Following the recent collapse of a garment factory in Bangladesh that killed 1,129 workers and injured 2,500 more, over 70 companies, mostly Europeans, signed the Accord on Fire and Building Safety in Bangladesh. This Accord was rejected by most US companies, who instead announced the Bangladesh Worker Safety Initiative agreement, led by Wal-Mart and the Gap and signed by 17 companies.
The Wal-Mart/Gap agreement recreates the primary weaknesses of private monitoring, the centerpiece of corporate social responsibility (CSR) in the global apparel industry for over a decade.
The consensus among researchers is that CSR monitoring has done little to improve the industry. Although there is evidence that standard payment of wages and health and safety conditions have improved in some factories, overall we have seen a decline in real wages, a rise in the use of temporary and contract labor, the continuation of millions of dollars in wage theft, and the deaths of workers by violence, fires and building collapse.
Importantly, there is also a unanimous agreement in the academic literature that there has been no progress towards the respect for freedom of association and collective bargaining rights as a result of CSR monitoring (see Locke 2013, Anner 2012, Barrientos and Sally 2005).
While the Wal-Mart/Gap agreement has a number of weaknesses, I will focus here on four points that mirror the faults of the larger CSR monitoring system, faults that have resulted in its impotency and that do not bode well for the success of this agreement in drastically altering conditions for workers. (Implicit in this analysis is a comparison to the Accord).
1) Company controlled monitoring: CSR in the apparel industry has been based on a system whereby companies hire auditors to inspect the factories they contract with, or factories hire the auditors themselves. In both scenarios, the process is rife with conflicts of interest as those responsible (immediately or ultimately) for violations choose and pay the auditors. The Wal-Mart/Gap agreement relies on this same format, a system that has been shown time again to produce unreliable and incomplete information; research has also demonstrated that even when problems are uncovered little corrective action occurs. In fact, there is clear evidence that factories in the collapsed Rana Plaza, as well as Tazreen where over 100 died as a result of fire, had been audited.
2) Lack of worker involvement: one of the fatal flaws of the current CSR monitoring system, which is replicated in the agreement, is that workers have not played any role in designing, supervising or even agreeing to a system meant to protect them. In fact, workers are often intimidated during the CSR monitoring process by employers’ threats of firing for speaking out or of lay offs if brands withdraw work when problems are discovered. Unlike the Accord, the Wal-Mart/Gap agreement includes no worker representatives as negotiators or signatories. While there is language referring to worker empowerment, this is clearly restricted to voicing concerns about safety. According to the group’s own summary, “worker voice” in this agreement consists of setting up a hotline.
3) Failure to address root causes of problems: while monitoring is intended to ferret out violations, it does nothing to address the underlying structure that creates the violations in the first place: unsustainably low prices paid to factories, unstable production schedules, and short-term business. Lean manufacturing and fast fashion have intensified the shortened lead times and quick turn-around demands that necessitate unpaid overtime and hiring of contract employees to meet peak production periods. Low prices mean that this overtime is rarely paid at the proper rate, or other employee expenses (health insurance, severance, regular wages) and other outlays such as in building safety get cut. Short-term contracts mean factory owners have no guarantee that even if they make improvements, which would require investments, the brands will continue to source from them. Monitoring has not addressed these issues but has only focused on the resulting violations. This agreement promises to do the same, lacking any language to guarantee longer-term commitments, continued levels of orders, or pricing, all addressed to some degree by the Accord. In fact, under this agreement companies can specifically relieve themselves of all obligations if they stop producing Bangladesh.
4) Voluntary participation: CSR monitoring has also been criticized for its voluntary nature, which has proven to undermine the seriousness of the endeavor. For instance, we know from brand name compliance officers that “business considerations” outweigh likelihood of compliance when making sourcing decisions. Only within the university-logoed apparel realm, and now with the Accord, have elements of contractual obligation become part of the process. This agreement directly challenges the trend toward more obligation. The main objection of the signers of this agreement to the Accord was the legal liability they claimed it created. While the Accord includes both dispute resolution and binding arbitration that worker representatives can avail themselves of, the agreement does not include such mechanisms of enforcement and specifically states that, “The Members expressly intend that no rights be created in any third parties by virtue of the undertakings to which the Members have committed.” Companies can also leave the agreement at anytime, although they may be required to pay their remaining membership fees.
The earlier Accord on Fire and Building Safety in Bangladesh actually remedied some of the fatal flaws of CSR monitoring by: requiring independent monitoring, including workers as parties to the agreement, addressing sourcing practices and incorporating enforcement mechanisms. In this sense the Wal-Mart/Gap agreement represents a retreat to CSR as usual.