Worker-Driven Social Responsibility | Interfaith Center on Corporate Responsibility

Statement endorsed by 192 investors calls on companies to join the International Accord in Bangladesh and the new Pakistan Accord, to accelerate implementation of human rights due diligence in the garment sector.

NEW YORK, NY, THURSDAY, APRIL 20, 2023 – A coalition of 192 global institutional investors representing $1.3 trillion USD in assets under management released a statement today calling on apparel companies sourcing from Bangladesh and Pakistan to strengthen their implementation of human rights due diligence to effectively embed their corporate responsibility to respect human rights.

Following the 2013 collapse of Rana Plaza where 1,134 workers lost their lives and 2,500 more were injured, the Accord on Fire and Building Safety in Bangladesh (Bangladesh Accord), a landmark legally binding agreement between global brands and unions to reform the sector and create safe factories, was born.

Directly following the collapse of Rana Plaza, the Interfaith Center on Corporate Responsibility (ICCR) formed the Bangladesh Investor Initiative – comprising over 200 institutional investors with over $4 trillion in assets under management and advisement – to press global companies sourcing in Bangladesh to become directly involved in helping to reform the Bangladesh apparel sector by joining the Accord. In the ten years since, this group of investors has supported the Accord’s work to create workplaces that protect and respect the lives of workers and help mitigate the risks to companies and their investors.

“The days of voluntary CSR are fading, now replaced by a combination of mandatory human rights due diligence laws and regulations,” said David Schilling, Senior Advisor, ICCR. “For ten years, the Bangladesh Accord has proven that legally binding agreements anchored to a governance structure comprising trade unions and companies with authentic worker engagement and effective grievance mechanisms are the best recipe for meaningful, long-term change.”

In the past decade, the Accord has successfully established safer factories in Bangladesh for over two million workers through unprecedented collective action. Meanwhile, the global regulatory landscape has continued to evolve, leading to a growing number of initiatives advocating corporate respect for human rights. Notably, in January of 2023, the International Accord for Health and Safety expanded to supplier factories in Pakistan, a move widely welcomed by investors.

“The tragic Rana Plaza collapse in Bangladesh led to an outcry in the apparel industry and also in the investment industry. In the aftermath of the Rana Plaza tragedy, investors played a role in encouraging retailers to sign the Bangladesh Accord,” said Måns Carlsson, head of ESG for Ausbil Investment Management. “That framework helps reduce the risk of further safety tragedies in the Bangladeshi garment sector and it is a concept that could be applied in additional geographies and sectors. Having recently visited garment factories in Bangladesh, it is clear that the Accord has been a positive force but investors should also note that many underlying labor rights issues remain in the Bangladeshi garment industry.”

“In the current policy environment, companies are increasingly required to show how they effectively implement human rights due diligence to address salient human rights issues across their operations and value chains. Companies need to prepare and ensure compliance with current and upcoming regulation. If not already a signatory, the best way to ensure due diligence on health and safety issues is to join the International Accord and the Pakistan Accord,” said Matthias Narr, Head of Engagement International at Ethos.

To further accelerate progress on human rights due diligence, the investor coalition is urging brands to commit to prioritizing the health and safety of workers in Bangladesh, Pakistan, and throughout global supply chains by taking the following four concrete actions:

Accelerating and strengthening the implementation of human rights due diligence as defined by the UN Guiding Principles on Business and Human Rights with increased attention given to remedy, in their operations and value chains as part of their ‘corporate responsibility to respect human rights’;
For those companies sourcing from suppliers in Bangladesh or with plans to do so in the near future, signing the International Accord;
For those companies sourcing from suppliers in Pakistan or with plans to do so in the near future, signing the Pakistan Accord;
Joining the Employment Injury Scheme (EIS) Pilot in the garment sector of Bangladesh, an innovative tripartite initiative that involves the ILO, government, brands, trade unions, and employers, in creating a social protection scheme including compensation for medical treatment and rehabilitation services, as well as income loss caused by occupational injuries and disease.

“As a legally binding system designed to protect more than two million garment workers and give them a mechanism for redress, the Accord has been absolutely transformative in the apparel industry over the past ten years,” said Lauren Compere, Head of Stewardship & Engagement at Boston Common Asset Management. “At the same time, investor expectations of portfolio companies with regard to human rights implementation have also risen, and today we call on apparel brands to go further, and put human rights at the core of their business models and worker health and safety as a top priority in their supply chain management.”

“Investors will be engaging relevant companies in their portfolios, particularly U.S.-based companies that have yet to join the International and Pakistan Accords,” stated Chavi Keeney Nana, Director of Equitable Global Supply Chains at ICCR.

CONTACT:
Susana McDermott
Director of Communications
Interfaith Center on Corporate Responsibility
201-417-9060 (mobile)
smcdermott@iccr.org

About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 51st year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs, and other socially responsible investors with combined assets of over $4 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn, and Facebook.

The majority of apparel and footwear brands still cannot demonstrate how they are mitigating the risks of forced labor that may result from unethical recruitment practices.

NEW YORK, NY, WEDNESDAY, MAY 26^TH, 2021 – In early 2019, a group of global investors, led by the Interfaith Center on Corporate Responsibility (ICCR) and supported by the Principles for Responsible Investment (PRI) committed to address the findings of KnowTheChain’s 2018 apparel and footwear benchmark which demonstrated a sector-wide failure to address exploitative recruitment practices that could lead to forced labor. Forty-three companies were sent letters, or otherwise engaged.

Today, KnowtheChain released its 2021 sector benchmark which indicates that these investor engagements have had some impact on worker rights: all of the companies benchmarked in both 2018 and 2021 made some improvements since 2018, with the strongest improvements seen on the theme of responsible recruitment. Specifically, since 2018, nine companies published a policy prohibiting worker-paid recruitment fees in their supply chains, and five companies reported that workers in their supply chains have been repaid recruitment fees.

Yet, the new benchmark also revealed several disturbing trends: of the 37 largest apparel and footwear companies in the world, the majority (78%) still do not disclose whether workers in their supply chains are repaid recruitment fees let alone how they protect workers from having to pay such fees in the first place.

Even before the COVID-19 pandemic, reports of forced labor in the sector were skyrocketing with allegations of abuse identified in the supply chains of more than half the benchmarked companies (54%) and some companies facing up to four allegations. In addition, many workers have lost their livelihoods due to COVID-19 and millions of global apparel workers still await payment by their employers of legally owed wages and benefits. Yet, only four out of the 37 companies (11%) benchmarked could demonstrate several examples of how workers were receiving remedy, including repayments of unpaid wages or recruitment fees. In fact, half of the companies scored zero on the remedy indicator including online retailers such as Amazon and Zalando, which have profited significantly during the pandemic. Not only are companies not remediating past abuses, the benchmark also showed that they are a far cry away from building a more equitable and resilient supply chain system as the economy recovers. Half the companies scored zero on the most worker-centric indicators: those that focus on due diligence processes related to worker participation, and concrete outcomes for workers.

“Companies with sound supply chain management pay workers their legally owed wages and severance pay,” said Vincent Kaufmann, CEO, Ethos Foundation. “We urge investors to use tools such as KnowTheChain to identify risks and steps companies in their portfolios need to take to remedy detected shortcomings.”

The group of more than 60 investors led by ICCR said they are committed to press companies to ensure these remedies are awarded to workers, and are prepared to act if companies fail to do so.

“KnowTheChain benchmarks have strengthened our engagements and enabled us to distinguish companies that are taking important and replicable steps from those whose inaction is putting vulnerable workers at risk. It is imperative that companies address exploitative working conditions in their supply chains, including forced labor and human trafficking—and we need to see proof on the ground. Policies are no longer sufficient; companies need to show that their policies and processes make a difference for workers,”said Julie Tanner, Managing Director, Christian Brothers Investment Services. “As a responsible investor, where portfolio companies continue to fail to remediate abuses, we will use the power of the proxy and vote against boards to stand in solidarity with workers in global supply chains.”

The investors also say they will urge companies to adopt worker-centric due diligence models that are built on responsible purchasing practices and support worker empowerment, including freedom of association and collective bargaining and enforceable labor rights agreements.

“ICCR members have focused on workplace human rights in supply chains for decades,” stated David Schilling, Senior Program Director, ICCR. “Some leading companies have made progress, but the sector, as evidenced by the KTC benchmark, has not sufficiently filled the gap between policy, processes and performance. To do so, companies and their suppliers must engage workers as agents to transform the garment sector from the ground up, where workers receive a living wage and labor under safe and healthy conditions.”

“The investor community must come together and mobilize and protect the rights of the millions of workers that are in situations of modern slavery and human trafficking today,” said Fiona Reynolds, CEO, PRI. “This is why the PRI has been supporting ICCR’s KnowTheChain engagements on forced labor in apparel supply chains since its inception. With our five-year human rights program, the PRI will ensure investors play their part to ensure respect of workers’ rights in global supply chains.”

About the Interfaith Center on Corporate Responsibility (ICCR)
Currently celebrating its 50th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-plus member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $USD 4 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn and Facebook.

Shareholder proposal emphasized vulnerability of farmworkers in Wendy’s ($WEN) supply chain to COVID-19 and its failure to join the Fair Food Program.

NEW YORK, NY, TUESDAY, MAY 18^TH, 2021 – Today shareholders approved a proposal at Wendy’s asking the company to disclose evidence of whether its existing policies effectively protect workers in its food supply chain from human rights violations, including harms from COVID-19 – as well as whether Wendy’s mandates Covid-19 safety protocols for these workers.

The proposal emphasized that the Presidential Medal-winning Fair Food Program (FFP), which investors have urged Wendy’s to join, has effectively addressed these risks for participating companies through its industry-leading standards, monitoring mechanisms, and unparalleled record of enforcement. All of Wendy’s major peers, including Burger King ($QSR) and McDonald’s ($MCD) currently participate in the Program.

Investors are encouraged that the proposal was approved, and believe this will send a signal to Wendy’s that it must join the gold standard Fair Food Program. The vote comes on the heels of two letters sent to the company last month – one from over 100 investors representing $1 trillion in assets, the other from a coalition of six U.S. state treasurers – demanding that Wendy’s “join the FFP because it is uniquely effective for risk mitigation and compliance in the agricultural industry”.

Presenting the resolution for a vote, Sister Margaret Magee, of the Franciscan Sisters of Allegany, NY, said: “With a global reckoning over racial justice, and a pandemic that disproportionately harms Brown and Black farmworkers, this is an issue every food retailer must address. But Wendy’s is falling terribly short, as the only one of its peers not to join the award-winning Fair Food Program.”

Gerardo Reyes Chavez, who spoke at the AGM on behalf of the Coalition of Immokalee Workers which created the Fair Food Program added, “With this resolution, we demand to know if farmworkers in Wendy’s supply chain have the same right to complain as workers under the Fair Food Program, if they are protected from COVID-19 like workers in the Fair Food Program are, if Wendy’s has eliminated abuses like the Fair Food Program has. All workers deserve to have a safe workplace and to be treated with dignity, and shareholders deserve to know whether Wendy’s is protecting your investment by protecting workers in its supply chain.”

“This shareholder approval makes clear that investors are seeking evidence that human rights systems are actually working to protect essential workers in the food supply chain. We urge the company to include all the concrete information sought by the resolution, so that we can truly compare Wendy’s efforts to the demonstrated success of the Fair Food Program,” said Mary Beth Gallagher, Executive Director of Investor Advocates for Social Justice, which spearheaded efforts around this resolution.

Although Wendy’s had previously filed a No Action request on the resolution with the Securities and Exchange Commission (SEC) to have it omitted from the proxy, the company shifted gears after the SEC denied that request, ultimately urging investors to vote yes. In reaction, Deb Goldberg, Massachusetts State Treasurer and Receiver-General, said, “I am pleased to see Wendy’s revise its position, and that the proposed shareholder resolution has been passed. However, a vote is still not enough, and its corporate directors should want to do more. I strongly encourage Wendy’s to commit to joining the Fair Food Program. In doing so, they will join their peers in providing a better environment for the people who produce the food we all eat.”

CONTACT:
Susana McDermott
Director of Communications
Interfaith Center on Corporate Responsibility
201-417-9060 (mobile)
smcdermott@iccr.org

Statement endorsed by 181 investors cites the Accord as a highly effective and critical accountability mechanism to safeguards worker health and safety that must be preserved.

NEW YORK, NY, THURSDAY, APRIL 22, 2021 – A statement endorsed by 181 global institutional investors representing over $4 trillion USD in assets under management calling on companies to re-commit to the Bangladesh Accord on Fire and Building Safety (the Accord) was released today in advance of the eight-year anniversary of the collapse of Rana Plaza.

As the Accord is currently set to expire on May 31^st, 2021, investors say a new agreement between global unions and brands that includes the essential elements of the Accord must be in place beforehand or there will be no enforcement mechanism to ensure the proper functioning of the RMG Sustainability Council and no independent organization to report on its performance.

Specifically, the investors, which hold many of the global brands sourcing in Bangladesh as portfolio companies, are urging brands to endorse a new, legally binding agreement with global unions that preserves the essence of the Accord by:

Including enforceable obligations for brands that ensure worker health and safety is protected;
Maintaining the role of the Accord secretariat as an independent mechanism of accountability for the RMG Sustainability Council, and is;
International in scope, providing a framework to expand the Accord’s lifesaving inspection and remediation program to other countries where garment workers’ lives are at risk from fires and structural failures.

“After the tragic collapse of the Rana Plaza building eight years ago and the death and injury of 4,000 workers, an unprecedented 200 global companies signed the legally binding Accord on Fire and Building Safety in the hopes of transforming the Bangladesh garment sector,” said David Schilling, Senior Program Director for Human Rights at ICCR. “That goal is being realized, and we commend these companies, particularly those that assumed leadership in the Steering Committee alongside global trade unions, for taking that important step. Now is not the time for them to abandon this proven model for effective supply chain management. We urge companies that have been part of the Accord – and those that have yet to participate – to demonstrate leadership by committing to this agreement, not just for Bangladesh, but for all the countries where workers’ health, safety and livelihoods are put in jeopardy simply by going to work each day.”

The investors point to the many achievements of the Accord, a first-of-its-kind multi-stakeholder initiative including brands, retailers, unions, and non-governmental organizations as signatories. Over the past eight years, the Accord has conducted sector-wide inspections and remediated electrical and structural problems at over 1,600 factories in Bangladesh. The Accord required brands to provide their suppliers with commercial terms or alternative means of financing to maintain safe workplaces and to make the necessary changes to remediate safety issues found through these inspections. These actions, among many others, have established the Accord’s reputation with workers and a broad range of national and international stakeholders as an inclusive, credible, and fit-for-purpose process that can transform worker health and safety in the Bangladesh garment sector and beyond.

“The Bangladesh Accord has made significant improvements in fire and building safety for over 2 million garment workers in factories in Bangladesh,” said Arthur van Mansvelt, Senior Engagement Specialist at Achmea Investment Management. “The success of the agreement is largely due to the legally binding nature of the agreement, that makes it stand out from many other sustainability initiatives in the industry. As investors who continually assess human rights risks in our portfolio companies, we have confidence in the Accord model and want to see it expand to other countries as the global garment sector looks to ‘build back better”.

Directly following the collapse of Rana Plaza where 1,134 workers lost their lives and 2,600 more were injured, the Interfaith Center on Corporate Responsibility (ICCR) formed the Bangladesh Investor Initiative – currently comprising 250 institutional investors with over $4.5 trillion in assets under management – to press global companies sourcing in Bangladesh to become directly involved in helping to transform the Bangladesh apparel sector by joining the Accord. In the eight years since, this group of investors has supported the Accord’s work to create workplaces that both protect and respect the lives of workers, and mitigate the risks to companies and their investors.

“Throughout its existence, the Accord has contributed to making the textile industry in Bangladesh safer, and maintained a high level of transparency about factory inspections and corrective actions,” said Katarina Hammar, Head of Active Ownership of Nordea Asset Management. “As investors committed to assessing human rights risks in our portfolios, this transparency is absolutely central. The Accord has more than proven its value in terms of helping to safeguard frontline apparel workers and this has given investors a sense of confidence that risks to brands sourcing there is being managed and mitigated.”

“Garment workers have been made more vulnerable during the COVID-19 pandemic as millions of workers have lost their jobs and been exposed to the virus,” said Lauren Compere, Managing Director/Director of Shareowner Engagement at Boston Common Asset Management. “As Bangladesh goes into another lockdown, it is all the more important for investors, as part of their human rights due diligence, to press companies to build upon the success of the Accord and ensure the health and safety of workers during this precarious time.”

About the Interfaith Center on Corporate Responsibility (ICCR)
Currently celebrating its 50th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-plus member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $US 2 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn and Facebook.

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On the Tenth Anniversary of Rana Plaza Tragedy, Investors Call on Companies to Prioritize Worker Safety in Global Apparel Supply Chains