FOREWORD: The Bangladesh apparel industry supply chains and its 4+ million workers face a new crisis: coronavirus. Obvious health issues aside, the impacts of the global pandemic on the industry and its workers are potentially catastrophic for the industry and the wider society alike. This report outlines some the early issues and developments relating to the impact of coronavirus in Bangladesh’s apparel industry and supply chain.
The report has two primary aims. First, it seeks to aggregate key information about developments and issues arising in Bangladesh’s apparel industry as a result of the coronavirus. Accounts and reporting are widespread, and the report brings together data and information from both international and local sources. It draws on media articles, academic research, watchdog reports, governmental policies and industry accounts to create a comprehensive overview of the issues and reporting. Second, and more significantly, it looks behind the numbers and accounts to provide analysis of, and reflections on, the broader issues and challenges at play. Key questions arising from this are detailed in the final section. The content here is reflective of a close collaboration of researchers from both the Global North and Bangladesh, thereby providing a balanced perspective.
However, the report is not entirely comprehensive. In its quest for speed, it does not yet provide an account of the trade union movement, updates on trade policies, or other important developments that affect the industry. These and other topics will be addressed in future reports.
This report is a product of the RISC project, which seeks to shed light on how social sustainability issues – like working conditions and occupational health and safety – are governed in the Bangladesh RMG industry. In particular, it examines how different entities – like brands, suppliers and governments – understand and take action on their responsibilities. Thus, RISC researchers endeavor to draw on their knowledge and experience in the industry to provide insight into the impacts of coronavirus given that many of the major issues arising are core to our areas of expertise: ethical trade, supply chain management, corporate social responsibility, social sustainability, governance, and the Bangladesh RMG industry.
RISC brings together researchers Copenhagen Business School, BRAC University Bangladesh, Tufts University, and professionals from the Danish Ethical Trading Initiative.
RISC is an academic research project funded by the Ministry of Foreign Affairs Denmark and administered by the Danida Fellowship Centre: The Regulation of International Supply Chains (RISC): Lessons from the Governance of Occupational Health and Safety in the Bangladesh Ready-Made Garment Industry.
BANGLADESH APPAREL SUPPLY CHAINS
BACKGROUND ON BANGLADESH RMG: The ready-made garment (RMG) sector started its journey in Bangladesh in the late 1970s, growing into a billion dollar industry by the year 2000 in an otherwise impoverished country. Bangladesh is home to nearly 165 million people and its capital, Dhaka, is the most densely populated city in the world with 21 million inhabitants. The RMG industry dominates the country’s earnings, accounting for more than 80% of all exports and 11% of GDP with a value of more than US$30 billion1. Bangladesh has the fastest growing economy in the Asia-Pacific region with around 8% annual growth in its GDP2. However, 22% of its population lives in poverty, and nearly 1 out of 10 employed people lives on less than US$2 a day3. The average monthly salary of a garment worker in Bangladesh is US$96/month.
In Bangladesh, the RMG industry associations effectively run the industry: Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). Their stated role is to promote and facilitate the apparel industry through policy advocacy to the government, provision of services to members, and ensure social compliance at factories. BGMEA has about 4500 factories as members, which account for 100% of woven garment exports, more than 95% of sweater exports, and about half of light knitwear exports . BKMEA has about 2,000 members, responsible for the balance of the country’s light knitwear export4. These associations – and in particular, BGMEA – protect the interests of the suppliers and is responsible for any action taken in the industry.
Historically, the industry relied primarily on a female workforce, though this has shifted in the past few years. Estimates from the industry ten years ago put the percentage of female workers at around 80%, but that figure has dropped to 61% today5. However, women still dominate the workforce, particularly in the lowest level positions in RMG factories.
Bangladesh continues to be an attractive country for buyers due to its low labor costs of US$96/month. The European Union is the country’s biggest market, accounting for 62% in 2019 of its exports6. This is due in large part due to the favorable ‘Everything But Arms’ trade policy which allows goods from Bangladesh to enter the Union duty-free. North America is also a major market, with the US accounting for 18% of exports and Canada a further 3%7. The rapid development of the sector, and its contribution to the economy led the country’s transition from aid dependency to greater self-reliance through trade.
However, the economic success of Bangladesh’s RMG has come at a high human price. Most famously, the Rana Plaza complex which housed several garment factories collapsed in 2013, killing 1,135 workers and injuring over twice as many more. This tragedy was particularly egregious not only due to the scale of the disaster, but also to the nefarious management which forced workers back into the building despite major cracking appearing throughout its structural columns, even after the commercial spaces on the lower levels of the building had been evacuated. Rana Plaza followed a long history of fatal fires in the industry, such as the Tazreen Fashions fire just six months earlier where 112 workers were burnt alive after being locked inside the building by security guards. The chronic neglect for even the most basic of health and safety provisions for its workers is cause for concern, particularly as the sector now faces the coronavirus crisis.
In response to Rana Plaza, hundreds of brands and retailers from around the globe joined efforts to oversee improvements to building safety through The Accord on Fire and Building Safety in Bangladesh and The Alliance for Bangladesh Worker Safety. While major improvements have been made to fire, electrical and structural safety, debates have recently arisen to question how improvements will be maintained and regulated. However, these conversations are now largely sidelined as the RMG industry in Bangladesh and around the world grapples with how to confront the pandemic now upon us.
EARLY IMPACTS OF THE CORONAVIRUS ON THE SUPPLY CHAIN: The sudden onset of the Coronavirus brought with it unprecedented impacts for supply chains worldwide, particularly those with links to China which stood at the epicenter of what would grow to become a global pandemic. The impacts and shutdown in China initially seemed to pose both opportunities and challenges to Bangladesh’s RMG industry.Initial optimism flourished around how the lockdown in China and closure of its factories represented a boon for Bangladesh, which could now take in the orders that were no longer able to be produced in China.
However, optimism quickly waned as the industry took stock of its reliance on China. The major apparel manufacturing countries – and in particular Bangladesh, Myanmar, Sri Lanka, Pakistan – are heavily dependent on China for the raw materials needed to make apparel. Bangladesh itself is dependent on China alone for more than 50% of its apparel raw materials, and about 40% of the machinery and spare parts for this industry11. Thus, the lockdown in China brought the Bangladesh RMG industry’s own supply chain to a standstill. According to a flash survey of Bangladesh suppliers, 93% reported that they faced a delay in raw material shipments during this pandemic.The delay in importing raw materials for production created problems with buyers who insisted on maintaining current deadlines on present orders.The BGMEA President conveyed her fear that the impact of the crisis would lead to irrevocable catastrophe in the supply chain.
“This is no longer only a global health crisis, it is also a major labor market and economic crisis that is having a huge impact on people. In 2008, the world presented a united front to address the consequences of the global financial crisis, and the worst was averted. We need that kind of leadership and resolve now.”
-Guy Ryder, director-general of the ILO, March 2020.
BRANDS & RETAILERS CANCEL ORDERS:
As the coronavirus spread around the world, various degrees of lockdown and stay-at-home order were instituted throughout Europe and North America.With unemployment on the rise and stores closed, consumers in the Global North ceased shopping for virtually anything other than basic necessities. Thus, brands and retailers found themselves with large volumes of merchandise but few customers, inciting the need to revise their sales and sourcing strategies for the coming months.
With low turnover, brands and retailers began to cancel orders with manufacturers, citing stores and warehouses full of stock that they could not sell in the immediate future. Brands canceled orders and announced delayed payment terms by exercising the force majeure clauses in their contracts, citing the coronavirus spread and resulting store closures as unforeseen circumstances. While legal analyses largely support this use of the force majeure clause, its invocation is likely to result in lawsuits, and the Centre for Policy Dialogue Bangladesh is currently pursuing examination about its use with the International Chamber of Commerce.
The cancellation of orders and the delays of payments by-and-large left suppliers in the lurch by shifting costs and liabilities from buyers to suppliers. As the effects of this began to ripple through the industry, brands and retailers have responded in a variety of ways. In this critical moment, BGMEA requested the brands and retailers not to cancel orders and to support factories. On March 23rd, the trade association published a video message where BGMEA President Dr. Rubana Huq made an appeal to
international apparel buyers to step forward and support the Bangladesh RMG sector in this dire time. She asked the buyers not to cancel orders for garments that were in production or already complete. For the fabric that remained uncut, she proposed that production go ahead and goods stored locally, and the buyers could defer the payments if need be. She stressed that “If we don’t have the support for the next three months, we will be having 4.1 million workers literally out on the streets. And this is a social chaos we cannot afford.” She contended that providing some measure of support to a country with whom all buying countries have been partners with for years is a small ask, going on to state that “this is a disaster that neither commerce, nor humanity can afford.” She also noted that buyers’ reputations were on the line.
Buyers’ responses varied to the extremes. In the most egregious cases, brands disregarded the pleas entirely and refused to accept orders already produced as well as those currently in production. In one such example, Topshop parent company Arcadia was called out for its poor treatment of suppliers when it demanded cancellations of all orders – including those already shipped – or be given a 30% discount, an amount unlikely to cover even the hard costs of suppliers let alone the wages of the workers who produced the garments. As forecasted by the BGMEA, such brands have become the targets of workers’ rights advocates. The Workers Rights Consortium instituted a tracker on their website to report on which brands have committed to accepting orders
already produced and in production and those which have not, demonstrating how core business functions like sourcing play an important part of brands’ reputations.
Other brands have been praised for their efforts to continue to support the industry.The president of BGMEA recently thanked H&M for being a “strategic partner” of Bangladesh by agreeing to take in all orders already in production, as well as those for which the raw materials had already been purchased19. The efforts and practices of most brands, however, have fallen in between these two extremes, with many brands which originally
cancelled orders later agreeing to accept shipment on goods already produced.Few, however, have responded to calls to reimburse suppliers for fabric and materials already purchased for future orders. Pushing financial liabilities from wealthy buyers onto suppliers who operate with very thin margins is a troubling tale when assessing the balance of risk and reward in the global marketplace.
Other brands have chosen responses grounded in charity rather than commerce. Primark is one such example, with its unique business model of zero advertising and online sales having calamitous effects in the time of shutdown, bringing its average monthly turnover of £650M to £020.
Initially facing harsh criticism for cancelling orders – and in particular for the impacts those cancellations would have on the livelihoods of workers – Primark eventually set up a special fund to be used to support the payment of workers’ wages21. Levi’s has also leveraged its foundation arms to establish relief funds and help other brands do the same22. While charitable funds offer welcome and needed support for workers, the “charitable” positioning of these efforts sends a worrying signal about the voluntary nature with which buyers view their responsibilities to the workers on which their businesses depend.
SUPPLIERS LEFT IN THE LURCH: Suppliers have little bargaining
power, particularly under the current circumstances. According to the
Federation of the Bangladesh Chambers of Commerce and Industries, the bulk of orders through June have been cancelled and the “situation is dire”. Suppliers have thus been forced into a difficult situation with little cash flow of their own coupled with increasing liabilities for raw materials already purchased for the production of now-cancelled orders. For example, an import warehouse at the airport in Dhaka is now filled to the brim with more than 2000 tons of raw materials from China because local importers no longer accept delivery.
For many suppliers, the financial pressure created by cancelled orders was untenable. According to a flash survey of Bangladesh RMG suppliers administered in mid-March just as stay-at-home orders were being issued throughout Europe and North America, 58% of suppliers reported having to shut down all or most of their operations as a result of order cancellations. Many suppliers cite cancelled orders and delayed payments as causing cash flow problems so severe that they had difficulty paying wages to their workers. At that time, more than 1 million garment workers were fired or furloughed, with the BGMEA reporting that 2.27 million workers were affected as of April 26th27. The survey reported that around three-quarters of workers were sent home without their legally-mandated severance pay, in large part due to brands’ refusal to contribute to paying workers’ wages.
Under these unfortunate circumstances, the limited option for the suppliers is either to respond to these challenges in an effective and responsible way, or to exit the industry entirely. It is feared that only those suppliers who have good financial liquidity are likely to survive.
CORONAVIRUS HITS BANGLADESH: As the coronavirus continued to spread, Bangladesh instituted its own shutdown order on March 26th. While RMG factories were initially told that they could use their own discretion to determine whether or not to shut, guidance issued by the BGMEA urged factories to shut to help stem transmission of the virus. The Bangladesh Department of Inspection for Factories and Establishments (DIFE) advised that only those factories with urgent orders for export or personal protective equipment (PPE) production should remain open, and that these factories must ensure that the workers were equipped with proper safety measures. So, the vast majority of factories that had not shut previously due to order cancellations now were compelled to close. Yet, hundreds of factories throughout the country either remained open or opened again before the lockdown order was lifted, despite not having a valid reason or meeting safety requirements.
Given the financial crisis facing RMG factories and their workers, the decision to remain open or to re-open should not come as a surprise. It does, however, underscore two important points
about the industry. First, it emphasizes the hand-to-mouth dependence that suppliers and workers have on their Global North buyers. Second, it reinforces the unacceptable disregard employers regularly show for the health and safety their workers, similar to those which resulted in the deaths of 112 workers in the Tazreen Fashions fire in 2012 or the 1,135 killed in the collapse of Rana Plaza in 2013.
WORKERS: THE MOST VULNERABLE OF ALL: Sudden factory closures led factory workers – many of whom had come from rural areas – to return home. However, public transit was suspended due to the lockdown, stranding thousands of workers in crowded hostels. While the shutdown was due to continue through April 14th, workers reported being told by their employers to return to work on April 5th – the original end date of the lockdown – lest they lose their jobs. The immediate risks of loss of income and the longer-term impact of losing one’s job weighed more heavily upon workers than did the threat of contracting COVID-19.
So, since the lockdown also included the closure of public transit, stories abound of workers walking hundreds of kilometers to reach their workplaces and cramming themselves in vans and trucks intended for goods. However, most workers were met at factory gates by police who told them to return home. Workers not only incurred significant expense in reaching factories and returning home again, but are also feared to have contributed to the spread of the virus.
Workers – the vast majority of whom have a limited income and no savings – are typically paid their salaries by the 10th of the month for their work the previous month. As the shutdown continued and the financial liquidity of suppliers dried up, nearly half of workers reported not receiving their salaries for March35.This despite a governmental aid packaged announced with the express purpose of paying workers’ salaries, and threats by DIFE to take legal action against factories that didn’t pay up. The payment deadline was extended to April 16th. However, thousands of factories still failed to pay, causing workers to take to the streets in protest.
Protests were reported throughout the country, further fueling fears about transmission. The workers blocked roads and shouted slogans such as “we want our wages” and discussed their food insecurity. One protester was quoted as saying, “We are afraid of the coronavirus.
We heard a lot of people are dying of this disease, but we don’t have any choice. We are starving. If we stay at home, we may save ourselves from the virus. But who will save us from starvation? ”38 When confronted with questions about protesting during a lockdown, another worker
asked “If we don’t have food in our stomach, what’s the use of observing this lockdown? ”39 BGMEA President Rubana Huq also expressed concern at the prospect of workers’ starvation as part of her plea to brands to help support the industry. The non-payment of wages created more immediate impacts to workers’ health and safety than did the threat of the coronavirus.
The non-payment of wages was a short-term issue, but the longer-term concern was about the prospect of employment at all. Order cancellations and holds by the end of March alone effected nearly half of the country’s 4.1 million workers40. As the situation intensified and factories closed, workers were being let go by the thousands, with more than one million workers out of a job by the beginning of April41,42, a number which has likely increased. This in spite of the BGMEA President’s repeated appeals to factory owners not to lay off workers on humanitarian grounds, citing concerns for starvation should their income come to a halt.
SUPPORT FROM THE BANGLADESH GOVERNMENT: Seeing the impacts of the pandemic on the industry, Prime Minister Sheikh Hasina announced a stimulus package on 25th March, even before sending the country into shutdown. This first package amounted to more than US$580 million and targeted export-oriented industries – principally RMG – to help mitigate the impact of the coronavirus. The premier stipulated that the money from the package was available to suppliers and could only be disbursed in the form of wages for their workers. While positioned as a stimulus package, however, it was clarified a week later that the funds were actually in the form of loans which carried 2% interest and a 6-month grace period43. Perhaps unsurprisingly, there has been little uptake of the funds by RMG factories. Thus, thousands of workers continue to go without payment of their wages.
Throughout the crisis, both the government and BGMEA have repeatedly called for suppliers to not lay off workers, largely based on humanitarian grounds.
However, with orders dried up and future prospects bleak, thousands of workers have continued to be let go. It may not be until the industry is fully re-opened that we can accurately assess the impact of how many workers – and suppliers – will be unemployed long-term.
BY THE NUMBERS: BIG LOSSES FOR BANGLADESH’S RMG INDUSTRY: It is predicted that Bangladesh will lose around US $6 billion in export revenue this financial year amid order cancellations and factory shut downs. Coronavirus has already resulted in more than $3 billion in losses for the industry – due to a combination of $1.4 orders put on hold and a further $1.8 billion cancelled outright – which will result in nearly $2 billion in unsettled liability, according to the BGMEA. As per a BGMEA report, the total apparel export in the month of March 2020 declined by 30.19% while shipment witnessed a 77.76% decline during the first week of April47. The BGMEA President citied “This can be estimated that export from March to May 2020 will fall short of around $4.9 billion from regular exports or confirmed orders.“ . Even before the worst of the health impacts hit Bangladesh, its principal export industry has already suffered millions of dollars in losses.
Prospects for the future are similarly bleak. The summer and fall is typically the sector’s busy season as they prepare merchandise for the holiday period in the Global North. Projections estimate that with a May re-opening exports will be down 62% or $1.44 billion in September compared to the previous year. Without a May opening, estimates put that number at 83% or $1.94 billion for the same timeframe. Even the best-case scenarios for the industry are distressing.
DESPITE LOCKDOWN, FACTORIES RE-OPEN: The countrywide lockdown had been extended to May 5th at the time of writing. Despite the president of the BGMEA promising to journalists in mid-April that factories would “definitely not“ be reopening in April, the BGMEA reversed this decision just days later, allowing more than 500 factories to open on April 26th. Many buyers reversed their initial order cancellation decisions and agreed to accept products already in production, so suppliers were pressed to finish and ship the orders, hence the push to re-open factories. Other factories had received orders for the production of personal protective equipment (PPE), an urgent need locally and globally.
The rush to re-open factories was due in part to Bangladesh’s fear of lost competitiveness to other countries like China and Vietnam which also resumed manufacturing lines. Policy experts in the country advocated a gradual approach to re-openings, which could ensure the health and safety of workers while also avoiding the negative, long-term economic impacts of a prolonged shutdown. There were also concerns that remaining closed in the short-term would send a signal to buyers that the country’s sector may not be open later, either, stoking fears that when brands are ready to buy again, orders would divert to other production countries.
Advocates of re-opening have also used the phased re-openings in the Global North – such as Germany – as justification for their decision. However, this rationalization fails to account for the fact that re-openings in Global North countries follow the peak and flattening of the infection curve; Bangladesh’s curve is still rising rapidly. Further, there are significant questions about the ability of the country’s healthcare system in managing the outbreak. For example, an average of 30 doctors were infected each day in the week of April 18-2454. Ergo, it seems that Bangladesh’s re-opening of its RMG factories can be justified solely in economic terms, rather than through informed modelling which balances transmission rates and healthcare capacity with economic objectives.
Officially, factories were to be re-opened according to a phased schedule. Even then, factories were only to allow locallybased workers to return so as to decrease the number of workers traveling across the country. Suppliers were also tasked with responsibilities for workers’ health, but significant concerns remain as to factories’ abilities to adhere to necessary health and hygiene protocols, with one headline bluntly stating that “Social distancing in garment factories out of the question” .
Yet, while factories were re-opened, the government extended closures for public institutions. The government reversed a previous decision to also reopen ministerial offices at the same time as RMG factories, and announced that educational institutions are likely to remain closed until September. The differing policies for RMG and the rest of the country underscore the government’s prioritization of economic interests.
HEALTH PROTOCOLS IN FACTORIES: Despite the continuous operation of some factories and early openings of others, guidance regarding the health and safety protocols in factories wasn’t published until April 22nd. This was just four days before the official re-opening of factories, and long after the first round of reopenings on April 5th.
The BGMEA – and not the government of Bangladesh – has set the policies and guidelines for factory re-openings. Key measures and provisions include:
Reducing the number of workers in the factory at a time, for example by creating shifts
• Requiring the wearing of masks • Installing thermal scanners or temperature checks at entrances
• Increasing the number of facilities for handwashing
• Regularly cleaning and disinfecting all hightouch areas
• Ensuring social distancing, such as making indoor walking paths unidirectional • Adjusting building exhaust systems to ensure air isn’t drawn through buildings • Training workers in new guidelines and protocols
• Ensuring treatment of any worker affected by COVID-19
Whilst the authors are not medical experts, the policies themselves overall seem consistent with those which have been developed by health experts. However, there are widespread reports that the guidelines are not being followed. Workers report no social distancing, no temperature checks, no regular cleaning, and the like. Enforcement of protocols is not expected, amid finger pointing between who should be responsible for the task, the BGMEA or DIFE. In the meantime, workers’ health and safety hangs in the balance.
PPE PRODUCTION: PROMISE OR PITFALL?:
As factories re-open, some are working on completing orders that were in-progress when the factories shut, and others have worked to shift production to PPE. There is a huge shortage of PPE in the local market in Bangladesh – particularly given the increasing demand during the pandemic – presenting a fitting opportunity for suppliers to re-start their businesses by helping satisfy local demand. In addition, international buyers from the US, Kuwait, Sri Lanka and Nepal have also expressed interest in purchasing PPE from suppliers in Bangladesh, further incentivizing suppliers to shift production.
While moving to PPE production sounds promising, it is not without its pitfalls.First, PPE materials are graded on a scale of 1-4, with lower levels offering basic protection and higher levels the medicalgrade protection necessary to fully protect frontline workers like doctors and nurses.
However, Bangladesh also currently lacks medical-grade materials (3/4). Certified fabrics have been ordered but have not yet arrived from China, due to both a high demand for the materials as well as delayed cargo routes operating between the two countries. So, in the meantime, suppliers are using the materials they have available or can source from local mills, largely waterproof fabrics. While they may be similar, they are not certified fabrics.
Thus, the only PPE products able to be produced can merely ‘substitute’ for levels 1 and 266. Producing ‘substitute’ products is a slippery slope, since its protective value cannot be guaranteed.
The next major issue with PPE production is that there are no production facilities in Bangladesh which can provide the necessary dust-free, medical-grade environment necessary to produce certified PPE67. Thus, even if medical grade, certified fabrics were available, any PPE produced in the country cannot be certified for medical use. However, the BGMEA has stated that they intend to engage in PPE production for export. “Our ultimate goal is to export PPE to the rest of the world and we want to do it very fast. As soon as we can get the certified fabric, we will be switching to certified and imported fabrics for our PPE.” .It is unclear if and how suppliers might be able to upgrade production facilities to comply with medical production requirements.
As demand for PPE has skyrocketed, so have the numbers of fraudulent, uncertified or poor quality products flooding the market. For example, when officials in Demark conducted checks on a longawaited order of 20 million masks from China intended for local hospitals, they rejected five million of them due to poor quality; many of the masks did not filter particles at the stated level, which could put healthcare workers and patients at risk69. So, Bangladesh’s current inability to produce certified PPE products coupled with its aspirations for export brings to bear life-and-death questions about the quality and performance of their masks, gowns and other medical products in ensuring the health and safety of both medical professionals and patients.
Despite these shortcomings, twelve suppliers have already begun PPE
production and supplied to the local market70. The BGMEA president stated that these products are intended for use by “support workers and doctors” and that the “fabrication and garments already have an approval from the Director General of Health Services (DGHS), Ministry of Health. They have certified them as Level-1 Substitutes.“ 71. While something might be better than nothing, equipping doctors and nurses with ‘Level-1 Substitutes’ falls short of the level of protection required to stem viral transmission, and may also compound the problem by giving healthcare workers and their patients a false sense of security that their PPE will adequately protect them.
Finally, the move to PPE production in the Bangladesh RMG sector could arguably accelerate viral transmission, rather than reduce it. As detailed above, the vast numbers of factories not following safety protocols puts the garment workers who manufacture the PPE at great risk. Herein lies the bitter irony: workers are sent back to factories with little enforcement of the protections needed to keep them safe, just so they can produce the PPE that will help protect others.
THE ROAD AHEAD: Amid all of the various accounts and issues, one thing is clear: it will require coordinated, good faith efforts by all actors to safeguard the health and livelihoods of the workers on which the sector depends, as well as to facilitate the economic recovery and continued viability of the Bangladesh RMG industry.
Efforts to address the many issues outlined in this report are underway. The International Labour Organization (ILO) has recently announced a Call the Action for the industry, which sets out “urgent priorities and specific commitments for organizations across the industry to endorse as the first step to collective action to achieve these goals.” 72. It outlines the responsibilities and suggested actions for brands, governments, suppliers, labor and donors, all with the aim to protect the most vulnerable – workers – while also ensuring the long-term sustainability of global supply chains and trade.
It is crucial for companies – particularly brands and retailers – to understand how their decisions and practices affect workers throughout their supply chains. The United National Development Programme has also created a rapid self-assessment for businesses to conduct human rights due diligence in relation to COVID-19.
As brands and retailers evaluate their sourcing decisions and overall re-building strategies, the authors encourage utilizing the UNDP self-assessment tool as well as joining the ILO’s Call to Action and subsequent efforts. In addition, companies may wish to consider the following questions and issues arising from this research.
ORDER CANCELLATIONS. If your company has already cancelled orders, were already-produced and in-production orders included in the cancellations? If so, can your company take in these orders rather than shifting costs and losses to suppliers?
RAW MATERIALS. Have your suppliers already purchased fabric and supplies for future orders that are now on hold?
If production of the originally planned products are no longer saleable, can the materials be re-used for other designs?
Can you assist your suppliers with covering the costs of your fabrics?
WORKERS’ WAGES. If your firm has delayed payments to suppliers, have you ensured that this will not also delay wages paid to the workers? How will your company ensure that the workers who produce you products will be paid in accordance with prevailing governmental regulations?
HEALTH & SAFETY IN FACTORIES. If your company’s goods are currently undergoing production, what are the safety measures in place in those factories? Are workers adequately protected? Is official guidance being followed? What will you do if you find problems? What will you do if there’s an outbreak of COVID-19 in one of your supplier factories?
PPE. If your company plans to purchase PPE, are the suppliers able to meet the necessary requirements? Do they have access to medical-grade fabrics? Is the production facility up to medical standard?
How will you inspect and test PPE products once they arrive to ensure their quality?
RESPONSIBLE BUSINESS CONDUCT. Do any of the issues here necessitate revisions to your company’s CSR policies? Sourcing policies and practices?
RISC Briefing – April 2020
Perspectives from a Danida funded research project:
The Regulation of International Supply Chains (RISC): Lessons from the Governance of Occupational Health and Safety in the Bangladesh Ready-Made Garment Industry.
Syeda Nusaiba Hossain
Jette Steen Knudsen
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