Tesco’s view of the Bangladesh garment industry

Posted on 14 May 2013

Group commericial director of Tesco, Kevin Grace, blogs about Tesco's view of Bangladesh clothing industry and its response to the Dhaka factory collapse.

“The death toll at the Rana Plaza factory collapse in Dhaka, at the time of writing, stands at more than a thousand. Such is the scale and horror of the disaster that it has drawn the world’s attention and through the media it has touched customers.

Kevin Grace, Tesco
Kevin Grace, Tesco

“They have responded with empathy and deep concern, asking searching questions of their retailers. They want to know that this tragedy will change the industry in Bangladesh. Tesco did not use factories in the Rana Plaza building, but we are all responsible for ensuring we prevent another tragedy.

“For the multinational retailers like Tesco who source from Bangladesh, we must help it to change in a positive way, a way which sustains and improves the livelihoods of all those who work in the industry. Some say we should all pull out of the country because conditions are bad, employers exploitative, behaviour entrenched and the route to resolving those issues is too long and complicated to make it a credible prospect. Some argue that by staying in the meantime we are complicit in the exploitation of poor workers to satisfy demand for affordable clothing. The right thing to do, they say, is to leave and only return when standards have improved.

We don’t see it that way, and never have. Nor do the unions who represent workers globally and others who fight for their rights every day. They tell us to stay, but stay and share the responsibility for making the lives of people in our supply chain – who work for us – better and safer. If multinational retailers left, it would damage the industry, the economy and ultimately the people who rely on it.

Clothing may still be made because the demand for affordable clothing would remain, but the inspections, commitment, expertise and accountability that big multinational brands bring would go. Conditions would deteriorate not improve, and Bangladesh would be $19bn poorer, a catastrophic reduction for one of the least developed countries in the world which has seen the rate of poverty fall from 57% in 1992 to 31.5% in 2009.

When we chose the market we chose to make a commitment to help it improve, and we have delivered on that commitment. That commitment is mirrored in the principles of the Ethical Trading Initiative, of which we are a founding member. Those principles say that when we uncover poor practice we work to improve it, we do not cut and run. Switching production from country to country when problems surface is not the answer.

Improving standards is slow, laborious work. It needs vigilance, persistence and persuasion. It does pay off – never fast enough for any of us, but it does. We have 54 people in Dhaka whose job is to support and help to improve standards at the 100 garment factories we work with. We do that with our suppliers and try to build relationships which means we can trust them and they us. They don’t try to hide poor practice if they are sure we won’t automatically abandon them if we find any.

Nor do we just work with the factory owners either. Some of the most profound impact is on the factory floor so last year we opened a joint Tesco/DFID training academy specifically to show middle and junior managers how higher standards leads to higher productivity – as well as reduced hours and increased wages for all. It is open to any manager, not just the ones supplying Tesco.

We have a long list of checks we make, but improvement is a constant process so we have consistently strengthened our approach whenever we can. Today we are announcing that we will support the multi-stakeholder Accord on Fire and Building Safety, which aims to ensure good practice across the industry’s 5000+ factories. This Accord will be developed into a strong programme with other leading retailers and global unions, with coordination from the UN International Labour Organisation.

But we also want to ensure we are going further and faster with our own supply chain, where our reach and responsibility is greatest. So we’re publishing today our own commitments about how we will do that, including some changes we’ve already made over the last 12 months. They are based on the principles of safety, partnership, transparency and improvement. These commitments apply to all factories we work with in the country.

We do not source from any mixed use or shared use factories, i.e. factories which share premises with other factories, shops or markets (a key fire risk).
We are conducting structural surveys for all factories we source from over the next four months to ensure they are sound. We will suspend any factories with concerns and provide support to address them. If they fail to take sufficient action we will stop using them, as we have with 15 factories in the past 12 months.

We are using the same approach and timescale to assess all our factories for fire safety, using the tailored factory standard we have developed.

We already have expert structural surveyors and trained fire experts at work in our supply base and are recruiting a full time international safety expert based in the country.

We only build relationships with factory owners we directly know and trust.
We only work with suppliers all of whose factories meet acceptable standards, even if we only source from one of their factories.

We will offer contracts of at least 2 years to all suppliers who want them, as long as they meet all our standards.

We will publish a list of all our Bangladesh factories online from June so our customers and others can know exactly who we work with.

We will ensure structural and fire safety information from our reviews is shared with workers.
We will also share any structural or fire safety results through the Accord to ensure this information is freely available to the other stakeholders including other retailers and unions.

We support the establishment of strong Workers Safety Committees in each factory and will work with our own suppliers and other stakeholders to ensure they are put in place.

We will create a fund of £1m from our own profits to support improvement of safety and conditions across the industry in Bangladesh, working with our suppliers and other local and international partners. We will provide more details in due course of how funding is used, following discussions with partners, but it is likely to include:

– Working in partnership with unions and others, subsidise training for worker representatives and managers on the effective operation of worker safety committees – provisionally using the Skills Academy we have already established in the country.

– Subsidise training for a new generation of internationally qualified fire and structural safety engineers, also through the Skills Academy.

– Provide interest-free loans to our supplier partners needing support for infrastructural improvements.

– We continue to review all other aspects of labour standards in our supply base, in line with our commitments as a founder member of the Ethical Trading Initiative, and ensure that all problems identified are addressed.

– We support proposals for an increase to minimum wages in Bangladesh, and in particular for wage reviews to be conducted on an annual basis against agreed criteria.

These are not the sum total of what we can achieve, they are the practical things we can do now, on our own and with others. We hope that discussions on how the Accord should be implemented will enable us all to go further. In the meantime we will continue working hard with our own supply base to make a difference today.”