The Future in Focus

Hello all and welcome. I’m really glad to be speaking with you today on a sombre topic granted, but one that feels right to commemorate and explore. On the 24th of April 2013 a building called the Rana Plaza which housed five garment factories collapsed in Dhaka, Bangladesh killing over 1,100 people and injuring over 2,500 people. We’re here to mark the tenth anniversary of that tragic event to remember those who lost their lives but also to discuss how this was a defining moment in the evolution of assurance and social responsibility in the region.

So Ian, if I can come to you first you are the founder and former CEO of ELEVATE a leading sustainability solutions provider which is now part of LRQA. At the time I understand ELEVATE immediately went to support the region in the aftermath of the collapse, but before we come to that and cover that, can we briefly recap what exactly happened leading up to and on that day in 2013?

Yes, thank you, thank you Holly for letting me share my thoughts on this.

So first off, I would say you know what happened on the 24th of April obviously woke up the international community to the challenges that we had known for quite some time. When I say that many people in Bangladesh and outside of Bangladesh knew that buildings there were not as safe as they could or should be. We also knew because of the nature of the growth of the garment industry that there were a lot of buildings that were being built with maybe inferior concrete and building design etc.

We had had a number of tragedies prior to the Rana Plaza and in terms of fires where there were actually buildings that actually had some fires, there were also a building collapse that had happened previously.

So I think what shocked us was just the sheer size of this particular tragedy, the number of people that were impacted, the number of victims and their families, and it was one of those moments that just woke up everybody to say you know, this can’t be business as usual we need to do things differently here. And that led to the formation of a number of formal efforts to set standards, to inspect factories, to remediate buildings and ELEVATE was one of you know dozens and dozens of organisations that stepped into the effort to lend our support.

But prior to Rana Plaza, there was certainly a number of incidents that I think we were all trying to identify and remediate but we lacked some of the tools, we lacked the financial resources and more importantly the will from the government, the will from the industry and the will from the international buyers to bring about more formidable change.

And so if we had to say what was the silver lining of Rana Plaza, it is the fact that we all got into action and we basically worked our butts off to try and remediate it so that we can ensure that Rana doesn’t happen again.

I just want to quickly stress Ian’s point earlier which is that Rana Plaza was not an unavoidable accident. The safety issues in the building were very well known by the local communities, they were very well known by workers at the factory, by factory management. There had been major cracks that had appeared the days before the collapse and of course on the morning of April 24th, 2013, people employed in the factory even stepped out of the factory and refused to go back to work because they knew it was so unsafe.

However, the management essentially gave workers an ultimatum which was either you go back to work or you’ll have to lose a whole month’s salary which as we know for garment workers most of them are young women, heads of the family, losing one month of a salary is really not an option and something that they can afford.

Thanks Ian. So Savitri, if I can come to yourself next. You’re the Associate Director for Sustainability Consulting specialising in Human Rights, so I’d love to get your perspective on the significance of this event in terms of promoting businesses to prioritise social responsibility and ESG more broadly. Was this a wakeup call for the apparel sector in the region?

Thanks, Holly, for that. Really, the Rana Plaza tragedy completely changed the social compliance model entirely. It highlighted in an undeniable way the need for real-time worker voice data, shifting the model from compliance to proactive accountability.

29 global brands and retailers from Europe, from the US, were identified as having recent or current orders with at least one of the five garment factories that made up the eight-storey building that we know as Rana Plaza. And their previous compliance models really focused on single periodic audits that offered partial snapshots of safety and working conditions. Also standards on structural fire, electrical safety were, used to established by individual brands as part of their own social compliance programme or were subject to governments own regulations which were poorly enforced.

So different standards and enforcement protocols were confusing, inefficient, and really not too effective. For example, the Rana Plaza factory itself had slipped through an audit process, one of the brands that were sourcing from the factory admitted that it had done two safety audits and still giving the, given the building a green light to operate. So this really showed the need for apparel companies to increase the line on audit standards and this really served as a true call for industry action to establish as Ian was mentioning earlier, a set of internationally recognised principles for shared accountability where suppliers are not the only ones responsible but brands also need to do their share.

Secondly, I also want to mention that workers that were employed in the factory knew exactly the dangers that they were exposed to and had repeatedly tried to bring this up with management but they were being ignored, and they also didn’t have an alternative avenue to escalate these concerns. So this event dramatically heightened brands reliance on worker voice as an effective tool to identify risks before they become much larger problems.

It is a lot of peoples view that Rana Plaza could have been avoided if worker concerns about the shaking of the building and the structure would have been taken seriously. For example, the Amader Kotha Helpline which is currently operated by our team here at ELEVATE in partnership with Phulki which is a local NGO based in Bangladesh, and The Cahn Group a consulting firm based in Boston, was established in direct response to the compelling need for workers to have a trusted channel to report problems and other working environment abnormalities.

Through this helpline we do receive an average of 3,000 calls per month from workers across 1,500 factories which just to put it into perspective represents about one third of the entire garment sector in the country. International businesses that are part of this programme are informed proactively of any high-risk issues that are reported by workers so they can take immediate action to address these concerns.

Finally, I’ll mention that the aftermath of the tragedy also led to much greater transparency for businesses in the ESG space both the accord and the alliance as well the successor initiative have committed to unprecedented transparency in order to drive accountability and really build back public trust. And there are very few countries or industry wide examples of the same level of transparency that matches what apparel factories in Bangladesh are now held to in terms of supplier list disclosure, public communication of their inspections and remediation.

So truly the willingness of apparel brands to sign on to these multistakeholder ESG initiatives really does speak to in my view an important indicator of change in brand behaviour and also a step in the right direction for the sector.

Thank you, Savitri, that’s really, really interesting and those stats in particular really paint a full picture for our audience so thank you. I’m going to turn to Mamun now. As the Associate Director for ELEVATE’s operations in Bangladesh itself you’ve got such intimate insight into how the region was impacted. Can you talk about how Bangladesh responded to the tragedy both in the short term and long term?

Thank you, Holly. Yes, it is true the Rana Plaza tragedy which occurred on April 24th, 2013, was a catastrophic industrial accident that took place in the Savar Upazila of Dhaka, Bangladesh. The building which housed several garment factories collapsed and the incident brought worldwide attention to the hazardous working conditions and labour rights violations in the Bangladesh garment industry which is the second largest in the world within apparel.

In a short time Bangladesh responded to the Rana Plaza tragedy by launching a massive rescue operation to save as many workers as possible from the rubble. The government also declared a day of national mourning and promised to investigate the incident. The countries garment industry which accounts for over 80% of its export earnings faced immense pressure from international buyers to improve working conditions and labour standards.

In response to the demands the Bangladesh government together with the international labour organisations and other stakeholders developed a number of initiatives aimed at addressing the root causes of the Rana Plaza tragedy. The initiatives included the establishment of a number of committees and working groups to oversee the implementation of new labour laws, the creation of a new minimum wage for garment workers and the development of a new level of inspection regime.

One of the most significant long-term responses to the Rana Plaza tragedy was the formation of the accord and alliance on fire and building safety in Bangladesh a legally binding agreement signed between global unions and over 200 apparel brands and retailers. The accord and alliance it improved fire and building safety in the apparel and garment industry by conducting inspections of factories, implementing corrective measures, and establishing confidential worker complaint mechanism which is called as a grievance mechanism right now and approaching to most of the brands and they are widely accepted.

Another significant initiative was the creation of the Bangladesh Occupational Safety, Health and Environment Foundation (OSHE) an independent non-profit organisation that works to improve working conditions to promote workers lives and prevent workplace accidents in the garment industry. OSHE provides training and support for factory foreman’s and workers on Occupational Safety and Health and also conducts research and focus of work to raise awareness about labour rights violations.

Overall Bangladesh’s response to the Rana Plaza tragedy has been multifaceted involving a range of stakeholders and initiatives aimed at addressing the root causes of the disaster. While much progress has been made, there is still much work to be done to ensure that workers in the Bangladesh garment industry are able to work in safe and healthy conditions.

Thanks Mamun. Over to you now Ian. We’ve heard from both Mamun and Savitri that despite the devastation there was a relatively positive outcome in how Bangladesh responded by upgrading and improving thousands of factories for millions of workers. I understand that ELEVATE played a role in that process which I am sure is a point of pride given the tragic nature of what happened. Can you summarise the ways in which ELEVATE contributed to that overall response?

Sure, so early on when the North American companies got together to form the initiative they worked with us, we basically set up their operations on the ground. So we had an office and you know more than a dozen or so colleagues on the ground doing, you know in-depth type of work and we quickly mobilised, we basically put in place maybe 30-40 people within a matter of months.

We set up a brand new office for folks to coordinate all the activities, we brought on board dozens of outside auditing companies that specialise in fire, electrical, structural inspection. We vetted them, we set up the operations to then get the information back and to work with factories to start the heavy work of remediation.
So that’s the normal stuff, I think we had an average of 75 violations that we’d identified per factory and we knew it would take years to remediate those violations per factory. And that’s, we’re very proud of that.

But the thing that probably doesn’t get talked about that I’m particularly proud of is that when there were unsafe buildings, we basically got workers out of the building and we got them paid for any lost income that they had. And it didn’t take months and months of negotiation, we got it done in hours and days and I’m very proud of that. We mobilised people and you know banks to basically get involved, we launched a 50 million dollar credit facility in partnership with the IFC and the US government in order to get low cost loans available to factories that were struggling to get some access to capital. And we had a number of factories take advantage of those low cost loans in order to then redirect money towards remediation efforts.

You know obviously I’m very proud of the fact that we worked with the National Fire Protection Association and the University of Maryland, one of the better universities out there that focuses on fire safety. And we brought in external assistance to support the local engineering community within Bangladesh so that people could learn about fire protection, the right way to build buildings, the right way to install electrical installations etc.

And what we learned very early on was that there was a lack of companies in Bangladesh that actually knew what the right equipment was to install and they weren’t actually able to get access to the right equipment. So we lobbied the Bangladesh government to illuminate duties, import duties on this fire equipment and Mamun you may remember that we, and that was significant because we didn’t want any barrier to import the right equipment, the right sprinkler systems, the right boilers that needed to be installed in order to ensure that the buildings were safe. So the Bangladesh government responded, they removed those tariffs or those duties.

And then we realised that we needed to encourage a lot of these companies to come to Bangladesh because you know fire equipment was not manufactured in the country, and so we put on the largest EXPO that, they’d never had an EXPO of fire safety equipment before that and ELEVATE was the lead sort of in developing that EXPO industry. That now is completely independent, all those efforts are now being maintained by local Bangladeshi companies and firms there and it continues to flourish very well as the fire safety community has really established itself. And now they have much stronger understanding and awareness of the standards. They actually have access to equipment and that can be, that actually upgrade factories and buildings not just in the garment sector but outside of that and those are things that obviously ELEVATE played a role in.

Now the measure of our success and the success of all of our efforts will be, have we sustained the remediation, have we sustained the improvement over time and unfortunately, we’re celebrating this ten year anniversary and the good work that’s happened but we still recognise that buildings have some safety concerns that are still prevalent there and so this is an ongoing effort and I think our work is not yet done. And when I say our work, I’m not just speaking to that of ELEVATE, I’m talking about the collective we here, you know the government, the industry, stakeholders, trade unions.

You know there’s a lot of folks that really lent a lot of help and support to remediate the factories there and our collective work is not yet done, and so we just have to keep pushing forward to ensure that the legacy is one that we’re proud of, you know 10-20 years from now.

Absolutely, well said Ian. I think the Rana Plaza incident is so powerful partly because it prompts us to consider the very real personal and intimate ways in which Business Assurance or ESG or supply chain due diligence, however you want to refer to it, how it impacts human lives and we hope that over the years we will continue to see unrelenting commitment and progress in terms of businesses accepting social responsibility and doing more, even if that progress may not always be linear.

So with that in mind I’d like to pose one final question to all of you really. The Rana Plaza incident could be considered an inflection point in the evolution of ESG Assurance because it was so significant. It’s tragic nature immediately put social responsibility on the top of CEO’s lists. But how do we move away from that reactive response to proactive risk management to try and avoid similar atrocities happening in future?

Perhaps Savitri if I could come to yourself first.

Sure. I think one could argue that the new supply chain due diligence and human rights framework that we’re seeing emerging in European countries and the EU itself is very much informed by what happened in Rana Plaza. We now see a much stronger emphasis on workers and their inclusion in stakeholder consultation processes as well as the need to account for indirect suppliers and subcontracting the factories and just in general a much more comprehensive responsibility and accountability for brands. All of which can be traced back to the good analysis and the petitions from unions and worker rights organisations, civil society in the aftermath of Rana Plaza.

In terms of moving from a reactive to a proactive risk management model, I would stress the importance of again integrating worker voice and feedback through trusted worker grievance mechanisms and helplines. But also strengthening the opportunity for brands to collaborate on issues that require remediation. One of the criticisms of the compliance movement is that suppliers are often subject to diverse and even conflicting brand standards on a variety of issues, in my view this is potentially getting worse now with emerging legislation requirements.

So again we have to be conscious of that a really focus on harmonising standards and enabling sectoral initiatives that can help avoid suppliers from juggling through different customer expectations and ultimately help us build trust amongst all stakeholders.

Yes, what I can see from my point of view in Bangladesh that the sentiment, that the professionalism within the owners have developed by the ghost of last ten years’ time because when I go back in the time of Rana Plaza and in the past the amount of sincerity and the amount of importance and how they’re feeling about their own workers, about their own factories, and about the reputation of the brand has significantly changed.

So everyone’s putting so much of investment in a positive manner in order to continue the business in order to save the lives of the workers. But as Ian was mentioning I think everyone also will be agreeing with me that there is a lot more to do in the sector on safety. Because it’s a continuous improvement process. There were a lot of designs around facts and figures which were laid down in the past and it’s not very easy to overcome a shortfall so I do believe that things will be still continue to move on a positive trend.

Everyone needs to put a lot of effort in order to troubleshoot their own safety and choose firm compliances but at the same time the amount of positivity I have seen in to the ownership levels are quite satisfying to me and I do believe that you know buyers and the stakeholders are getting more confidence about the factories and the Rana Plaza will not occur in the future in here everyone has taken that kind of you know moto in their vision. So I do believe that these are important directions so far, right now yes.

And I’ll just add quickly a couple of things that I think will sort of stand the test of time.

One is what we learned in Bangladesh was that companies need some oversight, some stick if you will, to hold them accountable to drive real remediation on the local level. And I say that because I know Savitri just commented about the change in legislation, I think because of what happened that led to Rana Plaza that’s where governments reacted internationally. They said, cut, the private sector left to its own devises can’t be completely trusted, we have to actually have standards and make them a legal requirement. So I, and I see that happening, we see that in the United States, we see that in Europe, we see that in a number of different markets.

I think the other thing that we learned was the role of workers, the need for trade unions to be more involved and I say that representing you know companies that tend not to have a lot of experience working with trade unions. But the importance of trade union discussions, negotiation involvement has actually helped because it broke down barriers between the private sector and the trade union movement and I think that that has carried on. We see that now as the accord launches in Pakistan and obviously helps to support the trade union movement there and I don’t think that’s going away. I think we’re going to continue to see active trade union movement emerge especially in some of these developing countries.

I would say the other you know nice legacy that comes from Rana and what happened is that companies and trade unions and activists began to take the learnings and experience in Bangladesh and apply it in other markets. You know we saw that happen, we see it happening in Pakistan right now, but it’s happened in Indonesia and Cambodia, in Turkey you know a number, in Vietnam, a number of different markets and the private sector has been involved in that which I think is great.

And they’ve changed the way they do audits or due diligence which was your question Holly. They’ve changed the nature of it so that where there’s critical risks in some of those markets, they’ve obviously changed the standards to ensure that obviously factories were being evaluated for building, fire, electrical safety in those high risk markets.

And then lastly is I think the auditing profession including companies like ELEVATE and LRQA are being held to a different standard. We have to demonstrate that we have the right people that are competent, that can deliver a professional due diligence on behalf of our clients in the markets that we operate and that we have to have oversight of our profession in order to ensure that we meet the standards if you will. And I don’t think that is changing, I think that’s going to continue to be around for the future of ESG due diligence, we need to be held accountable just like the factories on the ground in Bangladesh need to be accountable, it’s a shared responsibility.

Thank you for those final thoughts, everybody. Savitri, Ian, Mamun thank you so much. We’re here to mark the tenth anniversary of this tragic event and I feel like we’ve been able to do so both to honour those lives lost and impacted, but also to think about how this was such an important and significant event for wider ESG assurance. So thank you all very much for your time.