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The shortfalls of third party certification schemes and possible remedies for stronger worker protection (part 2 of 2)

By Sreelatha Babu, Denis Nolasco and E.Constantinos Pappas

Whiting_BoxDieline.pdfAs consumers have grown more conscious of the human rights, labor and environmental impacts of their purchases, they have turned to third party certifications (i.e. the Fair Trade or Rainforest Alliance certifications) to distinguish how to ethically spend their money. In terms of human and labor rights, the proliferation of certification schemes is a helpful and welcome development to protect vulnerable workers in developing economies. Especially after news organization have exposed how slave labor, child labor, trafficking of undocumented migrants and debt bondage are rampant in the Thai seafood industry, these schemes may be a useful tool for corporations seeking to uphold human and labor rights in their supply chains.

Unfortunately, a litany of issues, including undue influence from corporate interests, economic pressures, lax enforcement, lack of financial independence, insufficient chain of custody procedures and ineffective auditing procedures, plague third party certification schemes, making them often inadequate in preventing the worst kinds of human rights abuses. In the second part of this two part series on human rights violations in global supply chains and the role that certification schemes can play in ensuring rights, we will discuss the criticisms and shortfalls of current schemes and how reforms can make these schemes more effective. This research and these recommendations derive from a project in the Spring 2016 Corporate Social Responsibility Clinic in partnership with the International Labor Rights Forum.

MAJOR CRITICISMS OF EXISTING THIRD PARTY CERTIFICATION SCHEMES

Although certification standards are formulated with multi-stakeholder engagement, they are often developed with significant influence from corporations that hope to use a given mark. The success of a particular certification depends on retailers and restaurants using the mark on its products. Certifications that require higher standards may result in greater costs to the corporation. If corporations cannot pass these costs onto their supplies, it’s less likely that they will seek to gain certifications. As a result, though many of the schemes purport to use existing International Labor Organization (ILO), Food and Agriculture Organization (FAO) and other international guidelines as a benchmark, many standards cherry-pick or water down the requirements due to business and financial pressures. Furthermore, standards are often silent on important labor rights issues that may not be enshrined in national laws or basic international human rights law. Some certifications only require applicants to honor national labor laws when it comes to critical areas of labor rights, such as daily hour requirements, freedom of association, minimum working age and the right to collective bargaining. This situation is exacerbated when the board of the certification has final say over what standards are selected from the recommendations of the formulation committee.

Certification schemes are also criticized because they do not impose binding obligations on their applicants, due to lax enforcement for non-compliance by the certification organizations themselves. This allows applicants to deviate from their obligations after receiving certification. Most certifications superficially provide for post-certification surveillance audits and heightened scrutiny in regards to complaints of non-compliance. They are also technically equipped to enforce their requirements through sanctions or removal of the right to use the mark. However, most of the certifications surveyed in our project do not provide public reports regarding enforcement or sanctioning, making it difficult to determine whether this occurs in practice. For example, a BAP certified shrimp-processing factory investigated by International Labor Rights Fund (ILRF) and Workers Watch United, revealed substantial human and labor rights violations. Unfortunately, after the investigation, BAP publicly announced that, despite some nonconformities, the factory retained its certification. This suggests that certifications may not completely serious about enforcing their requirements.

These enforcement issues might be related to the fact that certifications and certifying bodies are dependent on fees paid by corporations and applicants, including licensing fees for using the mark and payments for conducting audits. This dependency of certifications on licensing fees could create a conflict of interest between the certifications’ purpose of protecting against human and labor rights violations and their need to generate income to continue operating. This conflict of interest likely permeates the standard formulation process, the initial auditing process and the enforcement process, resulting in less protective standards, over-certification and lax enforcement. The independent auditing organizations themselves are not immune to this, as they are often for-profit organizations that rely on auditing costs for earnings, and are at the mercy of applicants, as many certifications allow applicants to choose their auditor.

Finally, certifications can be criticized for not imposing effective auditing procedures as a condition of certification. Applicants have an economic incentive to gain certification at the lowest cost to their business, preserving access to the market of developed countries with minimal effect on their profits. Despite this, many certifications do not require audit procedures that effectively prevent gaming and manipulation of the audit. For instance, many certifications schemes in our research provide for an initial announced audit and do not provide for random selection of interviewees, among other bare bones procedures. This gives the companies enough time to simulate the conditions required under the certification, resulting in less reliable audit reports and inhibiting the reliability of certifications as a control for human and labor rights risks.

STRENGTHEN EXISTING THIRD PARTY CERTIFICATION SCHEMES

Despite these criticisms, third party certification schemes still provide a feasible and beneficial private sector solution to labor and human rights violations in the seafood industry in developing countries such as Thailand. Much of the present criticism of these standards could be addressed by adopting changes in the organizational structure and procedures undertaken by certification schemes, including making the initial auditing process and the post-certification complaint and grievance process more rigorous and transparent.

During the initial auditing process, more rigor and transparency would help third party certification organizations police human rights violations, such as those discussed in the first part of this series. During the initial auditing process, more rigorous procedures would prevent applicants from gaming the system to achieve certification despite continuing abusive practices. This could include requiring auditors to conduct interviews of employees at random, select safety equipment at random and conduct interviews out of earshot of employers. These practices ensure that the interviewees and conditions of the audit are not prepared beforehand to simply meet standards. More transparency in audit requirements could also aid the non-governmental organization (NGO) community and the public in comparing certifications amongst one another and in effectively advocating for more rigorous procedures.

Certifications could institute more rigorous complaint mechanisms, which would allow the public to ensure that certified applicants continue compliance while giving workers and the public an effective way to voice complaints with confidence. Generally, complaints should trigger unannounced surveillance audits by the certification organization. However, this is not always the case, as shown by the BAP investigation discussed above. More rigorous complaint mechanisms and grievance procedures must be formulated to ensure that union representatives, interested NGOs or workers themselves have an effective outlet for reporting noncompliance. Transparency in this process, including, ideally, a way to see how many complaints have been lodged and their resolution, is essential for ensuring that all issues are promptly addressed. Moreover, a rigorous and transparent complaint mechanism could help prevent situations where certified companies reap the benefits of certification while still profiting from deplorable working conditions, and deter future non-compliance from others who would seek to do the same.

When it comes to the standard setting and auditing processes, including civil society in the process while separating business and financial interests from having final say on the standards is essential. These changes would result in more rigorous substantive standards with the ability to effect real change for workers. Involving NGOs, labor organizations, and other stakeholders more in the standard setting and standard review process would provide a more diverse and spirited discussion on which substantive requirements and procedures should be included by the certification. The separation of business and financial interests of the certification itself from the standard setting and auditing process would ensure that the economic interests of the certification do not impede its judgment. This could be achieved by delegating formulation of standards and auditing procedures to a truly independent committee with final authority within the certification and removing veto power from the main board that manages the other business and affairs of the certification. The independent committee should be comprised of all interested stakeholders, even members of the certification themselves. This would result in standards and procedures that are free from conflicts relating to the finances of the certification or its directors that may hinder the goal of providing a certification that maximizes benefits to at risk laborers.

Of course, the success of all of these reforms depend on the willingness of the certification to enforce its requirements. Thus, increasing enforcement sanctions and suspensions would give teeth to certifications, ensuring that noncompliant applicants suffer financially from deviating from requirements once they obligate themselves to meet them. Sanctions and suspension can be used as an initial deterrent, with revocation of the use of the mark as a final remedy for repeat offenders, cutting out the market for retailers and restaurants who require certification.

Finally, organizations should alter how certification schemes and auditors function financially by overcoming their dependence on licensing and audit fees from applicants. This change will promote impartiality and ensure that standards are formulated without economic incentives in mind. Although this is undoubtedly the hardest reform to achieve, certification organizations could seek out donations, grants or government funding focused on corporate social responsibility. Similarly, auditing bodies could reorganize as non-profit organizations, removing the self-interest motive from the initial audit and surveillance process. Furthermore, if certification organizations themselves assigned auditors to each applicant, rather than allowing applicants to choose, they would remove the incentive among auditors to relax their requirements for more business, removing the main influence behind the race to the bottom for auditing.

MOVING FORWARD

Multinational corporations must be held accountable for their global supply chains and how their products are produced. When governments fail to uphold basic labor and human rights standards, companies have an obligation to step in. For this reason, we applaud the creation of these schemes by the certification organizations and their proliferation through adoption and requirement by retailers and restaurants around the world. However, the work is not yet done. Third party certification schemes can benefit workers, companies and consumers if they are created and used in a responsible, accountable, and transparent fashion. We believe these recommendations, gleaned through our research in conjunction with the ILRF, provide a helpful starting point for creating an effective private sector response to the human and labor rights crisis in the global seafood supply chain.  We hope that these recommendations spur further attention, reform, and response in this critical area. The lives and livelihoods of workers around the world may very well depend on it.

Sreelatha Babu is an LLM student at Fordham Law School. Denis Nolasco is a 2L at Fordham Law School. E. Constantinos Pappas is a 3L student at Fordham Law School. They all participated in the Spring 2016 Corporate Social Responsibility Clinic at the Leitner Center for International Law and Justice.

The views expressed in this post remain those of the individual authors and are not reflective of the official position of the Leitner Center for International Law and Justice, Fordham Law School, Fordham University or any other organization.

Photo Credit: Walmart/Creative Commons


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Human and labor rights violations in the global seafood supply chain and the rise of third party certification schemes (part 1 of 2)

By Sreelatha Babu, Denis Nolasco and E. Constantinos Pappas

While browsing the seafood aisle of the local supermarket, few consumers think about the course that products take before they arrive on the shelf. Even fewer consumers imagine that the seafood that ends up on their plate might have come from exploited, abused or even enslaved workers half a world away. Nonetheless, this exact scenario is playing out on fishing vessels and in factories, hatcheries and fisheries throughout the seafood industry in developing countries such as Thailand. Often times, these abuses occur at the acquiescence of or with the involvement of state and local authorities. Worse still, this seafood ends up in supply chains used by some of the most prominent brands in the world, leaving consumers and investors in developed economies as unwitting bankrollers of egregious labor and human rights violations.

Despite the existence of international labor rights standards, many national governments either fail to enact laws that adequately protect workers or fail to enforce existing laws that do. In the face of this impunity and lack of action, there are a number of approaches that retailers can take to prevent or mitigate harmful labor practices that take place within their supply chains, including using their leverage to work with governments to improve regulation and enforcement. One of the approaches taken by multinational companies has been to adopt and comply with third party certification schemes. These certification schemes help companies to identify and remove such violations from within their supply chains while signaling to consumers that the product they are purchasing is “sustainable.” Unfortunately, because of a litany of issues ranging from lax standards and auditing requirements to business influence over the formulation of the standards themselves, these certification schemes are generally insufficient in preventing the worst kinds of human rights abuses, as evidenced by their continued practice.

This two-part series will explore some of the human rights violations plaguing global supply chains and the role that third party certification schemes can play in helping prevent or curb these abuses. The first part of this series will discuss human rights violations in global supply chains, with the Thai seafood industry as a specific example of how trafficking of undocumented migrants, forced labor, debt bondage and child labor can be used to produce items sold all over the world. It will also examine how voluntary third party certification schemes have developed to help companies understand and address human rights violations within their supply chains. The second part of this article series will delve into the major criticisms of these third party certification schemes and propose some reforms to strengthen their efficacy in preventing human rights and labor violations. This research and the reforms that will be proposed in the second article stem from the work of the Spring 2016 Corporate Social Responsibility Clinic in partnership with the International Labor Rights Forum.

HUMAN RIGHTS AND LABOR VIOLATIONS IN THE THAI SEAFOOD INDUSTRY

The globalization of supply chains has caused competition among developing countries to attract investment. In 2007, multinational corporations contributed $3 trillion in foreign direct investment. As a result, national labor laws often fall short of internationally recognized standards, providing little protection to workers. Further, the enforcement of labor laws is often weak, sometimes as a result of political unwillingness or due to corruption or bribery. In the case of Thailand, a combination of these factors has resulted in reports of trafficking of undocumented migrants, forced labor, debt bondage and child labor throughout its seafood industry.

In 2009, the U.S. imported 552,206 metric tons of shrimp, which totaled $3.8 billion, with Thailand making up 35 percent of that supply. In 2015, shrimp imported to the U.S. increased to 587,185 metric tons of shrimp worth $5.3 billion, out of which 11.4 percent was from Thailand. These imports are destined for U.S. food stores such as Whole Foods, Costco and Wal-Mart, as well as prominent restaurants, including Red Lobster and Olive Garden. In fact, an Associated Press investigation found 150 stores across the U.S. selling shrimp associated with human and labor rights violations.

The Thai seafood industry is currently thriving, with the most recent year of exports bringing in approximately $7 billion dollars in revenue. This growth is primarily due to the industry’s ability to maintain low production and processing costs, often through the employment of undocumented migrant workers. In 2011, the International Labor Organization (ILO) estimated that approximately 193,600 migrants from Burma, Cambodia and Laos worked in fishing and fish processing factories, toiling in inhumane working conditions. In the case of shrimp, currently 80 percent of the 700,000 shrimp workers are migrants. Given that many unregistered migrants workers live in the shadows out of fear of deportation, it is difficult to accurately assess the amount of undocumented workers in this industry. However, in Samut Sakhon, the most prominent province in shrimp processing facilities, only 70,000 of approximately 400,000 migrant workers were legally registered, implying a large rate of undocumented migrants in this industry as well.

Thailand’s harsh penal laws for undocumented migrant workers make them especially vulnerable to abuse by their employers due to fear of being reported to authorities, being deported or even facing imprisonment for terms upwards of five years. This gives employers substantial leverage, often culminating in conditions of forced labor. In fact, government officials themselves are often directly responsible for the precarious situation of undocumented migrants. A 2015 U.S. State Department report found that officials “on both sides of land borders accept payment from smugglers involved in the movement of migrants between Thailand and some neighboring countries,” with these migrants often becoming the victim of human rights violations.

In addition to the fear of deportation, most workers are hired in their countries of origin (including Burma, Cambodia and Laos) through labor brokers that charge a recruitment fee ranging in the hundreds to thousands of Baht (between $270 and $570). The workers arrive believing they will pay back their fee with the money they make from working. However, they are often paid meager wages. Laborers in Thai shrimp processing factories peel 175 pounds of shrimp for just $4 a day, far too little to cover their recruitment fee and additional debts charged by their employers for food and equipment. Before long, workers’ debts far outpace their income. But with no alternative to meet their obligations, they must continue to work, resulting in situations of debt bondage.

Moreover, workers are often coerced or forced into enduring inhumane working conditions. Laborers in shrimp factories can spend up to 16 hours a day with their hands in ice water peeling shrimps.  They are not given adequate time to rest and are often forced to work while ill or are denied adequate medical attention. Beyond this, many factories are woefully inadequate with respect to safety and living conditions, often with 50 to 100 workers crammed into tiny sheds. Workers are threatened with violence (to themselves or their families) or with arrest and deportation (for their undocumented status or outstanding debts) to prevent them from leaving. For those who do manage to escape, they are often caught and returned by complicit local authorities, according to reports, or are sold or forced into a neighboring operation by owners competing for labor.

Furthermore, many reports document child labor in these factories. According to the International Labor Organization report, “Child Labor in the Value Chain of the Shrimp Industry in Thailand,” in Samutsakhon—one of the main Provinces dedicated to shrimp exportation—most children employed in this industry started working before their 15th birthday. In at least one reported case, a worker at a shrimp peeling factory was so tiny that she had to stand on a stool in order to reach the peeling station.

These violations are not limited to the shrimp industry, but are issues throughout the Thai seafood supply chain. Many ILO reports detail how migrant workers in the fishing industry are often tricked into inhumane working conditions. An article by the Guardian also recently found egregious human rights violations aboard fishing vessels operating in and out of Thailand. And until the recent Trade Facilitation and Trade Enforcement Act amended the law, U.S. officials were often powerless to exclude these seafood exports pursuant to their power to exclude goods procured as a result of egregious human rights violations, due to an anachronistic exception for goods that cannot be procured by another source.

THE PRIVATE SECTOR RESPONSE: THIRD-PARTY CERTIFICATION SCHEMES ON HUMAN RIGHTS AND LABOR RIGHTS

In the face of government inaction and impunity, the private sector has turned to third party certification schemes as a tool to ensure that human rights and environmental concerns are addressed within their global supply chains. These schemes seek to reassure retailers, restaurants, suppliers and consumers that certain labor rights protections and sustainability standards are being met. By enabling companies to identify and remove violations that occur within their supply chain, these schemes in turn help companies avoid negative publicity associated with being linked to those practices.

In a third party certification scheme, an independent organization works with stakeholders such as NGO representatives, trade unions, key retailers, academics and the general public to formulate a set of standards that certified companies must meet. A company wishing to gain certification must agree to have their supply chains audited to ensure compliance and follow-up audits are often mandated. Once the company is certified, it receives a license to use the certification mark on all goods it sells. A retailer may also require certification from a certain scheme as a condition for its suppliers, so applicants must be certified to retain access to the most profitable markets.

In the seafood industry, the major certifications for human rights and labor rights compliance include, among others, Social Accountability International 8000 (SA8000), Best Aquaculture Practices (BAP), Marine Stewardship Council (MSC), Aquaculture Stewardship Council (ASC) and Friends of the Sea (FOS). These certifications are voluntarily adopted by both retailers and participants in their supply chains and rely on basic international human and labor rights standards such as those established by the International Labor Organization (ILO) and the Food and Agricultural Organization (FAO). The standards set by these certifications address issues such as forced labor, child labor, traceability and transparency of production processes.

While each of these certifications more or less protects foundational human rights in the same way, there are some differences in how they protect other labor rights. Many certifications differ in the extent to which they require adherence to core ILO conventions or merely defer to national standards.  There are also differences in their organizational governance and the rigor of their audit procedures. With governance for instance, the standards of some certifications are formulated by an independent technical committee, as in the case of FOS and MSC. Others, such as BAP, rely on such committees, but have the discretion to adopt or reject proposals. Similarly, with audit procedures, there are disparity in the manner of auditing and level of scrutiny, with some providing more protection than others. These variances in protections, governance and auditing can determine the success or failure of a scheme in ensuring that companies uphold basic human and labor rights.

After the Associated Press and several other media sources reported on widespread slave labor and human rights abuses in the Thai seafood industry, new attention has been focused on the practice of adopting third party certification schemes as a way to prevent such abuses from occurring in the future. While these certification schemes are certainly a step in the right direction, their efficacy will be limited unless reforms are made. In the second part of this series, we will discuss the shortfalls of third party certification schemes and possible changes to benefit workers, corporations and consumers.

Sreelatha Babu is an LLM student at Fordham Law School. Denis Nolasco is a 2L at Fordham Law School. E. Constantinos Pappas is a 3L student at Fordham Law School. They all participated in the Spring 2016 Corporate Social Responsibility Clinic at the Leitner Center for International Law and Justice.

The views expressed in this post remain those of the individual author and are not reflective of the official position of the Leitner Center for International Law and Justice, Fordham Law School, Fordham University or any other organization.

Photo Credit: Rienk Nadema/Marine Stewardship Council/Creative Commons


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The case for corporate social responsibility (CSR): a report back from the Leitner Center’s CSR Leadership Course

By Takahisa Juba

Situated in the one of the largest business districts in the U.S.—Midtown Manhattan—the Leitner Center for International Law and Justice at Fordham Law School hosted their second annual Corporate Social Responsibility Leadership Course on June 11-12, 2015. The large number of participants and their diversity denotes the growing importance of corporate social responsibility (CSR) and demand for education on the topic. As the world continues to become more interdependent and integrated because of globalization, businesses have been the primary driver of this inevitable trend as they seek new markets and resources. Acknowledging their vital role in development and poverty alleviation, businesses’ growing power and presence have also raised concerns about the negative impact they may have on society. Since the 1960s, CSR has garnered attention and spurred action, evolving from a public relations catch phrase to an issue that is of growing focus and legitimate concern to companies both from a business and legal perspective. With panelists ranging from business executives to general counsels, attorneys, accountants, financiers, academics and a UN representative, the CSR Leadership Course explored some of the most pressing questions and issues in the field.

GROWING IMPORTANCE AND ROLE OF CSR

Despite the importance of CSR, companies face challenges in implementing CSR initiatives both internally and externally because the financial impact of CSR may not be immediately evident or quantifiable. However, investors are growing more concerned with a company’s CSR performance and this trend will likely continue. Moreover, the Rana Plaza building collapse in Bangladesh, which killed over a thousand garment workers, was a game changer. Businesses can no longer ignore such risks, and integrating CSR into their business approach is one way for companies to minimize reputational risk and conform to millenials’ demands for companies to become more socially responsible.

A key part of practicing CSR is making ethical commitments and choices, such as pledging to end human trafficking in a company’s supply chain, which can be a lengthy and conflicted process. What seems to distinguish ethical companies is the atmosphere established from the top down. However, the economic realities of slowing revenue can put pressure on maintaining ethical commitments. In many cases ethical choices may give way to economic considerations. For example, the nature of multinationals (companies based in one home country but manufacturing in a range of countries along their supply chain, and selling in many more) may pose ethical problems as a company may choose to abide by regulations that establish high ethical standards in one country but lower their standards in another as the regulations are less restrictive allowing for less ethical or more predatory practices.

AFFECTING SOCIAL CHANGE

Businesses, undoubtedly, influence a broad variety of social issues. How they impact these issues depends on the company’s policies and priorities. With regard to the environment, some financial institutions have adopted project financing guidelines to regulate environmental and social impacts of financed projects such as the Equator Principles, which establish requirements for environmental and social assessment, performance and reporting. Companies can hold themselves accountable for their environmental impact by voluntarily reporting their impact through the Global Reporting Initiative or the Carbon Disclosure Project. In general, however, sustainability reporting is still evolving as stakeholders determine what issues are important and how impacts are measured, the panel on sustainability reporting pointed out.

Companies also play a major role in women’s empowerment. In general, women have been underrepresented in positions of power in companies and certain industries like tech. But innovative initiatives, like scholarships, training programs, and flexible guidelines, can provide a more supportive environment for women in the workplace.

In contrast to the private initiatives addressing environment and women’s empowerment, the role of legislation has been instrumental in combating human trafficking. U.S. Federal regulations prohibit any contracts with the federal government that involve human trafficking. In addition, state laws such as the California Transparency in Supply Chains Act requires disclosure of efforts by companies to eradicate human trafficking from their supply chain.

LEGAL OBLIGATIONS

Domestic laws and regulations can play an important role in holding businesses accountable and ensuring that their businesses are conducted in a sustainable manner. However, international law does not directly regulate private businesses. The traditional view is that international law governs states and they have the responsibility to enforce the law against companies and individuals. It is uncertain if binding international law directly regulating multinational corporations will be adopted in the near future. However, there are “soft laws” that apply to businesses internationally such as the UN Guiding Principles on Business and Human Rights.

Under the Guiding Principles, states have the duty to protect human rights and businesses have the responsibility to respect human rights while both have the responsibility to provide remedies for negative human rights impacts. This can be complex and daunting for certain businesses. For example, a law firm’s responsibility to protect human rights can conflict with an individual’s right to representation, even those who may be guilty of a crime or human rights violation. In those cases, the lawyer or law firm must make a decision, but a human rights policy for the firm may be a good starting point to establish a proper decision making framework. In another instance, those who perform human rights due diligence for a private company—a responsibility under the Guiding Principles—may also face a difficult decision in helping a company that has committed human rights violations. The question that some may ask is if engagement with companies that have committed abuses could improve human rights conditions in the country and company’s operations.

LOOKING FORWARD

The trend toward an increasing focus on CSR is a welcome development, especially for human rights. The Leitner Center’s course emphasized the important role and impact of CSR to business and society. It not only identified challenges in implementing CSR but importantly, how to address them through real life examples, case studies and legal expertise. There is no one model for CSR, but there is no doubt that businesses must strive to conduct themselves in a socially responsible manner.

Takahisa Juba is a Leitner Center and Fordham Law School alumnus. He attended the 2015 Corporate Social Responsibility Leadership Course.

The views expressed in this post remain those of the individual author and are not reflective of the official position of the Leitner Center for International Law and Justice, Fordham Law School, Fordham University or any other organization.


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Two years since Rana Plaza: why the Accord and the Alliance are all the more relevant

By Yo Shiina

Following the devastating collapse of the Rana Plaza factory in Bangladesh in April of 2013, which claimed the lives of 1,129 people, two historic initiatives were launched by the world’s major apparel brands: the Accord on Fire and Building Safety in Bangladesh (“the Accord”) and the Alliance for Bangladesh Worker Safety (“the Alliance”). Both initiatives seek to establish mechanisms for preventing fire and safety hazards. These initiatives are all the more relevant now as increasing international attention focuses on meaningful change in the apparel sector.

During the Spring 2015 semester, the Corporate Social Responsibility Clinic at the Leitner Center for International Law and Justice undertook a review of these two mechanisms to identify structural differences and similarities between them, and to assess the current status of inspections and implementation measures at the supplying factories of some of the major signatory brands.

A FACTORY COLLAPSE AND AN INDUSTRY UNDER SCRUTINY

Ready-made garments (RMG) is the largest industry in Bangladesh, comprising nearly 50 percent of the nation’s economy, according to a report by the Institute of Developing Economies. Approximately 4 million workers work in the RMG industry, 80 percent of whom are women. Through their work, they indirectly support 40 million people, which is approximately a quarter of the entire national population. A typical RMG factory worker may earn about $1,176 dollars per year for six 10-hour work days per week for 300 days a year. This is after the 77 percent wage increase in 2013.

Due to a lack of land space and high population density, garment factories are typically built one upon the other, and in some cases, in former swamp areas. With multiple factory owners sharing the same building, structural weakness tend to be overlooked—highly stressed columns and cracks in beams often go unnoticed. It was in this backdrop that the multiple garment factory complex Rana Plaza, housing five workshops and 2,000 workers, collapsed on April 24, 2013.

Even before the Rana Plaza incident, fire and safety hazards were common in Bangladesh factories. For example, a fire at Tazreen Fashions killed 112 workers in November 2012. Responding to this, the Ministry of Labour and Employment of Bangladesh, in a joint effort with the International Labor Organization (ILO), coordinated the adoption of the National Tripartite Plan of Action on Fire Safety and Structural Integrity in the Ready-Made Garment Sector in Bangladesh, which was signed by the government, employers and workers. This plan set out a blueprint and timeline for respective parties to implement changes ensuring workers’ safety and building integrity. Although the Plan—originally set in place even before the Rana Plaza tragedy—was designated as a response to Rana Plaza collapse, the international community continued to question fashion brands’ culpability in the collapse, even though the brands did not directly own the supplier factories. Images of fashion brands’ labels amid the rubble quickly circulated the Internet, along with media reports of workers laboring in the often abusive environment for a mere pittance until the moment the building collapsed over them. Spurred by the calls for accountability, the brands took action: the Accord was launched on May 15, 2013 and the Alliance on July 10, 2013.

THE ACCORD AND THE ALLIANCE

Although both the Accord and the Alliance share the same goal of preventing fires and building safety hazards in Bangladesh and are based on the National Tripartite Plan, there are some marked differences between the two instruments. The Accord is often described as an “European” initiative, as its over 260 members include many top European companies, such as Benetton and Mango. Some American companies such as PVH and Abercrombie & Fitch are also signatories. The Alliance, on the other hand, comprises of 26 North American brands and companies, including J.C. Penny, GAP and Walmart.

The Accord is a legally binding agreement signed by brands, trade unions and NGOs. Over 260 companies have signed onto the Accord. Most signatories are from Europe, but some are also from North America and Asia. Six Bangladeshi labor unions and four global labor unions have also joined the Accord, and four international NGOs are currently acting as witnesses. Signatory companies commit to the Accord’s activity and obligations for the full duration of its existence. Each company commits to maintaining long-term sourcing relationships with its main suppliers, conditioned upon the supplier’s compliance with fire and building safety measures. The Alliance, on the other hand, is comprised of 26 North American brands and retail companies, and is not legally binding in the same sense: signatory companies don’t commit to any long-term sourcing relationships or assistance in remedial measures, and membership can be terminated at any time.

Under the Accord, signatory companies must ensure factory workers’ employment during necessary fire and building safety remediation. They must also work with suppliers to ensure that remedial measures are financially possible. Under the Alliance, the signatory companies have no such obligation. Also, while the Accord obligates signatory companies to maintain long-term sourcing relationships with complying factories, there is no such requirement under the Alliance, whose members may also resign at any time.

Many similarities also exist between the two initiatives. Both the Accord and the Alliance have a limited time span of 5 years to accomplish their objectives (although, in theory, both plans may be extended). Both provide fire and safety training programs and a hotline for factory workers to report dangerous working conditions. And the two pledged to conduct safety inspections of the supplier factories contracted with their company signatories. To that end, signatories are required to publicly disclose their list of contracting supplier factories and work with third party inspectors. However, while the Accord appoints an independent Chief Safety Inspector, who is free from the Accord’s interference except in cases of suspected incompetence or wrongdoing, to oversee inspections, the Alliance employs multiple inspectors who are under its supervision. Moreover, under the Alliance, a signatory company can select the inspector for its own supplier factories.

On top of these efforts, the Accord and the Alliance both publish Corrective Action Plans (CAPs), which are inspection reports for the supplier factories that set out issues relating to structure, fire and electricity in the inspected factories. A review of some of the CAPs conducted by the Clinic, in partnership with an international NGO, identified some recurring patterns: inadequate, blocked or locked exits; electric wires and cables kept under hazardous conditions; and building structure risks, such as highly-stressed columns and beams. To date, both the Accord and the Alliance have completed inspections of all of their respective signatory companies’ suppliers. Some factories were shut down, and non-complying factories that remained open despite warnings were disclosed; signatory companies can no longer contract non-complying suppliers. Visibility of such information is expected to not only heighten public awareness, but also impact the behavior of other supplier factories.

ENSURING SAFETY AND ACCOUNTABILITY

While the difference between the Accord and the Alliance sparked debate in the initial stage, there have been some concerns that the two initiatives only cover a part of the entire 5,000 to 6,000 RMG factories in Bangladesh. The factories supplying covered under the Accord or the Alliance comprise only a part of the whole RMG industry, and non-signatory companies’ supplier factories remain outside the supervision of the international community. Moreover, one of the major obstacles in bringing about transparency and enforcement is the strong political influence exercised by many of the supplier factory owners, many of whom strongly favor the status quo. Another is how the trade association, Bangladesh Garment Manufacturers and Exporters Association has an openly hostile attitude against workers’ rights and changes to the existing structure. Under this political landscape, even if a more worker-friendly law was enacted, the enforcement remains difficult.

It is undeniable, however, that these initiatives—which were motivated by consumer protests and implemented despite the fact that member brands do not directly own their supplier factories—made possible what was before unthinkable. This momentum for increased accountability and worker’s rights is all the more relevant after a recent deadly fire that killed 72 workers in the Philippines. The conditions at the factory was a virtual “death trap,” with windows covered with steel mesh and an inadequate number of exit doors. Initiatives such as the Accord and Alliance, even with their differences, can continue to promote awareness about the chain that links consumers, brands, corporations, supplier factories and labor all together, and what we as stakeholders can do to prevent these preventable tragedies. Though perhaps imperfect, they are a step in the right direction. In today’s world, where the fashion industry is based on increasingly frequent turnover during short selling seasons and is raking up revenues by selling higher volumes of cheaper fashion, we must continue to analyze and appraise what changes these legal instruments have brought on and what more we need to see moving forward.

Yo Shiina is a 3L student at Fordham Law School. She participated in the Leitner Center Corporate Social Responsibility Clinic.

The views expressed in this post remain those of the individual author and are not reflective of the official position of the Leitner Center for International Law and Justice, Fordham Law School, Fordham University or any other organization.

Photo credit: NYU Stern BHR/Creative Commons