This article is written by Shambhavi pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho.
The ready made garment (RMG) sector of Bangladesh is one of the biggest earners of foreign currency for the country. This sector contributes significantly to the GDP and is powered by the young and urbanizing workers of the country. Without any doubt, the RMG sector is an important sector for a developing country like Bangladesh and the government of Bangladesh has put in a lot of efforts to make the RMG sector one of the biggest employment sectors in the country, however, the government and the foreign retailers gave little importance to the safety of laborers engaged in this sector before the year 2013. As a result of lack of infrastructure, safety equipment, and strict implementation of safety policies, many workers working in garment factories succumbed to building collapses and catastrophic fire breaking out at such factories from time to time. These incidents prompted the Bangladeshi government, NGOs, various labor organizations, and various international brands and retailers to come together and ensure the safety of workers working in such factories. After much deliberation, the Accord for Fire and Building Safety in Bangladesh (“The Accord”) came into existence and it was accepted by all the stakeholders. In this article, we will briefly discuss the history and structure of the Accord and look into the negotiations that took place in the background.
The history behind the Bangladeshi fire and safety accord
The Accord for Fire and Building Safety in Bangladesh represents the culmination of response by the international and Bangladeshi trade unions, labor rights organizations, and the international community in general to the bitter experiences caused by a series of factory fires and two building collapses in Bangladesh. The Accord, in fact, was the result of the abject failure of voluntary efforts by international brands and retailers in preventing such disasters. Among such catastrophic incidents, the fire breakout at the Garib & Garib Sweater Factory in February 2010 and the fire breakout at the Tazreen Fashion garment factory in Dhaka in November 2012 prompted all the stakeholders to address the various safety issues at these factories.
After the incident at the Garib & Garib Sweater Factory in February 2010, the International Textile, Garment and Leatherworkers Federation (ITGLWF) worked with Bangladeshi unions on a set of proposals to improve fire and building safety. These were codified into a set of Health and Safety Action Points for Buyers. The Health and Safety Action Points for buyers included provisions for a thorough review of all multi-story garment production facilities, expert fire and building safety inspections, public disclosure of audit reports, and a list of factories that do not meet standards, etc. to make a full proof for tackling the health and safety concerns existing in the factories. These provisions were later included in the final draft of the Accord.
After the drafting and publication of the above-mentioned action points, discussions between the various stakeholders moved at a very slow pace, and at the end of 2010, another fire engulfed the “That’s It Sportswear” factory, killing 29 more workers. This incident again highlighted the urgency of the issue and prompted another meeting between the various stakeholders in Dhaka, April 2011. In this meeting, the stakeholders discussed the signing of an MoU and establishing a multi-stakeholder task force to oversee the program. After much discussion and delays, the final draft of the MoU came into existence and the GAP Inc. contributed to the final text of the MoU but later refused to sign the MoU. In fact, GAP announced in October 2012 that it would continue with the same self-regulatory approach, that did not require the company to make commitments or be legally liable, and which in the past decade had also failed to protect the safety of workers in Bangladesh. However, some other companies, mainly the European companies, still agreed on the MoU but it still needed more companies to come forward and sign the MoU.
The MoU was re-christened as the Bangladesh Fire and Building Safety Agreement (BFBSA), and between September 2012 and April 2013, and the signatories urged other global companies to also sign the agreement but none were willing to do so. The matter had already dragged on for a very long time and in the meanwhile, another catastrophic incident took place at Rana Plaza on April 24 which caused the tragic death of about 1,100 workers.
This tragic incident further highlighted the grave nature of the situation and on April 29, 2013, a GIZ-sponsored meeting finally brought together representatives from most of the major stakeholders i.e., IndustriALL, GIZ, many major European and North American apparel brands and retailers, the International Labour Organization (ILO), Ethical Trading Initiative (ETI), CCC, WRC, and others. This meeting led to the establishment of a drafting committee that would be responsible for drafting a new, joint agreement by May 5th.
After much delay, this problem saw a major breakthrough when H&M (the largest buyer of apparel from Bangladesh) announced that it would sign the Accord with IndustriALL and UNI. Following H&M, almost forty companies announced their intention to sign the Accord, and the Accord was formally signed between the international brand buyers, the global unions, and Bangladeshi unions on May 23, 2013, with the NGOs CCC, ILRF, MSN, and WRC signing as witnesses.
What is different about the Bangladeshi fire and safety accord?
The Accord is seen as a better way to ensure the safety of workers as against the various initiatives that were taken by the companies under the CSR mechanism earlier because those initiatives did not take place in the form of a legally binding and enforceable and therefore there was a lack of accountability in those initiatives. Moreover, the result of those initiatives was far less than what was required to actually ensure the safety of the workers and therefore, the Accord came as a solution to ensure that more concentrated and effective aid is provided by the various stakeholders to ensure the safety of the workers.
There are many positive points about this Accord which makes it more desirable, and this includes but is not limited to:
The Accord seems to provide transparency in all the programs that are to be carried out under the Accord and one of the biggest factors that make the entire initiative more transparent is the clause that provides for making public the results of various factory inspections and all the remediation plans and efforts.
Safety training program with the government’s employment
Under the Accord, a training coordinator is to be appointed by the Steering Committee to provide health and safety training for workers and at the same time enhance coordination among the management personnel. The provisions of the Accord also allow Bangladeshi trade unions to participate in worker training efforts.
Right to refuse unsafe work
The Accord gives the right to refuse unsafe work to the workers and allows them to refuse unsafe work without any fear of retaliation from the authorities or companies.
Support for remediation
The Accord ensures that factories have the financial capacity to comply with remediation requirements and such financial capabilities can be maintained by the way of joint investments, loans, accessing donor or government support, offering business incentives, or through paying for renovations directly.
Other important terms
One of the most important aspects of this Accord is that there is a specified governance structure to oversee the safety programs, called the Steering Committee under the Accord, and it is made up of equal representation from labour and company signatories, with a neutral Chair. The Signatories to the Accord have also agreed to establish a binding dispute resolution process, based on standard international commercial arbitration models.
In addition to the above mentioned terms, there were various other provisions included under the Accord that was not present in any other programs for workers’ safety launched at that time in Bangladesh. The Accord guaranteed a more efficient and concentrated program for workers’ safety.
Negotiations between the various stakeholders
Many rounds of negotiations took place before the Accord was actually signed and one of the most important tasks that fell on the shoulders of the government, NGOs and various labour organizations was to convince the companies and retailers to agree on common ground and sign the Accord, despite the legal liability the companies would have to bear. To achieve their goal labor unions focused their efforts on persuading Swedish giant, H&M, to take the lead on safety improvements. They thought that getting a giant like H&M onboard would pressurize other companies to follow suit. Later H&M was convinced to sign the agreement mostly because after the Rana Plaza incident in April 2013, these companies had already attracted a lot of public criticism and such Negative publicity marked a tipping point for H&M.
After H&M signed the Accord, other European companies began to follow and on July 8, 2013, a European consortium of 70 brands unveiled its legally binding agreement. However, it is important to note here that there were still many US retailers and companies who chose not to sign the Accord even after many rounds of negotiations and persuasions, and negative publicity.
The reluctance of the US companies to sign the Accord
The website of the Accord defines it as “an independent, legally binding agreement between brands and trade unions designed to work towards a safe and healthy Bangladeshi Ready-Made Garment Industry.” This definition itself tells us that the Accord imposes a legally binding obligation on the companies and first world consumers and therefore the Accord puts a new and heavy liability on these companies. This was one of the reasons why many negotiations earlier had failed and many US companies wanted to continue with their same old programs and CSR mechanisms.
Apparel firms like GAP had also claimed that their reluctance to sign the Accord was based primarily on the concern that signatory firms risk excessive undefined legal liability. The US retail giant, Wal-Mart also cited such concerns.
According to spokespersons for the retail industry, American courts, which allow class actions, contingent fees and do not require losing plaintiffs to pay legal fees, might permit liability claims against retailers in the event of another disaster which might result in substantial enforceable judgments, in contrast to European courts which generally do not allow class actions, forbid contingent fees, and require losing plaintiffs to pay winning defendants’ legal fees and costs. Further to escape criticism GAP, Wal-Mart and some other North American companies came up with separate programs of their own which were not as effective as the Accord and allowed the companies to escape liability and till date, they have not signed the Accord.
It is important to note here that the excuses given by the retailers were not enough as many other European and US companies, despite the liabilities imposed on them, agreed to sign the Accord. GAP and Wal-Mart both failed to explain as to why New York-based PVH, which is one of the largest sellers of shirts in the world and the leading U.S. retailer Abercrombie and Fitch, a key GAP competitor, agreed to sign the Accord if they had to bear such excessive legal liability being a US company. In this background, these companies have been criticized for being self-servient and being ignorant of worker’s safety and rights.
The Accord is not only termed as a very good example of multi-stakeholder governance but is also seen as a positive shift from the traditional CSR mechanism that cannot guarantee project-oriented efficiency and at the same time does not provide for any kind of accountability. The efficiency of this approach can be seen from the fact that after the Accord was signed by various stakeholders in 2013 and a key transition Accord was signed in 2018, there has been a 90% initial remediation progress rate at Accord-covered factories. 254 factories have completed the initial remediation and there have been over 90% initial remediation at more than 1,120 factories.
Moreover, this Accord invites the participation of labour unions, various labour organizations, the Bangladeshi government, and NGOs to ensure that the workers are actually benefited by this program and therefore the Accord has been welcomed by all the workers.
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