fashion essay

Improve Corporate Social Responsibility in the Global Apparel Industry: A Case Study on Bangladesh

(Updated: August 2020)

Part I Deadly Factory Collapse in Bangladesh

DHAKA, Bangladesh — A building housing several factories making clothing for European and American consumers collapsed into a deadly heap in April 2013, only five months after a horrific fire at a similar facility prompted leading multinational brands to pledge to work to improve safety in the country’s booming but poorly regulated garment industry. More than 1,000 workers were died in the rubble of Rana Plaza, making the collapse the deadliest disaster in the history of the garment industry.

The collapse followed a fire in November that killed 112 workers making shorts and sweaters for export and that led importers, including Walmart, to vow to do more to ensure the safety of factories where goods they sell are manufactured. The building collapse quickly revived questions about the commitment of local factory owners, Bangladeshi officials and global brands to provide safe working conditions.

Brig. Gen. Ali Ahmed Khan, head of the National Fire Service, said that an initial investigation found that the Rana Plaza building violated codes, with the four upper floors having been constructed illegally without permits.

“There was a structural fault as well,” General Khan added, noting that the building’s foundation was substandard.

The Bangladeshi news media reported that inspection teams had discovered cracks in the structure of Rana Plaza. Shops and a bank branch on the lower floors immediately closed. But

the owners of the garment factories on the upper floors ordered employees to work on Wednesday, despite the safety risks.

Labor activists combed the wreckage and discovered labels and production records suggesting that the factories were producing garments for major European and American brands. Labels were discovered for the Spanish brand Mango, and for the low-cost British chain Primark.

Activists said the factories also had produced clothing for Walmart, the Dutch retailer C & A, Benetton and Cato Fashions, according to customs records, factory Web sites and documents discovered in the collapsed building.

Survivors described a sensation akin to being in an earthquake: hearing a loud and terrifying cracking sound; feeling the concrete factory floor roll beneath their feet; and watching concrete beams and pillars collapse as the eight-story building suddenly seemed to implode.

“I heard screams,” said Mahmudul Hasan, a quality inspector at Ether Tex, a garment factory, who was hit by a falling ceiling. “My heart started pounding. I lay down near a pillar and started thinking that perhaps I was going to die.”

International attention was focused on labor conditions in Bangladesh five months ago, with the fatal fire at Tazreen Fashions, a garment factory near Dhaka. That fire brought pledges from government officials and many global companies to tighten safety standards.

But many labor rights advocates said the collapse of Rana Plaza showed a continued failure to take meaningful action.

“The front-line responsibility is the government’s, but the real power lies with Western brands and retailers, beginning with the biggest players: Walmart, H & M, Inditex, Gap and others,” said Scott Nova, executive director of Worker Rights Consortium, a labor rights organization. “The price pressure these buyers put on factories undermines any prospect that factories will undertake the costly repairs and renovations that are necessary to make these buildings safe.”

Bangladesh is the world’s second-leading garment exporter, trailing only China, but the industry has been plagued by concerns over safety and angry protests over rock-bottom wages. The industry has grown rapidly in the past decade, particularly as rising wages in China have pushed many global clothing companies to look for lower costs elsewhere. Bangladesh has the lowest labor costs in the world, with the minimum wage for garment workers set at roughly $37 a month.

Such low labor costs have attracted not just Walmart but almost every major global clothing company, including Sears, Gap, Tommy Hilfiger and many others. Bangladesh now has more than 5,000 garment factories, employing more than 3.2 million workers, many of them women, and advocates credit the industry for lifting people out of poverty, even with such low wages. Exports also provide a critical source of foreign exchange that helps the government offset the high costs of imported oil.

But critics have argued that the outsize importance of the industry has made the government reluctant to take steps that could increase costs or alienate foreign brands. Labor unions are

almost nonexistent, and a labor organizer, Aminul Islam, was tortured and murdered last year. The case remains unsolved. Meanwhile, some factory owners say they cannot raise wages or invest in upgrading facilities because of the low prices paid by Western brands.

Poorly constructed buildings have long been a problem in Bangladesh. In 2005, at least 64 workers at Spectrum Garments were killed in a building collapse. Alonzo Suson, who runs an A.F.L.-C.I.O. training center in Dhaka known as the Solidarity Center, said Wednesday’s accident illustrated the repeated failure of government inspectors to ensure that safety standards and building codes are met.

“It is substandard construction, shortcut construction,” Mr. Suson said. “There was already a crack in the building.”

On Wednesday, a spokesman for Walmart expressed sympathy for the victims and said the global retail giant was committed to promoting stronger safety measures. “We are investigating across our global supply chain to see if a factory in this building was currently producing for Walmart,” said Kevin Gardner, the company spokesman.

One problem exposed in the Tazreen Fashions fire was the opacity of the global supply chain for clothing. The Tazreen factory was making apparel for Walmart and Sears, but after the fire both retailers said they had not known that and accused their suppliers of secretly subcontracting the jobs.

Inside Rana Plaza, labor activists discovered a document detailing cutting specifications for an order from Benetton. Yet Luca Biondolillo, a spokesman for the Benetton Group, denied any connection to the factories in the building. “None of the companies involved are currently suppliers of Benetton Group or any of its brands,” Mr. Biondolillo said.

The Bangladeshi prime minister, Sheikh Hasina, announced that Thursday would be a national day of mourning. Ms. Hasina, leader of the governing Awami League, could face political fallout from the accident. Rana Plaza is owned by a political figure affiliated with the Awami League.

Mr. Hasan, the quality inspector who survived the collapse, recalled a chaotic scene in which the dust was so thick that he struggled to breathe.

Part II Apparel industry in Bangladesh

The export-oriented apparel sector has been the main source of growth in exports and formal employment for the past three decades in Bangladesh. The industry directly employs 3.1 million people, comprising 40 percent of manufacturing employment; indirectly more than 10 million people are dependent on the apparel sector.

According to the World Trade Organization (WTO, 2018), Bangladesh’s apparel exports to the world reached $33.6 billion in 2019, from only $11.9 billion in 2009, or up 183% (see the figure below). Around 53% of the exports went to the European Union (EU28), and 21% went to the United States. Basic fashion items, such as cotton trousers, cotton shirts, cotton sweaters and

cotton T-shirt account for around 70% of Bangladesh’s total apparel exports in 2019 (WTO, 2020).

Data source: Bangladesh Garment Manufacturers and Exporters Association

Bangladesh’s local sources are able to meet about 80 percent of the domestic apparel industry’s demand for apparel accessories such as thread, buttons, labels, bags, tapes, shirt board, and cartons. But Bangladesh’s apparel sector relies on imported fabric and yarn inputs because the local textile industry is unable to supply its requirement in terms of quality, quantity, and variety.

Bangladesh’s main competitive advantage is low labor costs, one of the lowest among main apparel exporter countries in the world. In 2016, the monthly minimum wage in the Bangladeshi garment industry was only $68, compared with $107-$156 in Vietnam and $155-$321 in China.

Part III U.S. Consumers

Although the Rana Plaza put global retailers under pressure, some labor experts predicted that it was highly unlikely that consumers would be moved to stop shopping at Wal-Mart just because of the association with the burned workshop. "Most people are just looking for a bargain and they don't have the time or the inclination to find out who's making them and should we buy this stuff or not," said James Gross, a professor of labor in the school of industrial and labor relations at Cornell University in New York

The fire has drawn fresh attention in the United States to working conditions overseas, but it is also not the first time that American shoppers have been confronted with uncomfortable realities about how their consumer goods are made. "(We) know that the consumer sentiment in these markets is not to pay higher prices, so the companies that import are also looking for ways to cut costs, since it is a relationship. If consumers are not willing to pay higher prices, the companies are not willing to pay more in manufacturing," said Munir Mashooqullah, founder of New York-based sourcing company Synergies Worldwide.

Part IV Amazon Sells Clothes From Factories Other Retailers Blacklist After a 2013 factory collapse killed more than 1,100 people in Bangladesh, most of the biggest U.S. apparel retailers joined safety-monitoring groups that required them to stop selling clothing from factories that violated certain safety standards. According to a Wall Street Journal (“the Journal”) investigation, the site today (October 2019) offers a steady stream of clothing from dozens of Bangladeshi factories that most leading retailers have said are too dangerous to allow into their supply chains. A yellow gingham toddler top embroidered with flowers was among those clothes, listed on Amazon for $4.99 by a New York City retailer. The Journal traced the top to a factory in Chittagong, Bangladesh, that has no fire alarms and where doors are of a type managers can lock and keep workers in. A laborer at the factory, 18-year-old Nasreen Begum, said she spends 12-hour days there stitching shirts with 300 others. “You’re trapped inside until the time you complete the orders,” she said.

The Journal found other apparel on Amazon made in Bangladeshi factories whose owners have refused to fix safety problems identified by two safety-monitoring groups, such as crumbling buildings, broken alarms, and missing sprinklers and fire barriers. U.S. retailers such as Walmart Inc., Target Corp. , Costco Wholesale Corp. and Gap Inc. have agreed to honor bans imposed by those two groups, to have their supply chains inspected and to disclose to the groups the factories that supply them. The Journal found clothing including pants, sweaters, clerical robes, fishnet body stockings and other items, that originate from blacklisted factories and end up on Amazon.

Amazon has become a major player in apparel, a force with which other retailers must compete in a market where customers often seek the lowest price. It may have overtaken Walmart last year as America’s No. 1 clothing seller. Amazon dominates the rapidly growing online-retail market. Here, as throughout Amazon’s business, the giant retailer runs its platform without many of the constraints that big U.S. companies apply to their products and stores, sometimes in ways that can put customers and workers in danger. That is particularly true for Amazon’s third-party marketplace, made up of millions of individual sellers. Many are anonymous and aren’t subject to some of the oversight Amazon applies to its own brands and to items it sells directly. The Journal in August 2019 revealed that thousands of products listed on Amazon are deemed unsafe by federal agencies, are deceptively labeled or are banned by

regulators—items that many retailers’ policies bar. They included items such as unsafe children’s toys and recalled motorcycle helmets. Amazon took down some of those listings after the Journal’s reporting. Several members of Congress called on Amazon to better police its site. An Amazon spokeswoman said at the time that “safety is a top priority” and that the company uses automated tools to weed out suspicious sellers. Asked about its practices in clothing, the company removed some listings the Journal identified from banned Bangladeshi factories, including the yellow top, and said it was reviewing the others. A spokesman said Amazon inspects factories that supply its own brands to ensure they are in line with international safety standards similar to those of the safety-monitoring groups. The Journal didn’t find Amazon-owned brands made in banned factories. Of the banned factories the Journal found with apparel on Amazon, some of the clothing items they produced were for sale by Amazon directly. Most—more than two-thirds—were being sold by third-party sellers using Amazon’s marketplace platform.

The spokesman said Amazon doesn’t inspect factories making clothing that it buys from wholesalers or that comes from third-party sellers. Instead, it expects those wholesalers and sellers to adhere to the same safety standards. Amazon’s agreement with third-party sellers doesn’t explicitly say they must meet those standards. “If we become aware that a product is from a factory that may not meet our supply chain standards,” the spokesman said, “we will remove the product from our store.” The company’s control of its site is under scrutiny by some Congress members who are calling for more regulation of the company. Other U.S. technology giants that have lost control of their platforms—or decline to control them—face similar pressures. Amazon consumer chief Jeff Wilke, at the WSJ Tech Live conference Tuesday, said Amazon might need to spend billions of dollars to police products on its site to preserve customer trust. Ethical lines aren’t clear-cut in the global garment-supply chain, which remains a murky network in which clothes pass from factories through traders around the world. Even signatories to one of the safety groups have offered items that come from unsafe factories. Some garments the Journal found on Amazon were also listed on Walmart.com, mostly by third parties on the online marketplace Walmart developed after Amazon’s third-party market grew rapidly. The Journal found garments from one banned factory listed online by Target. Walmart spokeswoman Marilee McInnis said the company was looking into the items for sale directly by Walmart and talking to the companies that supplied them. Target removed its listing after the Journal pointed it out, and declined to comment. Meanwhile, Sears and Kmart, whose previous parent company was a member of a safety- monitoring group, have resumed importing from banned factories, shipping records show. A new postbankruptcy ownership structure under financier Edward Lampert didn’t continue as a member of monitoring groups. A spokesman for Sears and Kmart didn’t respond to questions about the company’s sourcing policies.

Clothing sellers formed two safety groups in Bangladesh after the 2013 Rana Plaza collapse. The factory complex, which manufactured clothing for several Western brands, killed more than 1,100 when it fell and injured many more, some of whom were stuck under the rubble for days. One worker the Journal interviewed a year after the accident survived by sawing off her arm. Together, the groups have blacklisted more than 300 factories. One group, Amsterdam-based Accord on Fire and Building Safety in Bangladesh, has mostly European members. The other, Dhaka-based Alliance for Bangladesh Worker Safety, attracted mainly U.S. members, such as Walmart, Target, Costco, Gap and Nordstrom Inc. Alliance members were expected to abide by Accord’s blacklist. As of 2017, 11 retailers accounted for more than 50% of U.S. clothing sales, Morgan Stanley reported last year. Of those, three didn’t join the safety-monitoring groups—T.J. Maxx parent TJX Companies Inc., Ross Stores Inc. and Amazon. TJX said it orders very little clothing from Bangladesh. Ross Stores didn’t respond to requests for comment. To trace how Amazon lists clothes from factories the monitoring groups banned, the Journal used records from a global-shipping-records database, information on Amazon.com, factory- inspection reports from the safety-monitoring groups and interviews with dozens of people in the New York and Bangladesh garment industries. The Journal reviewed shipping records from Panjiva, a division of S&P Global Inc. that collects them, for 122 banned factories that appeared to be still in operation. Since being banned, 67 of those had sold to wholesalers whose wares appear on Amazon, records show. The Journal was able to link products on Amazon to codes or product descriptions in shipments from 51 of those factories. Of those 51 factories, 16 shipped items that were sold by Amazon directly and 35 shipped items that were listed on Amazon.com by third parties. Of the 122 factories, 33 had sold to wholesalers whose wares were on Walmart.com. The Journal linked specific listings on Walmart.com to codes or product descriptions of 22 factories. Items from seven of those factories were sold directly by Walmart; the rest were sold by third parties on Walmart’s marketplace, which numbers about 22,000 sellers. Many listings on Amazon.com and Walmart.com don’t show product codes, nor do many bills of lading in shipping records, making them difficult to trace. And the Journal could count records only for shipments sent directly to the U.S., not those traveling first through other countries. Among clothes the Journal found on Amazon from banned factories were pants from Klarion Designs Ltd., a Chittagong maker that Accord blacklisted in 2017 after the group waited two years for the owner to remove locking doors and fix damaged walls. The Journal in August found 11 styles of Klarion-made pants on Amazon.com for $18.95 to $44.95, some sold directly by Amazon and others by third-party sellers. One shipment of women’s cargo pants left Chittagong on the ship CMA CGM Elbe, shipping records show, landing on Aug. 14, 2018, at Oakland, Calif., for wholesaler Amtai International

Ltd. Amtai sold the pants to Amazon, which then listed them directly under the brand name White Sierra, according to shipping records and Amazon listings. Amtai has imported 15 tons of pants from Klarion since the Accord ban. The records don’t show how many tons were later listed online. Klarion’s owners didn’t respond to requests for comment. Amtai Vice President Larry Tsui declined to comment. Amazon took down the listings after being contacted by the Journal. Accord and Alliance documentation says they inspected many of Bangladesh’s thousands of garment factories, usually giving them a year or more to address problems before a ban. Of the 1,794 inspected factories detailed on Accord’s online database, its records show it has declared about 8% ineligible. Companies joining Alliance and Accord agreed to legally binding conditions. They included the requirement that the companies abandon factories that didn’t meet the groups’ standards and agree to enforcement by an independent arbitrator. Under Accord’s terms, two unions brought two fashion companies to arbitration and scored settlements in 2017 and 2018, one of them valued at about $2.3 million; the companies’ names weren’t disclosed. The unions claimed the companies weren’t doing enough to ensure factory safety.

Riverside Apparels’s Chittagong factory that Accord blacklisted.

Amazon began advertising itself as a place to buy clothing in 2012, pitching its Amazon Fashion clothing site. By 2017, its share of U.S. clothing sales was 7.9%, just behind No. 1 Walmart, estimated Morgan Stanley analysts, up from less than 1% in 2006. They predicted last year that Amazon was on track to pass Walmart as No. 1.

Much clothing on Amazon comes from Bangladesh, among the world’s largest clothing exporters. Amazon publicizes little information about its supply chain, offers few details about how it enforces safety and doesn’t require third-party sellers to disclose the factories where products come from. Many listings don’t identify the country where the products were made, so it typically isn’t possible for consumers to tell if sellers are buying wares from Bangladesh. Many of Amazon’s most popular listings for clothes are marketed under little-known brand names, according to an analysis of the best-selling women’s clothes on the site by data firm Marketplace Pulse. That best-selling list changes often: An average of 3.5 new brands, many of them obscure, appear on the list every day. The list of best-sellers recently has included such anonymous-sounding brands as XMYIFOR, from a seller based in China, Marketplace Pulse said. XMYIFOR in an email confirmed it is a China-based brand. On Tuesday afternoon, 85% of those listings were from little-known brands. Where Amazon itself is an item’s seller, the company lays out general requirements for its suppliers in a webpage titled “Responsible Sourcing”: Factories need alarms, emergency plans and other measures to prevent workplace deaths. The Amazon spokesman said it works with suppliers to make sure they “are continuing to make progress under the Accord’s requirements,” adding that it has conducted more than 150 audits since last year of Bangladeshi factories supplying Amazon-owned brands. Amazon doesn’t have any explicit rules governing factory conditions spelled out in its standard contracts with third-party sellers beyond an agreement that no item be produced by a child or a convict or through forced labor, and that any entity in the supply chain follow local labor laws. A link on the website with guidelines for third-party sellers directs them to a document that explains there are specific supply-chain rules for Amazon’s suppliers. “The standards require selling partners to consistently monitor and enforce those standards in their own operations and supply chain,” the Amazon spokesman said. Amazon’s early push in apparel came at about the time Western companies were pulling out of Bangladesh or joining Alliance or Accord in response to public outrage over the 2013 Rana Plaza collapse and a 2012 factory fire near Dhaka that killed more than 100 workers. “It was a hard time for factories,” said Nazrul Islam, a director of the Bangladesh Garment Manufacturers and Exporters Association. Alliance in 2017 suspended his factory, Zisas Fashion Ltd., for violations including cracked walls and failing to install a water supply for firefighting. Mr. Islam denies it was suspended, despite Alliance documents showing it was. Many owners reinforced sagging beams, unblocked fire exits and installed alarms. Others closed factories. Some, like Mr. Islam, kept going without bringing their factories up to the safety group’s standards. Among those listing Mr. Islam’s clothing is Amazon.

Amazon had decided against joining the safety-monitoring groups early on because it wasn’t yet buying directly from Bangladeshi factories, some former employees said. More important, it didn’t feel obligated to police the suppliers of its third-party sellers. Mr. Islam in July said 95% of his production now goes to a New York company, Amerex Group LLC, including fleece-lined “London Fog” jackets it had listed on Amazon for $20 to $40 this spring. According to shipping records, Mr. Islam’s factory has sent 25 shipments to Amerex since the 2017 ban, including seven this year, as recently as August. Amerex President Ira Ganger said his company has no further production planned for Zisas. Amazon removed the listings after being contacted by the Journal. Alliance banned HKC Apparels Ltd.’s Chittagong factory in 2017 after giving it three years to fix sagging structural beams in the seven-story building, and to add sprinklers and special walls to prevent a fire in one location from igniting the rest of the space. Rakibul Alam Chowdhury, chairman of the RDM group, HKC’s parent company, said he didn’t own the building and that while he made some safety improvements, the landlord wasn’t willing to make changes Alliance demanded. Shipping records show that HKC’s clothing shipments to Alliance members stopped but that business continued to come in from clients including Stormtech Performance Apparel, a British Columbia seller of ski jackets and other outdoor gear that didn't join Alliance. The Journal found a Stormtech jacket for sale on Amazon this spring that Mr. Chowdhury said matched a jacket HKC’s factory made. He said he stopped shipping to Stormtech in 2017. Records show that, in 2018, Stormtech imported about 23 tons of anoraks, polo shirts and other clothes valued at more than $480,000 from HKC. Stormtech eventually told Mr. Chowdhury it would no longer use his plant, for violating company standards, said Mr. Chowdhury and Stormtech’s supply-chain chief, Georgeta Navodarszky. Shannon Ward, Stormtech’s director of marketing, said her company started buying from HKC before it was banned and stopped buying from it last year, adding, “We strongly support efforts to improve safety for workers at our supplier’s facilities, and will continue to ensure that we maintain the highest standards for our suppliers.” Amazon took down the jacket listing after being contacted by the Journal. The yellow gingham toddler’s top on Amazon came from Riverside Apparels, a Chittagong factory where a supervisor, Mohammed Bahar, said conditions are definitely worse than at the safety-monitoring groups’ approved factories. “In a noncompliant factory,” he said, “you don’t get paid on time, you don’t get a bonus like other factory workers and you don’t get medical leave.”

Riverside owner Md. Golam Kibria referred questions about the factory to its director, his son Rifat Bin Kibria, who said he was aware of the problems noted in the ban—among them, columns that are too weak to hold up the building. Since joining the company within the past two years after completing a business degree in London, he said, he has been trying to shift production to a new factory.

The Journal traced the toddler top, through shipping records and interviews in Bangladesh and the U.S., to a New York City wholesaler, Trendset Originals LLC. Trendset sold the shirt to a local store, Cookie’s, which listed it on Amazon and Walmart. The Journal also found two other shirt styles from Riverside on Amazon. Trendset spokesman Josh Nass said, “The company has always operated in good faith with the highest ethical standards. It has only dealt with the factory in question through a conduit who it faults for not having performed proper due diligence.” The company has stopped doing business with the middleman moving forward, he said. Cookie’s Vice President Al Falack said: “Each vendor that we work with pledges to us that they only use factories that are safe and humane. The allegation that one of our vendors is using a factory known to be unsafe is appalling to us and we will be taking action on this vendor. The vendor has re-pledged to us that they will not be using any unsafe factories moving forward.” Amazon has been expanding its efforts to encourage listings directly from suppliers in Bangladesh, some factory directors said, with company representatives attending seminars to teach factory owners how to sell on the website without middlemen. Md. Belayet Hossain, managing director at Fabin Apparels Ltd. in the outskirts of Dhaka, said Amazon wrote in 2016—the year Accord blacklisted his factory—asking what products Fabin made and whether he would be interested in selling on the site. Mr. Hossain said he has struggled

to survive since the Accord ban by trying to sell T-shirts to companies that ignore the bans. Still, he turned Amazon down: “I don’t know how to operate that kind of business.” Faiaz Rahman, director of Urmi Group—a Bangladeshi manufacturing group with factories that aren’t blacklisted—said that when he began selling activewear in the U.S. directly on Amazon in February, Amazon didn’t ask for safety-certification information. Amazon did ask for the information, though, when he joined a separate program to sell clothing in a partnership with Amazon that gives Amazon the right to buy the brand. “Amazon is just the platform,” he said. “Anyone can sell anything.”

Part V. H&M’s Different Kind of Clickbait

The H&M group sells an estimated three billion articles of clothing per year. Its revenue makes it among the top three fashion retailers in the world. Clothing for its brands, including H&M, Arket and & Other Stories, is manufactured in 40 countries, the company said; in Bangladesh alone, it sources from 275 factories that employ half a million workers. As it sprawls ever farther around the globe, hopping from trend to trend, how can H&M keep track of how the skirts, pants and sweaters it sells are made? How, for example, can it monitor whether, in faraway countries, workers are being paid less than they need to live, forced to work hours of overtime in precarious conditions? This spring, after almost three years of preparation and coordination by 40 team members from Hong Kong to Stockholm, and at a time when scrutiny of the global fashion industry and its shadowy supply chain is greater than ever, H&M introduced an effort to do exactly that — and to make it public for shoppers. Now, the company says, it can be held accountable for the origins of its products. If consumers care to look.

They Made Your Leggings Browsing the H&M website this month, you may find yourself taken with a ladies’ amber sweater with “Hiver” written on the front, or else a pair of pink children’s leggings, with smiling bunny faces and ears that stick out from the knees for $4.99. Click on the “product sustainability” tab on the page, and you will learn they were made in Bangladesh by some of the 13,000 workers at the Jinnat Apparels & Fashion plant in Gazipur, a dense manufacturing neighborhood near Dhaka. This is part of the company’s new “consumer-facing transparency layer.” H&M shoppers can now find out not only the country where clothing was manufactured, but also details on materials and recycling, the name of the supplier or authorized subcontractor where a garment was made; the factory address; and the number of workers employed there. Customers shopping in physical stores can also have access to this information by using the H&M app to scan the product price tag. There are limits to how much information you’ll get, of course. The sustainability tab won’t tell you that Jinnat sprawls over seven floors, each the size of a football field, or that employees perch in front of whirring sewing machines making white cotton T-shirts, monitoring 337 high- tech embroidery appliances and snipping at stray threads. And you won’t find out that this single company makes 400,000 pieces (roughly 110 tons) of clothing per day, or around 10 to 12 million units per month, up to a quarter of which will be bound for H&M. Nevertheless, it is the first effort of its kind by a retailer of this scale. H&M created the system by building a bridge between its supplier and production databases and then linking it to its retail interfaces. (The company declined to say what the project cost.) Pascal Brun, the head of sustainability for the H&M brand, said the new public transparency layer showed that the company had nothing to hide regarding labor or environmental practices, or how H&M products were made. Seeing Through Transparency “Transparency has become the key driver of change in the fashion industry, which used to be about as untransparent an industry as it could possibly be,” said David Savman, the head of production for the H&M group, from a factory floor in Dhaka. Tanned and golden haired, the Swede filed between rows of workers and inspected sequined T- shirts, asking line managers about different cotton hybrids and admiring fire doors. Change came crashing down on the industry with the Rana Plaza disaster in Bangladesh in 2013, a factory collapse that led to the death of more than 1,000 workers, with scores more disfigured or disabled for life.

In the wake of the catastrophe, several Western retailers found they had sold clothes sourced from the factory, or had little to no idea where the clothes they sold were sourced from. All have since come under increasing public pressure to investigate, police and invest in exactly where and how their products were made. There is also pressure for them to be as transparent about their findings as possible (though some have been far more forthcoming than others about taking action). For example, pressure from consumers has prompted brands like H&M to proactively support local suppliers who create safe and profitable businesses in places like Bangladesh. “We choose not to work with a lot of suppliers that other rivals work with so they can save on costs,” said Karl-Johan Persson this fall. (In 2018 six suppliers in Bangladesh were phased out by H&M because of their poor sustainability performance.) Mr. Persson, the billionaire chief executive of H&M, sat in the “hygge”-style library for the company’s army of young designers in Stockholm as he defended his family company’s business model and its contributions. He declined to specify how much H&M spent annually on transparency efforts, other than to say the investment had continually hurt short-term profit in order to ensure the long-term survival and growth of the company. His argument is that by working in low-cost areas, H&M is creating jobs and investing in the economy; by making its partnerships public, it is accepting its own liability. “But often,” Mr. Persson said, “the focus ends up on what we don’t do.” The new “transparency layer” project has been cautiously applauded by some human rights and fashion advocacy groups and union leaders. But many have also said that H&M’s efforts do not go far enough, questioning whether improvements like this are worthwhile if they merely prolong the existence of a system where profits and shareholder interests are continually placed ahead of employees, suppliers and the environment. Currently, customers do not have access to information on workers’ wages at individual factories, or local minimum fair living wage commitments and calculation methodology. Nor does the transparency layer offer a breakdown of the pricing structure that could specify how labor costs are calculated. “Transparency is primarily a means to an end, and mere information about where a garment is produced does not automatically guarantee meaningful changes in factory labor conditions,” said Aruna Kashyap, senior counsel for the women’s rights division at Human Rights Watch, which is part of a coalition that started the Transparency Pledge (of which H&M is a signatory).

“H&M is among the leaders on supplier transparency, and other companies should follow this practice,” Ms. Kashyap said. “But that doesn’t mean that H&M and other companies that are transparent have fixed an industry model that is replete with problems.” The Model and the Problems Even after the Rana Plaza tragedy, the global business model for producing low-cost clothing remains the same. Most brands don’t own their own production facilities, but instead contract with independent factories to make their garments. Generally, in these factories, located in mostly developing economies, very low wages are paid to workers using manufacturing processes that are geared toward expediency rather than the environment. Subcontraction or homeworking remain common, and make it even harder to track where clothes come from. The industry is operating at an almighty scale. In total, across the fashion industry, 80 billion garments are produced each year, according to Greenpeace, with consumer demand and appetite for trend-fueled fashion only growing stronger, in part thanks to a digital culture powered by social media and the wallets of a young emerging global middle class. The worldwide apparel and footwear market’s expected growth, pegged at roughly 5 percent through 2030 by Euromonitor analysts, would risk “exerting an unprecedented strain on planetary resources” by raising annual production of fashion to more than 100 million tons, according to a Euromonitor report. The pressure to meet those demands, and the demand for ever-cheaper labor, are at odds with the move toward transparency and tightly managed supply chains. Many major brands in Europe and North America continue to have limited information about the factories and workers producing their wares. Inspections are usually delegated to third-party auditors, which have proven to be far from foolproof and at the mercy of the often uneven tides of developing nations. Revelations of egregious failures within the garment industry still emerge on a regular basis. A Guardian story in October reported that the active wear company Lululemon had been sourcing clothing from a factory where Bangladeshi female factory workers said they were assaulted. In December 2019, in Delhi, India, a fire broke out in a factory that made school bags and killed 43 workers, including children, who were asleep on the floors inside. Last year, Transparentem, a nonprofit focused on investigating human and environmental abuses in the apparel industry, published a report about abusive conditions and forced labor at a set of Malaysian apparel factories that made wares for brands in North America and Europe such as Primark, Asics, Nike and Under Armour.

Servitude and Lack of a Living Wage According to the Transparentem report, many workers, often migrants from Bangladesh and Nepal, said that they paid steep recruitment fees to acquire jobs. These could take years to pay back, resulting in “debt bondage,” a common form of modern slavery that occurs when a person is forced to work to pay off debts for little or no pay. Factories limited employees’ movements by withholding their passports; it wasn’t unusual for them to live jammed together in squalid conditions. Many also had to pay a government levy on foreign workers out of their own paychecks (a practice that was legal when Transparentem interviewed workers in 2016 and 2017). “The physical distance, cultural distance, and often time zone difference have all meant that there are inherent challenges in understanding the labor conditions in any manufacturer supply chain,” said Benjamin Skinner, the founder and president of Transparentem. Brands have largely trusted suppliers to follow certain rules with employees and the environment and then verified that those policies were being followed, Mr. Skinner said. But based on his organization’s work, he added, “the ‘verify’ part can be pretty weak.” Because auditors would alert factory owners to their visits, or only interview workers in the presence of their bosses, it created an environment where noncompliance was easy to hide. This gap between intent and reality also emerged in a May 2019 report from University of Sheffield researchers in Britain on apparel companies not delivering on promises to pay workers a living wage. Generally set by governments (sometimes with input from foreign and local businesses, unions and NGOs), living wages can differ significantly between countries, with benchmarks sometimes geared to maintaining a country’s competitiveness as a low-cost manufacturing destination rather than the needs of workers. The wages can also be significantly less — sometimes even falling below the poverty line — than the living wage as defined by outside groups, which broadly incorporates food, housing, medical care, clothing and transportation. Many companies, including Adidas and Puma, referred to components of a living wage in their supplier codes of conduct, the researchers said, but the wording around requirements was “very vague,” leaving fulfillment an option and the legal minimum wage the only requirement. On top of all this, the researchers noted that companies relied heavily on outside auditors to ensure codes of conduct were being followed, running into the same issues outlined by Mr. Skinner. Many of these firms are “beholden by financial conflict of interest since they are hired by companies who could decide not to continue to hire them if they identify too many problems,”

they wrote. Often, they visited only top suppliers, leaving out the many subcontractors where abuses can be the worst.

Client binders lining file cabinets inside the Jinnat Apparel & Fashion factory near Dhaka.

Who Polices the Supply Chain? After Transparentem revealed the Malaysian abuses to 23 companies with direct or indirect buying relationships with the factories, most said that they would take action. Buyers and suppliers were able to negotiate the return of passports and secure the reimbursement of recruitment fees for workers at several facilities. (By November 2018, the total amount of fees paid and scheduled to be paid exceeded $1.4 million.) Still, under the current system, the industry status quo means major garment manufacturers are mopping up mistakes, rather than not making them at all. This is the problem H&M is trying to solve. Mr. Savman of H&M said that because H&M did not own factories, all sustainability efforts and investments like a Dhaka training center ultimately focused on supporting and promoting processes and mechanisms between suppliers, unions and workers that made them self-sufficient when it came to problem solving. A self-reporting system called the Supplier Partnership Impact Program allowed H&M to see issues and regulate what sort of monitoring was needed and where. National Monitoring Committees — round table discussions between H&M employees, union representatives and factory owners — attempted to resolve pay disputes and abuse allegations at factory level. Alongside regular auditing by independent groups, Mr. Savman said, H&M still frequently sent its own employees to monitor factories, sometimes by prearrangement but often unannounced.

His colleague Payal Jain, the sustainability manager for H&M’s global supply chain who started her career as a factory worker in India, said that H&M visited its factories several times per week, and 2,500 audits were made in the country per year. That may sound like a lot, but it is an average of 10 per factory — in 365 days. Or less than once per month. The company was also criticized by the Clean Clothes campaign last year, which said H&M had not met a 2013 commitment made to ensure suppliers would pay a living wage to 850,000 textile workers by 2018. (H&M said it had reached at least 600 factories and 930,000 garment workers with its fair living wage strategy, and did not share the Clean Clothes Campaign’s view of how to create change in the textile industry.) Additionally, some factory owners say that despite support from H&M’s sustainability teams, they experience pressure from the company or from production teams who still want more product at a cheaper price — or they threaten to pull their business and go to even less expensive hubs, like Ethiopia. Ms. Jain said cost of labor was not a negotiable part of a supplier contract. But if suppliers are paid less, or overtime is required to complete a contract, the likelihood is that shortfall will get passed down the chain. “Brands like H&M offer training, help union members establish themselves in my factory and guide us on investing in the business, which are all very good and important things,” said Lutful Matin, the manager of Natural Denims, another factory near Dhaka. It employs 6,900 workers to make garments for H&M, Zara, Mango and Esprit. “But then their buying teams still drive down order values and I feel such pressure,” Mr. Matin said. He had proudly shown off the conditions and quality of his products. But, he said, while “I know I’ve invested more in my factory than competitors, they still get orders. There are always new certificates and alliances that need to be passed. Globally the trading market is getting tougher. Sometimes I don’t know how easy it will be to survive.” While the work it does is recognized by its recognition in projects like Fashion Revolution’s Transparency Index, H&M believes the best way to get consumers thinking about who made their clothes is to talk to them close to the point of sale. “Consumers have a lack of trust and say they don’t always know how to make the right choices,” said Anna Gedda, the head of sustainability for the H&M group. She added that it was “a constant struggle” to work out how much information a customer may want versus what might make them switch off or walk away from a sale. From Dhaka, Mr. Savman was more forthright. “We are still at the stage where if you put two T- shirts, one cotton and one recycled cotton, which is 30 percent more expensive, the majority of

consumers will still take the first option,” he said. “We put a lot of information out there, like the product transparency layer. But how much do customers engage with it? Not a lot — yet.” Nearby, the managers and owners were keen to show off the scope and quality of their Jinnat complex, from their high-quality Italian knitting machines and subsidized food store and medical facilities to the anonymous complaint boxes on every floor and payment system so that workers can be compensated directly and efficiently. As tens of thousands of workers streamed back into the steamy streets for their lunch break, Abdul Wahed, the chairman, looked on. “We are extremely proud of the factory here, and the work we have done,” he said. “People can know when and where we make their clothes.” The onus is on them to click.

Part VI. Accord and the Alliance Leave Bangladesh

Alliance for Bangladesh Worker Safety, the platform of North American fashion brands and retailers, has ended its operation in Bangladesh on January 1, 2019, as the transition period of the platform was expired on the day. ‘The Alliance for Bangladesh Worker Safety has ceased

operations effective December 31, 2018. All email directed to the Alliance will not be received,’ the buyers platform made the announcement on its website on the last day of the operation in Bangladesh. On 19 May 2019, after months of delays and uncertainty, the Bangladesh Accord on Fire and Building finally struck a deal with the Bangladesh Garment Employers Association (BGMEA) concerning the future of its operations in the country. A memorandum of understanding written by the two entities and endorsed by the Government of Bangladesh was approved by the

country’s Appellate Court. According to the memorandum of understanding, the Bangladesh Accord has agreed to leave Bangladesh in 281 working days. A new safety entity called RMG Sustainability Council (RSC) will be established during this period. Officially registered in Bangladesh on 20 May 2020, the RSC is a not-for-profit company created and governed by a board of directors consisting of an equal number of representatives from RMG manufacturers, global apparel companies, and trade unions representing garment workers. Accord signatory companies, unions, and the Bangladesh Garment Manufacturers and Exporter Association (BGMEA) agreed to establish the RSC through a Memorandum of Understanding (MoU) signed in May 2019. To ensure the safety progress achieved by the Accord since 2013 is sustained and potentially expanded, the MoU prescribed that the RSC inherits all operations, staff and infrastructure of the local Bangladesh Accord office. The transition, which took place on 1 June 2020, will see the RSC continue with factory inspections, remediation monitoring, safety training, and a safety and health complaints mechanism at the RMG factories supplying to Accord signatory companies. These programs will be implemented in accordance with the protocols and procedures developed by the Accord, which have also been inherited by the RSC. The RSC will initially conduct its workplace safety programs at the 1,600-plus RMG factories covered under the Accord, with plans to eventually cover all RMG exporting garment factories. It also aims to encompass industrial relations, skills development, and environmental standards in the long-term. The organization will appoint a chief safety officer (CSO) to lead its inspection work who will be free of interference from the RSC governing body. The independence of the existing safety and health complaints mechanism that is available to workers in factories supplying to Accord signatory companies will also be safeguarded. With the transition, the RSC becomes the organization implementing the in-country safety inspections and programs of the legally binding 2018 Transition Accord agreement between global companies and unions. To ensure the provisions of the 2018 Transition Accord on remediation, inspections, training, and complaints programs are fully and adequately implemented, the Accord International Secretariat based in Amsterdam will cooperate with and support the RSC. "The Accord company and union signatories are confident that the global companies, trade unions, and manufacturers governance model of the RSC will prove effective to ensure they collectively take responsibility for workplace safety in Bangladeshi RMG exporting factories," the Accord said in a statement. "The Accord signatories additionally recognize that to achieve and maintain safe workplaces requires the full participation of the workforce, sustainable purchasing practices, and strong accountability instruments. Accordingly, the Accord company and union representatives on the RSC board are committed to safeguard the key characteristics of the Accord program including:

that workers play an active role in advancing workplace safety and their right to freedom of association is protected; brands and retailers negotiate commercial terms to make remediation financially feasible; all inspection results and remediation activities are publicly disclosed; and the escalation protocol is effectively implemented to ensure that suppliers comply with the safety requirements." Rubana Huq, president of the BGMEA and industry representative on the RSC board, added: "The RSC is an unprecedented national initiative and through our collective efforts with the brands and trade unions we will make sure that Bangladesh remains one of the safest countries to source RMG products from." H&M’s representative on the RSC board Roger Hubert said that with the establishment of the RSC, brands could continue to honor their supply chain responsibilities that they had committed to through Accord in agreements signed with the trade unions. ‘Together with our Bangladeshi trade union affiliates we will help ensure workers in RMG factories have safe workplaces and have access to remedy to address safety concerns and exercise the right to safe workplaces,’ said IndustriALL Bangladesh Council general secretary China Rahman. As the RSC embarks on its work, one of the first issues it will need to address is the safe resumption of the office and field-based work of its mandate amid the Covid-19 pandemic. It urges all re-opened RMG factories to implement necessary measures to mitigate Covid-19 exposure and keep the factory workers as safe as possible. References: Abdulla, H. (2019). Alliance brands back new Bangladesh factory safety scheme. Just-Style Anas, A. (2017). Doubts over BGMEA Bangladesh factory safety platform plans. Just-Style American Apparel and Footwear Association (2018). Apparel Stats 2017. Washington, DC Chua, J.M. (2020, June 5). Safety Accord, Nirapon Exit Bangladesh as a New Era Begins.

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