June 02, 2013 | John Allan Peschong
The collapse of the Rana Plaza garment factory that killed more than 1,100 people in Bangladesh is a tragedy that deserves our attention and reflection. This disaster comes on the heels of two factory fires late last year in Pakistan and Bangladesh where combined at least 400 people lost their lives.
These workplace tragedies have raised questions about the moral culpability of the global supply chain that we all benefit from as we shop for products like shoes, clothes, toys and mobile phones.
As the global economy expands, many developing counties have experienced enormous and transformative growth.
According to the World Bank, Bangladesh suffers from high levels of rural poverty where 80 percent of the country’s population lives — 54 percent of them are employed in the country’s feeble agriculture industry. However, Bangladesh’s garment industry is rapidly growing — moving from the fourthto second-largest exporter of clothing after China in just two years.
Having tripled in size since 2000, Bangladesh’s apparel industry now accounts for a whopping 80 percent of the country’s annual exports — employing 4 million people and generating $20 billion per year. By 2020, it is predicted to nearly triple again.
This fast-paced growth is helping boost their economy, which has grown by six percent a year for the past decade — reducing poverty by athird. As is often the case with developing countries, lenient enforcement of building codes, political corruption and illegal construction create an environment primed for disaster. A 2010 report on Bangladesh’s garment industry stated that of the 5,000 garment factories in the country, only 50 to 100 had achieved high standards in actively complying with the spirit of the law.
It’s not surprising that the owner of the Rana Plaza reportedly added floors to the structure illegally in addition to committing other code violations.
Many U.S. and European apparel companies have been proactive in addressing the working conditions and building standards of their suppliers. However, the Rana Plaza disaster shows that in the absence of a strong government enforcing building codes, companies themselves will need to step up scrutiny of their suppliers.
Western companies will need to go further than examining the building permits of a Bangladeshi factory. They will need to work with local government officials, nongovernmental organizations and corporate social responsibility stakeholders to ensure compliance.
Critics of corporations often accuse businesses of lacking responsibility. This generalization is wrong.
Corporations are inclined to respond to consumer pressure because those are their customers. If consumers demand change, corporations must listen and take action if they want to maintain customer loyalty.
Also, it is now common that in addition to releasing annual financial reports, companies are including corporate social responsibility reports — all in the name of operating ethically and transparently.
Before and after the Rana Plaza disaster, Western companies began instituting new policies like: thermal circuit imaging to determine the temperature profile of a factory electrical system and analysis for possible faults and fire risks; visual inspection of building for indications of structural distress; and evaluating suppliers not just on price, quality and on-time delivery, but also on worker health and safety, as well as environmental considerations.
In the last 10 years, we have witnessed huge changes in the global economy. Unfortunately through tragedies, we are learning the shortfalls of the global supply chain and challenges in some developing countries.
Corporations will need to step in to fill the void when developing countries lack a firmly established rule of law. Many corporations are already taking on this responsibility to improve the global supply chain, starting with worker safety.