Three Years On: Are we learning from Rana Plaza's legacy?.

BlogCorporate social responsibilityEthicsGlobal RiskGlobal sourcingHealth and safetyLow Cost Country SourcingMiddle East and AfricaReputational RiskRiskSupplier Audits+-

Wednesday 24th April 2013 marked a dark day for the garment industry, but the shadow spread across procurement policies the world over.

On that day over a 1000 people died when the Rana Plaza garment factory collapsed in Bangladesh. Fingers were quickly pointed at western retailers and clothing manufacturers for their tough cost-cutting measures and inadequate auditing practices. Calls were made for supply chain audits to be more stringent especially when it was revealed that the Rana Plaza factory had passed an audit in the months leading up to the collapse and suggestions rife that child labour was being used and workers had to put up with a sweatshop-style working environment.

For their part, and crucial to our interpretation of this situation, western retailers whose clothes had been found among the rubble claimed that they were unaware of any manufacturing taking place at Rana Plaza and said that it was a result of illegal subcontracting, but vowed to clean up their acts.

Now, three years on, the question is has anything really changed?

In the immediate aftermath of the disaster many retailers and clothing manufacturers implemented their own corporate social responsibility (CSR) practices, while a number of new global initiatives were introduced to try and regulate industry standards and audit regimes.

However, a recent report from the Sheffield Political Economy Research Institute in the UK argues that the auditing process continues to fail in its role to identify and correct environmental and social problems in supply chains. If that’s true, another important issue emerges over whether business truly learns from tragedy or just pays lip service to that idea.

Much of the effectiveness of audits comes down to the honesty and integrity of the individual corporation and its suppliers, especially as many audits are pre-arranged and so any potential failings can be covered up.

Recent examples back this claim up. Earlier in the year the Clean Clothes Campaign alleged that 31 of H&M’s 32 most strategic Bangladesh suppliers had failed to complete safety repairs to schedule, while 55% of its supplier factories are still yet to install adequate fire exits, despite the Swedish retailer being the first company to sign the Bangladesh Accord on Fire and Building Safety back in May 2013. Even more recently, two Bangladeshi factories producing goods for Accord signatory companies have seen fire outbreaks.

To some extent businesses and their procurement functions are in a difficult position here: closely supervise the audits and they risk themselvesbeing accused of covering problems up. Outsource it and they run the risk of detractors saying they are just washing their hands of the problem and won’t do anything with the results anyway.

But there’s further complexity to audits - it is a process that is often more hit and miss than we’d like to admit. Indeed, earlier this month, the Worker Rights Consortium claimed that sportswear giant Nike refused to allow it access to inspect one of its clothing suppliers, currently embroiled in controversy over worker strikes.

Despite these discrepancies, corporations and the wider garment industry continue to look to auditing for the answer, but they continue to prove that in their current state they aren’t up to the job. A complete rethink is needed on audits, consideration needs to be given to how businesses can share information about suppliers, how those audits are carried out, how deep into the supply chain they should go and the standards that they should adhere to. 

Perhaps the answer may come from looking at other industries where security and standards are vital to integrity of the product. Either way, wherever CSR is relegated to a secondary concern, it’s only a matter of time before calamity happens. Only when that is recognised and addressed will corporations be able to successfully claim that their supply chain auditing practices are effective enough to address these risks.

This article is a piece of independent writing by a member of Procurement Leaders’ content team.

Rachel Sharp
Posted by Rachel Sharp

Want to learn more? Please fill in your details to hear from us.