Two Years After Rana Plaza Collapse, Investors Still Look to Apparel Brands and Retailers for Remediation

Lingering concerns remain over timeliness of major remediation efforts, the establishment of factory health and safety committees, and corporate commitments to victims’ fund

NEW YORK, NY, Thursday, April 23, 2015 – A coalition of global investors representing $2.5 trillion in assets have sent letters to corporate members of the Bangladesh Accord for Fire and Building Safety (Accord) and the Alliance for Bangladesh Worker Safety (Alliance) requesting that they disclose their efforts to safeguard the lives of workers in Bangladesh garment factories.

Tomorrow, 4/24/15, marks the second anniversary of the collapse of the Rana Plaza building in the outskirts of Dhaka where over 1,100 garment workers lost their lives. The event is considered one of the worst workplace disasters in history. The Accord and Alliance were established in the wake of the disaster by apparel brands and retailers sourcing from Bangladesh to implement needed fire, electrical and building safety measures to prevent future garment factory tragedies from occurring.  The investor coalition has urged companies to join the Accord, which currently has over 200 members sourcing from 1,600 factories in the country.

Factory inspections for fire, electrical and building safety have identified issues requiring immediate remediation; however, while remediation programs requiring minor investments are being implemented, those requiring larger capital investments, such as construction defects and the installation of building-wide sprinkler systems, may be delayed as buyers and suppliers debate how these programs will be financed. For investors pushing for the systemic changes needed to safeguard the industry in the long-term, these delays are seen as human rights risks.

“Investors recognize that additional issues need to be addressed,” stated Pawel Pieniazek, Research Analyst for Sweden’s GES, a signatory of the letter.  “However, we view timely remediation financing and the formation of worker/management committees as key indicators for assessing if systemic changes are being carried out in garment factories producing for companies our clients invest in.”

Investors are also asking companies to disclose progress on the establishment of factory worker/management occupational safety and health committees, with workers electing their representatives to the committees. The establishment of these committees is required by amendments made to the Bangladesh Labor Law in 2013. The Bangladeshi government has yet to release the implementing regulations, rules and procedures that cover the committees.

“Occupational safety and health (OSH) committees are an integral component of transparency, accountability and the long-term sustainability of safe workplaces,” said David Schilling, senior program director, ICCR.  “The establishment of these committees is an important structure for detecting, reporting and remediating potential issues before they become a risk to workers, suppliers and brands. Companies need to begin now to pilot the creation of these committees and incorporate buy-in from their suppliers.”

“Worker health and safety is a material issue for investors,” said Adam Kanzer of Domini Social Investments and a leader in the ICCR-led Bangladesh Investor Initiative. “When workers do not have an effective voice they are made vulnerable, and Rana Plaza has made it clear that their vulnerability creates risks for all of us. Investors take a long-term view; we are sticking to this issue and will continue to raise questions, press companies and assess progress until factories are sustainable and safe. We must work to ensure that our investment returns are built on a foundation of equity.” 

In addition, investors sent letters to companies calling on them to contribute to the Rana Plaza Donors Trust Fund to support the victims and their families.  Compensation is still needed for the thousands of workers who suffered grave injuries and psychological trauma from the collapse, and for the many families impacted financially due to the loss of income from those who perished. At the beginning of the week the Fund was $6 million short of the $30 million needed to provide for these families.  Since then, several companies have made pledges to the fund. Investors are calling on all companies sourcing from Bangladesh to make a donation to the Fund today in order to meet the goal on the second anniversary of the Rana Plaza event.

About the Interfaith Center on Corporate Responsibility (ICCR)

Currently celebrating its 44th year, ICCR is the pioneer coalition of active shareholders who view the management of their investments as a catalyst for change. Its 300 member organizations with over $100 billion in AUM have an enduring record of corporate engagement that has demonstrated influence on policies promoting justice and sustainability in the world. www.iccr.org