Loblaw’s and Supply Chain Management: Uncovering the details of the Rana Plaza Collapse

It’s early in the morning on April the 24th. Workers file in to start another day on the job. Sewing machines gear up and peck threads into garments like a community of woodpeckers searching for grubs. A mild tremor shakes the walls. Before anyone realizes what is happening, workers at the Bangladeshi Rana Plaza are running for their lives, but they are trapped inside. Over 1000 died, many more were injured.

Was this tragedy preventable? Who is responsible? Key questions have been raised by international labour organizations, NGOs, and the media, which have not been clearly answered.

Loblaw’s discount clothing chain, Joe Fresh, had contracted for garment workers inside Rana Plaza at the time of the collapse. Swiftly following the tragedy, Loblaw’s found itself under intense scrutiny from the world media.

When assessing a tragedy of this magnitude, it is important to start from the beginning. Why does Joe Fresh have suppliers in Bangladesh? Easy, lower wages and environment health and safety (EHS) standards allow for greater profit, and that motivates international outsourcing of jobs to developing nations.

Clearly then sourcing companies have a moral responsibility, if not a legal one, for the entire supply chain, even if a company does not own or directly manage it. How and why companies like Loblaw’s fail in meeting these responsibilities is insightful towards developing international standards that protect worker safety, public health and the environment, regardless of jurisdiction.

Therein lies the main problem: the lack of accountability. Many companies justify lower standards, arguing that they abide by local requirements. Others seem not to care and off-load their responsibilities to local producers, too often without providing help or support.

Wages are one thing; everyone should be paid a liveable wage, so they can provide themselves and their families with decent food, shelter, education and the other necessities of life. Unless of course, western companies, investors and customers, feel it is right to enrich themselves and enjoy higher standards of living at the expense of others.

Making wage decisions within the local economic situation is not unreasonable. However, unless we believe that the lives of Guatemalans, or Eritreans, or Bangladeshis are less important than ours, they deserve the same environment, health and safety (EHS) standards we enjoy.

Regrettably, current practices suggest we don’t value their lives as much as our own. After all, we are willing to risk their health and well-being for cheaper consumer goods and higher profits. This also applies to the elite in their own country who allow lower standards and benefit from attracting international companies.

As recent protests in Bangladesh and around the world have demonstrated, there is a growing demand to tighten labour laws and EHS regulations. They also made it clear that pro-active efforts, not damage control exercises, are long overdue, especially after a tragedy like Rana.

It is encouraging that only two weeks later, under heavy pressure from NGOs, media and labour organizations, the Accord on Fire and Building Safety in Bangladesh 1 was adopted. Signed by over 30 garment companies the accord called for independent building auditors, funding by retail brands to properly maintain buildings, and measures to improve safety standards 2.

Although this accord seems to be a step in the right direction, does it address the heart of the issue? No, and before the next tragedy occurs, we need to make sure this isn’t another image control exercise.

Meaningful change throughout the industry and the global supply chain requires effective international standards on worker health, public safety, and the environment. The Rana tragedy is not an isolated incident and such events are not limited to Bangladesh and neither should be our response. It is evident that the same lower standards risk lives in China, India, Pakistan and elsewhere in the developing world.

What’s needed is for corporations to embrace corporate social responsibility (CSR) as a serious commitment rather than a public relations tool. Otherwise we will continue to see a “race to the bottom” where corporations, in collaboration with government, continue to move to jurisdictions willing to settle for less.
Yes, corporations must do better. However, consumers, investors and government also are responsible for remedying the problem and eliminating future tragedies. The question is: how do we do it?

Governments must quit competing with each other by offering lower standards that put risk at the people and environments for which they are responsible. They also need to work together to achieve international standards for EHS. Not only do supplier country governments have a responsibility to ensure the health and safety of their workers, so do the home country governments, where corporations are headquartered. They should adopt policies with enforceable penalties and incentives that promote responsible behaviour.

Moreover, NGOs and concerned individuals need to continue advocating for safe and humane working conditions in developing countries. The Worker Rights Consortium (WRC), an independent labour rights organization, claims that $3 billion spread over 5 years, could be enough for Bangladeshi garment factories to be on par with Western health and safety standards 3. The WRC also mentions that this would mean only 10 cents cost added per garment. We’re talking about nickels and dimes to ensure that tragedies, like the one witnessed at Rana Plaza, won’t happen again. Can we afford not to do it?

And what about us consumers? If we buy from companies like Loblaw’s, or Apple, or Wal-Mart, what kind of responsibility do we assume? It is not only up to the corporations to ensure the health and safety of its suppliers; it’s in our hands too! We need to inform ourselves about the practices of companies and brands we support with our purchases, and refuse to be unwitting partners in exploiting others or damaging public health and the environment.

Investors and investment managers can play an important role too.  Can we justify harm to workers, the environment and future generations to earn a bit more money? Such an approach is unconscionable and not good business practice either.

So you decide, are you willing to risk the health and well being of others, of your children and theirs : at what price? Retail companies routinely earn 60% on goods produced in these poor work environments 4.  A little less profit or adding a small cost to your shirt or slacks or shoes could achieve significant improvement. How can we say no when the average worker wage per month, $38, is less than the price of a pair of jeans 5.

  1. International Labour Rights Forum. http://www.laborrights.org/creating-a-sweatfree-world/resources/bangladesh-fire-and-building-safety-agreement[]
  2. The Globe and Mail. http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/gap-willing-to-sign-bangladesh-safety-accord-but-only-if-tweaked/article12044573/[]
  3. Worker Rights Consortium (WRC). www.workersrights.org[]
  4. Maclean’s. http://www2.macleans.ca/2013/05/01/what-does-that-14-shirt-really-cost/[]
  5. Huffington Post. http://www.huffingtonpost.com/2013/05/12/bangladesh-minimum-wage-garment-workers_n_3263347.html[]