ADDING VALUES TO STRONG PERFORMANCE

Human Rights and Worker Safety in Bangladesh

November 19th, 2018

For the past five years, Friends Fiduciary has been joining other investors representing 4.5 trillion dollars in urging companies and the Bangladeshi government to collaborate to improve human rights and worker safety in factories in Bangladesh.

After over 1,100 garment workers were killed and thousands injured in the 2013 Rana Plaza building collapse, investors, including Friends Fiduciary, urged brands sourcing in Bangladesh to increase their supply chain transparency, use their leverage with the Bangladeshi government to support trade unions and a living wage, and ensure that adequate grievance and remediation mechanisms were in place. Additionally, investors asked companies sourcing in Bangladesh to join the Accord for Fire and Building Safety.

The Accord for Fire and Building Safety is a legally binding collaboration between brands, Bangladeshi factories, trade unions, and the Bangladeshi government. The Accord conducts factory inspections and remediation, resolves labor complaints, and provides safety training to workers and factory owners. In 2013 over 220 brands and retailers signed the Accord. Over its five year mandate, the Accord inspected over 2,000 factories, and remediation is almost complete at over 700 of those factories. Additionally, the Accord “provided training to personnel in 846 factories, reached 1.9 million workers, and has investigated and resolved 183 worker complaints.”

This past April, on the fifth anniversary of the Rana Plaza tragedy, Friends Fiduciary signed onto a letter from the Interfaith Center on Corporate Responsibility’s Bangladesh Investor Initiative acknowledging the accomplishments and outlining the work still to be done. The letter asked companies to urge the Bangladesh government to strengthen union protections, raise the minimum wage and work with suppliers to increase wages, publicly disclose suppliers, and ensure appropriate grievance mechanisms and effective remedies for affected workers and families.

The Accord was extended in 2017 with investor support; 190 brands signed the new 2018 Transition Accord, which recognized that more time was required to adequately “complete remediation of safety issues.” This new 2018 agreement included a “process to transition responsibility to a national safety regulatory body once it has the capacity” by 2021.

Although the 2018 Transition Accord plans for eventual transition of remediation and oversight to the government, in June 2018 the Bangladeshi High Court of the Supreme Court ruled that the Accord’s approval to operate will expire at the end of November 2018.

The Bangladesh Investor Initiative, including Friends Fiduciary, responded in September 2018 with a letter to the Bangladeshi government and to brands sourcing in Bangladesh expressing support for the continued functioning of the Accord. The Accord’s unique structure and governance system ensure that all stakeholders have a voice, and reiterating that ending the Accord’s work before “credible and effective regulatory systems” are in place is “hazardous to workers, their families, brands, and investors.” Ending the Accord’s work makes it harder for investors to get a full picture of the risks that companies face in their supply chains, and more difficult to conduct human rights due diligence for our investment screens.

Investors asked the government to express support for the 2018 Transition Accord’s monitoring transition plans, and asked companies to make it clear that continued sourcing in Bangladesh is dependent on the Accord’s continued operation.

It appears that the Accord will cease functioning on November 30th, but Friends Fiduciary remains committed to supporting human rights and worker safety in Bangladeshi factories.

Friends Fiduciary has also reached out directly to companies sourcing Bangladeshi leather after becoming aware of severe environmental degradation and child labor in Bangladeshi leather tanneries. For more information about how we leveraged our Quaker heritage to reach out to a private company, read page 6 of our 2018 Shareholder Advocacy summary, or read news coverage of our investor letter to the Bangladeshi government expressing our concerns about worker safety and human rights in the leather sector specifically here.