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Business News/ Opinion / Online Views/  24/04: Revisiting the CSR landscape

24/04: Revisiting the CSR landscape

Deaths from the factory building collapse in Dhaka underscore the need to address matters of corporate liability

Volunteers assist in rescue operations after an eight-storey building collapsed in Savar, on the outskirts of Dhaka, Bangladesh, on 24 April. Photo: Munir uz Zaman/AFP (Munir uz Zaman/AFP)Premium
Volunteers assist in rescue operations after an eight-storey building collapsed in Savar, on the outskirts of Dhaka, Bangladesh, on 24 April. Photo: Munir uz Zaman/AFP (Munir uz Zaman/AFP)

As deaths from the factory building collapse in Dhaka crossed a staggering 900 with several dozen bodies pulled out from the rubble on 9 May, it underscored not only the urgent need for local infrastructure and worker safety in Bangladesh—the builder allegedly constructed three floors illegally—but the equally urgent matter of corporate liability and corporate social responsibility (CSR). As government, multilateral organizations, businesses and NGOs jostle to work out a solution, the outcomes of the 24 April disaster will likely play across India’s export supply chain and CSR landscapes too.

Things haven’t been quite the same since labels for the Spanish brand Mango, and Primark, which operates stores in the UK, Ireland and Spain, were found in the rubble of Rana Plaza. Alongside outrage there have been calls for accountability and to ensure such incidents do not recur in Bangladesh and elsewhere.

Some globalization gurus like Columbia University professor Jagdish Bhagwati have called for Bangladesh to “buckle down and fix the acute governance shortfall that is at the heart of the fires and collapsed buildings". In a column in The New York Times in early May, Bhagwati also insisted that “blame must be assigned to Bangladesh and not to the brands. Since the factories were locally owned and operated, the blame surely belonged to their owners and managers, not to their clients any more than to those of us who purchased the garments at home or abroad".

While Bangladesh government and businessmen clearly need to fix things, as the owner of a Gap jacket made in Bangladesh and purchased in New York City, I am delighted that several businesses appear to be moving ahead of such strident opinion. With hits to the jaw, businesses learn they have real money to lose from damaged supply chains and damaged reputations that can and do accrue from the Bangladesh-like disasters. If trade economics—whether blissfully theoretical or brutally real-world—supply chain management, human rights and CSR increasingly visit the same page, it can only be to the greater good.

The responses since 24/04 have ranged from avoidance to acceptance of responsibility. In a statement this past week, Mango, the brand owned by Punto Fa, SL clarified that at the time of the building collapse in Dhaka, it “was planning to produce some samples for various company lines, samples that still had not been started". Mango insisted it “always conducts external social audits on all suppliers it works with in order to verify the working conditions of its employees: non-use of child labour, safety of workplace, remuneration, working hours, etc".

Primark has a deeper engagement in Bangladesh, and to its credit it has been upfront. Primark says it will “pay compensation to the victims of this disaster who worked for its supplier". The company maintains this will include “long-term aid for children who have lost parents, financial aid for those injured and payments to the families of the deceased". It also widened the scope of corporate responsibility with this broadside: “Primark notes the fact that its supplier shared the building with those of other retailers. We are fully aware of our responsibility. We urge these other retailers to come forward and offer assistance."

Clean Clothes Campaign (CCC), a major European watchdog association was less coy about this last point. In a statement on the day of the Rana Plaza collapse, it maintained: “On their website, factories list well known brands as customers including C&A, KIK and Wal-Mart. These brands were also involved"—CCC’s way of saying the suppliers to such brands were based at the location—“in the fire at the Tazreen factory, not far from Savar"—the location of Rana Plaza—“where 112 workers died in a fire exactly five months ago." Similarly, German “cost-cutter" KIK was also “involved in the Ali Enterprises fire in Pakistan, where nearly 300 workers burned to death last September".

Even as outfits like the International Labour Organization parachute into Bangladesh to pressure “tripartite partners"—the government, employers and workers—into adopting measures to “prevent further tragedy", CCC and its colleagues at the International Labor Rights Forum are, for starters, urging the owners of global brands active in Bangladesh to sign an agreement on building and fire safety. The Business and Human Rights Resource Centre claims that companies and NGOs “have set the deadline of 15 May to try to come to an agreement". Should it come about, it will be another necessary pillar to strengthen the shaky edifice of governance, and both local and global ethical business practices and corporate social responsibility.

Sudeep Chakravarti is the author of Red Sun: Travels in Naxalite Country and Highway 39: Journeys through a Fractured Land. This column focuses on conflict situations in South Asia that directly affect business.

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Published: 09 May 2013, 06:26 PM IST
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