The Rana Plaza legacy: eight years on, the fight for garment-worker protection continues

Global brands need to ensure workers in their supply chains enjoy safe working conditions. Read how we’ve engaged with companies to ensure that workers aren’t short changed.
November 2021
Tenisha Elliott

Tenisha Elliott

Senior Associate, Responsible Investment

It’s been eight years since the collapse of the Rana Plaza factory in Bangladesh, which resulted in the death and injury of thousands of garment workers. This, sadly, was one of many such incidents. For years, people in the region have been working to promote safer working environments for factory workers; the fact that the Accord on Fire and Building Safety was signed just a month after the Rana Plaza collapse is, perhaps, testament to that.

The incident gained significant media attention, which highlighted persistent human rights abuses and demonstrated the need for robust health and safety frameworks. The Accord on Fire and Building Safety was a five-year, legally binding agreement between trade unions, brands and retailers to provide a framework for the inspection and remediation of buildings with diminished structural integrity. It also established an independent Accord Secretariat, based in the Netherlands, to oversee compliance. But this secretariat contributed to increased tensions around the international community’s excessive influence in the affairs of Bangladeshi industry.

The Transition Accord

The threat of the Accord’s expiry prompted debate about how to ensure the protections it offered to garment workers while balancing the need for more Bangladeshi representation in the Accord model’s governance. In 2018, following scrutiny from the Bangladeshi High Court, the Accord was ordered to stop its work in November of that year; a national regulatory body was called upon to assume its role. Following efforts from the Bangladeshi government and factory owners to end the Accord’s influence, it was agreed that a three-year Transition Accord agreement should be implemented. The new agreement sought to continue the protections offered to Bangladeshi garment workers under the original Accord while, at the same time, transitioning the running of the Accord to the Ready Made Garment Sustainability Council (RSC) once a set of readiness criteria had been met.

This year, we saw the expiry of the Transition Accord and, once again, its continuation was threatened. Global unions were concerned about the diminished representation of workers under the RSC, which devoted two-thirds of all seats to brands and factory owners. There were also concerns around the maintenance of the Accord’s legally binding requirement for brands to be held financially accountable for factory remediation works. Stakeholders once again agreed that to let the Accord expire would lead to a return to the voluntary self-governance of brands. This would make brands, again, responsible for the inspection of factories and would also limit their responsibility for remedial action – which is the same situation that most likely led to the Rana Plaza incident and other disasters.

Our engagement at BMO GAM

We wrote to 19 of our investee companies who were signatories to the original Accord. We asked that they reaffirm their commitment to the Accord model to ensure they have an enforceable obligation for worker safety, maintain the independent mechanism of accountability for the RSC, and promote an extension of the Accord model to other regions.

The International Accord

Following the 2018 Transition Accord’s Intended expiration date in May 2021, a three-month extension to the negotiations was agreed. Following this, the new International Accord for Health and Safety in the Textile and Garment Industry (International Accord) was enacted. The new agreement focuses on health and safety programmes in Bangladesh and has committed to building a credible industry-wide compliance and accountability mechanism. The agreement also aims to expand the scope of the agreement to address human rights due diligence, extend the International Accord model to other regions, and streamline the arbitration process that enforces the Accord’s terms.

Next steps

We are encouraged by the fact that 12 of the companies we wrote to, or had conversations with, have reaffirmed their commitment to worker safety in Bangladesh by signing the International Accord. We, however, also believe that for the health and safety, labour and human rights of supply chain workers to be truly protected, the apparel and footwear industry must address the systemic inadequacies in how they interact with suppliers. Ultimately, brands continue to face uncertainties around consumer demand, which means that it is difficult to accurately forecast the quantity of orders to place. Because of this, there is a lack of financial liability on brands to take on orders placed, and suppliers often face the financial burden of raw materials and fixed employee costs. This divergence from forecasted demand puts suppliers between a rock and a hard place; they must still meet fixed costs but have no guarantee of being financially compensated for the work undertaken up front. Workers usually bear the brunt of this – either through inadequate wages or through poor building safety. It is time that we start talking about ‘skin in the game’. Brands should be at least partially liable for any divergence from their forecasts, and they should ensure that factories and their workers are not left short-changed in the process.

Risk warnings
The value of investments and any income derived from them can go down as well as up and investors may not get back the original amount invested.
The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.
Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

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Get to know the author

Tenisha Elliott, Associate, Analyst, Responsible Investment

Tenisha joined BMO in 2013 and focuses on corporate governance and proxy voting as well as covering environmental and social analysis of companies in the apparel and services sectors. She is a lover of fashion, property development and interior design.

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The Rana Plaza legacy: eight years on, the fight for garment-worker protection continues

Global brands need to ensure workers in their supply chains enjoy safe working conditions. Read how we’ve engaged with companies to ensure that workers aren’t short changed.