Retailers discuss compensation for Bangladesh factory disasters

BERLIN Thu Sep 12, 2013 11:56am EDT

Women work at a garment factory in Savar July 27, 2012. REUTERS/Andrew Biraj

Women work at a garment factory in Savar July 27, 2012.

Credit: Reuters/Andrew Biraj

BERLIN (Reuters) - A dozen retailers and clothing brands are meeting in Switzerland to discuss providing compensation for fatal disasters at two factories of suppliers in Bangladesh, although several companies were noticeable by their absence.

The talks, chaired by the International Labour Organisation in Geneva, are aimed at setting up funds to compensate the victims of both the Rana Plaza disaster in April, when an eight-storey building collapsed, killing 1,129 people, and the fire at the Tazreen factory in November 2012 that killed 112 workers.

The collapse of Rana Plaza, a factory built on swampy ground some 20 miles outside Bangladesh's capital city Dhaka, ranks among the world's worst industrial accidents and has galvanized brands to look more closely at trying to improve safety standards at suppliers.

About 3.6 million people work in Bangladesh's clothing industry, making it the world's second-largest clothing exporter behind China, but some of the workforce, which is mostly female, earn as little as $38 a month.

Garment exports in the last financial year which ended in June were up 13 percent at $21.5 billion, with 60 percent of the clothes going to Europe and 23 percent to the United States, according to the country's Export Promotion Bureau.

"The families and the injured have already waited far too long," said Monika Kemperle, assistant general secretary of the IndustriALL international trade union federation that is coordinating the talks.

"Companies who are serious about conditions in their Bangladeshi production chain can send a clear sign of their sincerity at these meetings," she said in a statement.

IndustriALL is seeking a deal on a long-term fund for Rana Plaza worth more than 54 million euros ($71.8 million), with 45 percent to be contributed by brands. It plans a statement on the outcome of the talks later on Thursday.

The firms expected to attend included Zara-owner Inditex (ITX.MC), the Primark discount chain owned by Associated British Foods (ABF.L), Canada's Loblaw Cos Ltd (L.TO) and European retailer C&A, according to the Clean Clothes Campaign, which has led the drive for compensation and is involved in the talks.

However, Inditex later said it was not attending as it was not supplied by either the Tazreen or Rana Plaza factories.

The other firms the Clean Clothes Campaign expected at the talks are Bonmarche, Matalan and Store Twenty One from Britain, Germany's Karl Rieker and KiK, Camaieu of France, Mascot of Denmark and Spanish department store chain El Corte Ingles.


But some retailers have attracted attention for staying away, including U.S. group Wal-Mart (WMT.N), which sourced garments from the factory hit by the fire, as well as Italian clothing retailer Benetton and Spanish fashion chain Mango.

Benetton's chief executive Baigio Chiarolanza said many companies had not joined the Geneva talks due to a "lack of clarity" around objectives and a lack of involvement by several key stakeholders, without elaborating.

"We decided to focus our efforts and resources in working directly with those affected by the Rana Plaza disaster and their families so that we can provide them with concrete help while they need it the most," he said in a statement.

Mango did not attend because it did not have commercial relations with factories at Rana Plaza, a spokeswoman said, although the company has said it ordered test samples from one supplier in the building.

Asked about the talks, Wal-Mart spokesman Kevin Gardner said the world's biggest retailer was focused on investing its resources in improving safety in factories, but did not comment directly on compensation demands from victims.

Wal-Mart is part of a North American alliance looking at ways to improve worker safety at suppliers.

A European group, also brokered by IndustriALL and separate from the compensation talks, is looking at the same issue. Some trade unions say they prefer the European plan for improving safety because it proposes uses a binding arbitration process that will be enforceable in the courts of the country where a company is domiciled.

IndustriALL said the compensation plan it was working on was based on a scheme it developed following other factory accidents that takes into account loss of earnings, pain and suffering, as well as medical costs, funeral costs and other family expenses.

C&A, KiK and El Corte Ingles already agreed in April to contribute to a $5.7 million fund for the victims of the Tazreen fire, but were discussing details of that plan in Geneva.

($1=0.7518 euros)

(Additional reporting by Robert Hetz in Madrid and Jessica Wohl in New York; Editing by Greg Mahlich and Mark Potter)

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Comments (2)
tmc wrote:
The big players, like Wally World, do not need to do this, so they won’t. The smaller players are doing this for their brand name, avoiding law suites, etc.. It surely isn’t out of the kindness of their hearts as they are corporations and do not have one. Nor do they have a single conscience, perhaps a collective one, but that’s not the same as it doesn’t have moral and ethics attached as a persons does.

Sep 12, 2013 10:04am EDT  --  Report as abuse
amv6 wrote:
Why should they be even concerned in the first place? This is a problem of corrupt government in Bangladesh. Those factories do not belong to the retailers and are just a relationship between a retailer and a factory owner. If factory owner want to endanger his employees retailer is not going to stop it. This fund is nothing else but another bribe to the government. What would make a difference if a number of government officials directly responsible for this would hang alongside factory owners. That would fix a problem in a few incidents, not throwing money at the government and owners.

Sep 12, 2013 12:45pm EDT  --  Report as abuse
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