Walmart and other large fashion retailers tout their progress on worker safety to consumers. But suppliers say they’re often on their own when it comes to improving factory conditions.
BoF Professional — March 12, 2021
If a factory in Bangladesh wants to make clothes for Walmart, it has to get certified by the Accord on Fire and Building Safety first.
Getting certified by the Accord means that the factory has addressed hundreds of potential safety issues, from puddles on the floor to the structural integrity of the building, and submitted to an independent inspection. It’s considered the gold standard for worker safety, and the fashion industry’s insurance policy against another disaster like the collapse of the Rana Plaza complex in 2013, when over 1,100 workers died.
Walmart appears to be following the rules to the letter. Managers for two different factories in Bangladesh confirmed that Walmart suspended orders until their facilities were inspected and cleared
by Accord engineers. The retailer benefits, too. Like Adidas, H&M, Zara and other fashion giants, Walmart touts its Accord bona fides as proof to consumers it treats garment workers well.
But unlike those other three brands, Walmart hasn’t actually signed onto the Accord. It doesn’t contribute financial support for factory upgrades or inspections. Until last year, Walmart backed a rival organisation many labour advocates said was less transparent and less effective.
Walmart’s approach to the Accord is not unique. Many brands hold their suppliers to higher ethical and environmental standards – and market that fact to consumers – while steering few resources toward helping factories meet those ambitious targets.
“If Walmart genuinely cares about workplace safety in Bangladesh, they will become an Accord signatory”
said Scott Nova, executive director of the Worker Rights Consortium.
Walmart did not respond to a request for comment.
Meanwhile, progress toward fulfilling the Accord’s promise to bring safe working conditions to millions of Bangladeshi garment workers remains unfulfilled, sometimes with deadly consequences.
Earlier this month, one garment worker died and 42 were injured when a fire broke out in the chemical storage room of a dye house in Bangladesh. According to the Bangladeshi newspaper The Daily Star, workers who rushed to the main exit of the factory found it locked. Though covered by the Accord, the factory had previously been found only partially compliant, including violations related to chemical storage dating back nine months.
The dye house fire can’t be traced directly to any single brand’s actions. But labour advocates say there is a link between underfunding of the Accord and stalled progress on worker safety.
In January, the Accord’s steering committee noted that factories that were closest to certification – and therefore, contracts with international brands – tended to get more inspections. The facilities with the worst violations, like the dye house, were going longer without active monitoring.
The suppliers who work with Walmart told BoF they see the retailer as part of a wider pattern. Since the Accord was put in place, the number of deadly incidents per year has fallen from dozens to low single digits. But the onus is on factories to pay for upgrades and change their practices. In some areas, including worker pay, water usage and emissions, the industry has made less progress.
“The brands are asking for improvements continually,” said one supplier’s general manager, who asked not to be identified so as not to hurt the factory’s standing with clients. “And improvements mean investments. Obviously, it’s a betterment for the factory. But the brand should increase the price, or offer the factory to share the investment with us, as a business partner. No one pays a single penny.”
Many brands cancelled or delayed orders last spring as lockdowns caused apparel sales to plunge globally.
Li & Fung, part of Fung Group, acting on behalf of American Eagle asked suppliers for a 20 percent discount on completed orders. Asda, a UK-based subsidiary of Walmart, refused to accept up to 20 percent of shipped orders, and demanded 40 to 70 percent discounts on in-process and completed orders, according to the Worker Rights Consortium.
A month later, American Eagle was among many brands signing onto the International Labour Organisation’s Call to Action, which promised to support manufacturers and garment workers during the pandemic. Walmart and other retailers signed USAID’s pledge to bring relief to garment workers in Bangladesh, Cambodia, Sri Lanka and Vietnam. Li & Fung and American Eagle did not respond to requests for comment.
Almost a year on, no brands have contributed financially to either programme. The ILO has relied mainly on funding from the German government to fulfil its pledge, while H&M and Levi’s have contributed $1.3 million and $3 million respectively to separate relief programs.
Meanwhile, brands continue to ask suppliers for steep discounts that bring prices below the cost of production, which contributes to factory closures and layoffs.
“Brands never paid towards any of the improvements it would take to actually assure that sustainability is embedded into manufacturing supply chains,”
said Ayesha Barenblat, whose nonprofit Remake’s #ShareYourProfits campaign aims to get brands to put money into a severance fund for workers.
“What we need is money yesterday.”
In 2018, a consortium of large brands committed to cutting their emissions 30 percent by 2030, later raised to 45 percent, via the Fashion Industry Charter, an effort organised by the United Nations.
To hit these goals, brands need to create incentives for third-party suppliers to reduce emissions. Those can come in the form of paying higher prices for garments produced in green factories, or financing renewable energy projects. More often, brands rely on sticks rather than carrots: threatening to take their business elsewhere if a factory doesn’t make improvements at its own expense.
Brands can create positive incentives even without direct financial payments. Some commit to working with a factory for several years if they, in turn, commit to using cleaner energy sources or improving working conditions. That provides factories with guaranteed income they can use to secure financing for environmental projects or to raise pay.
“If you have a long-term relationship, that will de-risk the lending,”
said Lewis Perkins, president of the Apparel Impact Institute.
Committing to the Relationship
Bombyx, a Chinese silk supplier, built its facility in Nanchong, China, to meet multiple sustainability certifications. The idea was to attract brands looking to market their clothes as made from sustainable materials, rather than purely on cost. Customers include Everlane, Club Monaco, Theory and J.Crew.
Convincing brands to budge on price has proven difficult. Some wanted the exclusive ability to market their products using Bombyx’s story in exchange for long-term supply commitments, which didn’t make business sense, said chief executive Hilmond Hui.
“Everybody wants sustainable. But when it comes to asking for a monetary value from your customers, it becomes a very difficult conversation, their margins might not be able to support that extra cost” Hui said
Franky Vangaever, who worked in technical innovation for Levi’s for 33 years before leaving last year to found Responsible Textile Innovation, a supply chain technical consultancy, said the denim brand
cultivated long-term relationships with suppliers. But he saw other brands request costly environmental upgrades, only to dump suppliers when they found cheaper prices elsewhere.
“Brands are not willing to spend one single dollar [or] cent more on the raw material prices and on the prices that they buy the product from their production facilities,” Vangaever said. “The technologies are there. So it’s not that you have to invest millions of dollars.”
Perkins said he welcomes smaller brands free riding on the effort of industry leaders. But larger brands need to step up.
“If H&M, Nike, Adidas and C&A have just done 20 percent of the industry, and everybody else benefits from it, then I think that’s great,” he said. “The largest brands should be engaged … if they’re not, then that’s a problem.”
Labour activists advocate for governments to step in and through legislation force brands to find out what is happening in their supply chains, disclose any problems and fix them.
Barenblat of Remake said she is tired of begging brands to do the right thing.
“We need an enforceable binding agreement system when it comes to severance and wages,” she said. “The voluntary efforts, we know they don’t work.”