Bangladesh Safety Accord Briefing by Judy Gearhart Executive Director, ILRF June 4, 2013

How Accord was achieved… Global labor advocate networks linking brands/retailers to factories in recent disasters Focusing attention on individual brand responsibility, failure of industry CSR programs, small cost of saving lives Broad support – Bangladesh unions, US and European unions, NGOs, online campaigners, student activists Key players: NGOs and unions in Bangladesh, Europe, US and Canada

The Accord: Unprecedented Commitments Thorough, independent inspections with full public reports Brands/retailers must require factories to undergo all necessary renovations and help with financing Brands/retailers must cease business with any factory that refuses (*through a guided process) Brands/retailers must make 2-year commitment to safe factories Central role for workers and unions: union access, OHS committees, right to refuse dangerous work All commitments binding and enforceable

Implementation Implementation plan in 45 days Brands/Unions/NGOs convened in Geneva on May member planning committee focused on swift implementation First priority: inspections and renovations to mitigate most serious widespread hazards

Signatory Brands and Retailers 41 signatory companies, from 13 countries H&M – largest producer in Bangladesh Inditex – world’s largest fashion retailer Carrefour – world’s 2nd largest general retailer Most major apparel retailers in W. Europe North America: PVH/A&F/Loblaw/ENYCE Signatories represent: At least 1,500 factories and 1 million workers Gaps: Gap, VF, Walmart, Target, JC Penney, Macy’s, Kohl’s

Conceptually: Four Parts to Program: Agreements on the Structure of the Program Rigorous Inspections and Remediation Worker Involvement and Transparency: Supplier Incentives

AGREEMENTS ON THE STRUCTURE OF THE PROGRAM

Scope of the Project: Brands designate all suppliers to 1 of 3 groups: Supplier Group Significance to BrandEngagement Level Tier 1, or Primary Suppliers Making up 30% of brand’s production  Safety Inspections  Remediation  Safety training at facility Tier 2, major or long-term suppliers Tier 1 & 2 make up 65% of brand’s production  Safety Inspections  Remediation Tier 3, minor suppliers Occasional suppliers; brand orders < 10% of its production; Make up 35% of brand’s production  Limited inspections  If high risk, move to Tier 2

Governance Dispute Resolution (para 5): ◦ Steering Committee reviews and decides disputes within 21 days of the petition; ◦ Appeals to that decision then move to an arbitration process, which is to be enforceable in a court of law of the domicile of the signatory company Administration and management: to be developed by the Steering Committee (SC will have 3 company and 3 union signatories) in consultation with: High-Level Tripartite Committee of National Action Plan, MOLE, ILO and GIZ.

Financial Support Brands fund SC, and work of the Safety Inspector and Training Coordinator and their teams. Brands fund proportional to their production in Bangladesh up to a max contribution per company per year being $500,000 for the 5 years (para 24).

CREDIBLE INSPECTIONS AND REMEDIATION

Credible Inspections: Inspections done according to rigorous standards Required public reporting of inspection findings and remediation plan; Sharing of factory lists and volume data with the Safety Inspector (confidentially) so they can designate suppliers according to its Tier

Remediation Factories to implement corrective actions on schedule Factories maintain workers’ employment relationship and regular income for up to 6 months in case the factory has to close for renovations; failure to do so may result in termination of contracts. Brands make reasonable effort to ensure workers who lose employment due to loss of orders or shut down of a factory are offered employment or supported in their placement at a safe factory. Factories ensure workers can refuse work if he/she has reasonable justification it is unsafe without recrimination

WORKER INVOLVEMENT AND TRANSPARENCY

Training: Require factories provide access to training teams to deliver training including the involvement of trade unions and local experts. All suppliers must have functioning health and safety committees set up according to law and made up of 50% workers chosen by factory union or democratic election

Complaints Safety Inspector establishes worker complaint process, connected to NAP hotline. [Note: consider how to set up community based support for workers’ complaints and concerns]

Transparency and Reporting Public Reports on Factory Compliance and Remediation: ◦ Written inspection reports within 2 weeks for: factory managers, OSH committee, worker reps and SC ◦ Inspection report and factory remediation plan public in 6 weeks. Aggregated list of suppliers in program, indicating to which Tier they are designated Quarterly aggregated reports summarizing industry compliance and review of findings. A protocol will ensure participating factories are not penalized as a result of the transparency

SUPPLIER INCENTIVES

Threats and Brand Financing: Warning system for brands to threaten termination of business due to lack of participation Brands negotiate commercial terms that ensure it is financially feasible for factories to maintain safe workplaces and/or use alternative means to ensure financial capacity to comply (e.g. loans, investments, direct funding, etc) Brands maintain order volumes with Tier 1 and 2 factories for at least first two years of this program, provided it’s commercially viable to do so, and the factory continues to meet the company’s terms.