct signatory brands to stop doing business with any factory that refuses to operate safely, and the strong transparency provisions, including detailed public information on whether each identified hazard, in each factory, has been corrected.

The new agreement also includes some modest, but significant, improvements:

  • Suppliers will be obligated to pay severance to workers if they have to close or relocate a factory for safety reasons. Since Bangladesh law already obligates factory owners to pay severance in these circumstances, the original Accord agreement did not address this obligation. However, as we have previously discussed in other cases, garment factory owners in Bangladesh sometimes fail to comply. With the specific inclusion in the new Accord of the obligation to ensure that workers receive severance, this becomes one of the requirements for factories that produce for Accord signatory brands, which means more workers will get the money they are legally due.
  • Freedom of association is now explicitly protected by the Accord in cases where workers and their organizations face retaliation for raising safety concerns. The Accord currently has an effective complaint mechanism that allows for intervention in some retaliation cases, but its scope of application is narrow. Under the new agreement, the Accord staff will be empowered to intervene in a wider range of cases. Such retaliation – in the form of threats, firings and sometimes outright violence against workers seeking to raise concerns about labor conditions – is by far the largest obstacle to the free exercise of associational rights in Bangladesh. A stronger and broader Accord complaint mechanism will help address this serious problem.
  • The Accord’s dispute resolution mechanism, which enforces brands’ commitments, also has been effective, but has been slow in operation. The process will be enhanced, under the new agreement, with a more active role for Accord staff, who will engage in independent fact-finding and make specific recommendations for the resolution of disputes.

There are also two changes to the agreement that I would not describe as improvements, as they do not enhance protections for workers, but which were desired by the signatory brands. Both these changes concern the ability of brands to shift production between factories for reasons unrelated to safety and they will result in brands having fewer obligations with respect to the length of their engagement at factories at which they no longer wish to produce. Brands will, however, still be obligated to support safety remediation, at any factory they exit, for one and a half years after the business relationship with the factory concludes. These changes make the agreement less burdensome for signatory brands, in some instances, without undermining the overall effectiveness of the Accord program.

The Purpose of the New Agreement

The primary purpose of extending the Accord is 1) to ensure that the safety progress achieved under the original Accord is maintained after 2018 and that factories cannot return to the unsafe practices of the past, and 2) to bring about needed safety renovations in more factories, as signatory brands and retailers identify new suppliers, which will then come under the coverage of the Accord.

It is important to note that the purpose of renewing the Accord for three more years is not to give factories currently engaged in safety renovations additional time to complete this work. All covered factories that have been inspected have corrective action plans in place, with clear deadlines, all of which expire well before the end of the original Accord in May of 2018. Factories are expected to meet these deadlines and finish the work of becoming fully safe.

As we have reported previously, despite all the progress the Accord has achieved in making factories safer for workers, there have also been substantial delays in renovations at many factories. There will be an intensive effort to complete the unfinished work in the months ahead and any factories that refuse to become safe will ultimately be terminated as Accord suppliers, as has already been necessary with respect to several dozen facilities.

Renewing the Accord will also allow for the continuation of its groundbreaking worker training program. The program, focused in particular on worker participation in factory health and safety committees, involves training of a length and intensity far beyond typical supply chain training schemes. The extension of the agreement will allow this important program to be fully implemented at a larger number of factories.

University Licensees and Their Suppliers’ Factories

All university licensees that are Accord signatories received the text of the new agreement, at the beginning of this week, from the brand representatives who led the negotiation. The WRC has also written to licensees to make sure they are informed of the new agreement. A significant number of major brands and retailers have already signed, in anticipation of yesterday’s announcement, but most companies, including the university licensees, have not yet had time to fully review the new language. We will update affiliate universities concerning licensees’ decisions in the weeks ahead.

As you know, the WRC continues to closely track safety progress, under the current Accord program, at all factories in Bangladesh making collegiate apparel. We reported on the status of renovation progress at each factory at the University Caucus meeting last month and you can see the details by perusing our Year in Review presentation, if you have not already had a chance to do so.

Thirteen collegiate licensees currently source from Bangladesh, 10 of which have signed the Accord, and there are 20 factories in the country that produce university logo apparel, 19 of which are covered by the Accord safety inspection and remediation program. These factories employ over 32,000 workers. As anticipated, numerous safety hazards were identified in every collegiate factory the Accord inspected, from inadequate fire exits, to dangerous wiring, to serious structural defects. At one factory on the university list, the Accord’s engineers identified structural flaws so severe as to create an imminent risk of collapse and the building had to be evacuated.

To date, 85% of the safety hazards in the collegiate factories have been corrected (with some items still pending verification by Accord engineers). At an average renovation cost of $500,000 per factory, this represents close to $10 million in renovations, repairs, retrofits and upgrades at factories making university goods. This includes installation of fire doors, modernization of inadequate alarm systems, reduction of excessive weight loads, removal of lockable gates on emergency exit routes, proper insulation of electrical cables, and dozens of other types of corrective actions. This is substantial improvement and it has reduced risks greatly for workers in all of these factories.

There is, however, much work left to do. The 85% figure overstates progress: among the 15% of the renovations still incomplete, there is an over-representation of especially costly items, such as the installation of automatic sprinkler systems and major structural repairs. And most factories are past agreed deadlines on at least some of the outstanding issues. Also, three collegiate factories have either been terminated from the program or are in the process of being terminated, because of persistent lack of progress on correction of safety hazards. This means they will no longer be able to produce for any Accord signatory, including the university licensees. Ending production at factories that refuse to become safe is an unfortunate, but necessary, part of the Accord program (just as it was a key element of the elimination of sweatshops in the US).

Despite these challenges, factories producing university logo goods in Bangladesh have collectively completed close to a thousand individual safety renovations and repairs and these buildings are much safer for employees as a result. This is a degree of progress that is a massive advance over previous safety initiatives in Bangladesh, none of which led to meaningful safety improvements in the nation’s garment factories, including the collegiate factories. The Accord’s achievements, even with the difficulties encountered, make it the most successful workplace safety program ever introduced in contemporary apparel supply chains.

It is our hope that licensees sourcing from Bangladesh will sign the new Accord, ensuring that the safety improvements achieved to date in collegiate factories, and those that will be completed in the coming months, are sustained in the years ahead.

A New Model for Protecting Worker Rights

The renewal of the Accord is a testament to the value of the new model of labor rights enforcement that the program represents – one defined by binding obligations for buyers, real consequences for unsafe suppliers, and a recognition of the fact that it costs more to produce under good conditions and that buyers must share these added costs. I believe that this model, elements of which derive directly from precedents first set by universities in their labor codes, holds the key to achieving broad and sustainable labor rights progress in global supply chains.

I am proud of the leadership role the WRC has played in the conception, creation and implementation of the Bangladesh Accord. The agreement has made factories safer for more than 2.5 million garment workers, including tens of thousands of women and men making university logo goods. It is heartening to see both global corporations and labor unions recognizing the value of the Accord and moving to renew and extend it.

As always, please let me know if you have any thoughts or questions about this communication.

Have a good Fourth of July.

Scott Nova
Worker Rights Consortium
5 Thomas Circle NW
Washington DC 20005
ph  202 387 4884
fax 202 387 3292
[email protected]