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Walmart and other retailers start $42 million Bangladesh safety fund

By Lindsey Rupp
Bloomberg News

Gap, Walmart and other North American retailers agreed to establish a $42 million fund to improve safety conditions in Bangladesh factories in the next five years.

The plan requires all factories working with the 17 retailers in the pact to be inspected within a year and for the results to be made public, the companies said Wednesday.

The group said it will implement safety standards by October and will refuse to buy from factories they determine to be unsafe.

The retailers, which also include Target, J.C. Penney and Canadian Tire, have been working with industry associations and the nonprofit Bipartisan Policy Center to craft an alternative to a European plan for improving factory safety in Bangladesh.

Both initiatives were started after the collapse of the Rana Plaza factory in April, which killed more than 1,100 people in the worst industrial accident in the country’s history.

“We all share a deep sense of collective responsibility to prevent the horrific loss of human life we’ve witnessed in Bangladesh from ever recurring,” former U.S. Senator Olympia Snowe, who co-chaired the group’s talks, said in the statement. The agreement is “a substantive and timely step forward in protecting Bangladeshi workers.”

U.S. retailers have faced criticism for not joining 50 other garment-sellers in a legally binding agreement to improve safety at Bangladesh factories that has won support from labor-monitor groups.

Hennes & Mauritz AB and Inditex SA, Europe’s two largest clothing retailers, signed that accord and pledged at least $60 million over five years to monitor safety in Bangladesh plants.

In the North American agreement, each retailer’s financial contribution will correspond with the size of its operations in the country. Retailers with the most production will pay $1 million a year for five years. About 10 percent of the funds will support workers displaced by factory improvements or closings. Individual retailers also have committed more than $100 million for low-interest loans to ensure repairs occur quickly.

The retailers said they will select a nongovernmental organization in the next 30 days to implement the program.

The group’s board will release semi-annual progress reports.

Snowe and former U.S. Sen. George Mitchell will provide reviews of the program for at least the first two years.


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