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Bangladesh Accord is wrong model for legal accountability in fashion industry

The Bangladesh Accord, a legally binding agreement between brands and trade unions set up in the wake of the Rana Plaza collapse, was set to expire at the end of August. It’s just been renewed, and going forward, will be referred to as the International Accord for Health And Safety in the Textile and Garment Industry, extending beyond Bangladesh.

On the one hand, the renewal makes sense: data seems to suggest that safety standards have substantively improved, and advocating for a legally enforceable mechanism (as opposed to unenforceable voluntary codes of conduct) is intuitive. On the other hand, is the Accord the right model for legal accountability? Is it a model that will push the industry towards collaboration? I’m not sure.

Figure: Legal accountability should be about pushing brands to have more skin in the game.

Have we gotten the diagnosis right?

The problem the Accord strives to solve is ultimately one of control: brands have leverage over their supply chains but are unwilling to use it to enforce health and safety standards in garment factories. Legal accountability — in this case, in the form of the Accord — changes this. Elizabeth Cline, author and Director of Policy and Advocacy for Remake has said: “It’s solely about…that piece of paper…that lays out brands’ commitment to factory worker safety and requires brands to sign on that dotted line…”

Cue activist pressure on brands to extend the Accord. The Clean Clothes Campaign launched a tracker, allowing the public to monitor which brands signed on to renew the Accord. Remake’s Action Kit encouraged people to “tag the brands that haven’t yet committed to the Accord’s extension and expansion on social media.”

But here’s the thing: a diagnosis premised on brand control inadvertently implies that suppliers are the problem. The subtext is that improved health and safety requires keeping unwieldy and unreliable players further down the chain in check. Because brands are the ones with the power, they should be held accountable for effectively policing those players and for investing (some of) the financial resources to address problems.

I’m not saying suppliers aren’t part of the problem. However, unsafe working conditions aren’t the result of “bad apples” or ineffective policing, they’re the result of inequitably distributed financial risk and reward. Because suppliers disproportionately front the costs of production (bearing all the material and labor costs months in advance with few guarantees), they disproportionately bear the financial risk of products not selling. That means it’s their bottom lines that are most affected when and if a brand’s products don’t sell as planned.

As long as brands continue to cope with uncertain consumer demand by pushing financial risk onto their suppliers, factory managers are likely to push that risk down to their workers (cue health and safety violations, and reliance on cheaply flexible labor). The absence of shared risk means that brands and suppliers alike have an extremely strong incentive to behave in ways that prioritize their self-interest over collective goals.

The wrong intervention?

A diagnosis premised on brand control has led to a proliferation of top-down compliance initiatives that exclude suppliers — the Accord, for instance, is a legally binding agreement between trade unions and brands (excluding manufacturers, the employers of said workers).

Nurul Muktadir Bappy, who was working for Bangladeshi supplier Epcot in the wake of the Rana Plaza collapse says: “The compliance shake was needed. But there were so many other ways to do it. The worst part was that the Accord gave unprecedented, unwarranted, and unrestricted access to outsiders, to people who had absolutely zero idea how factories work.”

Matthijs Crietee, Secretary-General of the International Apparel Federation (IAF), agrees that suppliers have been left out of the picture, but offers a more pragmatic take. “There simply is less capacity amongst manufacturers to engage in these kinds of conversations. They need all their capacity to remain afloat in this tough system. Large brands or retailers have big departments that deal with industrial relations. Unions, to a lesser extent, also have that. If we look at the Accord, for instance, it was the unions, the large brands, and retailers who were involved. At the time, because the Accord would have implications beyond Bangladesh, the IAF suggested that we should also have a seat at the table — but that was not perceived by the other parties to be a good idea. Today, the mindset is changing, but as an industry, there’s some catching up to do so that brands, multistakeholder initiatives, unions, and employers are at an equal level around a table.”

As a former garment factory manager, brand-worker agreements don’t sit well with me either. I’m wary of the moral monopoly it affords brands: is it really a brand’s job is to protect workers from irresponsible factory managers?

Sustainability narratives that position brands as workers’ protectors, and pit workers and factory managers against one another, smack of colonialism, of the divide and conquer tactics deployed to keep two marginalized groups fighting while obscuring the fact that the “piece of the pie” afforded to workers and factory owners by brands continues to shrink.

What should legal accountability for brands look like?

If our diagnosis is that brands must wield their power to assert more control over safety standards in garment factories and if that results in a set of top-down rules designed for suppliers but not with suppliers, then the question is: what should, or could, legal accountability for brands look like instead?

I want to return to distribution of financial risk and reward. It sounds like an abstract concept but put crudely, it’s about having skin in the game. The Accord does nothing in the way of redistributing financial risk, or making sure brands have an equitable amount of skin in the game.

One two metrics would hold brands accountable for having a fair amount of skin in the game. First, is a brand willing to make a financial commitment equal to at least 50% of projected demand for a period equal to the supply chain’s total lead time (this includes the supplier’s raw material lead time)? Or, second, is a brand willing to make purchase prices be dependent on variances from demand projections within a certain time frame (the total lead time for making the product)?

If a brand is willing to pay a deposit equal to the supply chain’s total lead time, this forces them to assume their fair share of the losses when and if consumer demand changes. Similarly, a brand willing to make purchase prices dependent on variances from demand projections means that if a brand’s forecasts (inevitably) are wrong, the consequences aren’t borne by their suppliers (and workers) alone.

Author: Kim van der Weerd.

An equitable amount of skin in the game fundamentally changes the incentives: if suppliers no longer bear the risk of uncertain consumer demand alone, they’ll be less likely to cut corners — improving conditions for workers. Ultimately, this will benefit brands too: shared risk means supply chains will contract, and forecasting horizons will get shorter.

Legal accountability shouldn’t be about brands policing their supply chains. It also shouldn’t be about one-off payments for infrastructure investments (though those certainly help). Legal accountability should be about pushing brands to have more skin in the game.

It should be about advocating for the distribution of financial risk and reward that’s equitable, and proportional to margins or value-added at each step of the chain. Only then will we avoid top-down initiatives. Only then will we succeed at changing the incentives. Only then will all supply chain actors have an equal seat at the table and be able to meaningfully collaborate.

The article was published in https://medium.com/

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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