Investors and Religious Groups Press Retailers on Safety

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May 16, 2013
Investors and Religious Groups Press Retailers on Safety
By STEVEN GREENHOUSE

A large coalition of religious groups and investors is urging major American retailers to join a landmark plan to improve factory safety in Bangladesh, calling on them to act together to force changes in the overseas marketplace.

In a letter released on Thursday, the Presbyterian Church (U.S.A.), the Unitarian Universalist Association and the A.F.L.-C.I.O. are pressing retail giants like Wal-Mart, Target, Sears and Gap to sign on to the factory safety plan that more than two dozen European retailers have embraced this week. The Interfaith Center on Corporate Responsibility, which helped put together the letter, said the signers controlled more than $1 trillion in investment assets.

The religious groups and investors mentioned the Rana Plaza building collapse that killed more than 1,100 workers last month as well as a November fire in Bangladesh that killed 112 workers, saying, “They are a grave indictment of the human rights record of Bangladesh, and an illustration of the failure of the global companies that manufacture and source their products there to ensure humane working conditions.”

The signatories pointed to decisions by some American companies, like Wal-Mart and Gap, to forgo signing on to the plan and instead set up their own factory inspection programs for Bangladesh, but criticized those moves as not being enough. “Acting alone, companies can and do bring about meaningful and positive changes in human rights in the countries where they source and manufacture,” the 99 signers wrote. “But when faced with intransigence of the type we have historically seen in Bangladesh on worker safety issues, we are convinced that systemic change will only occur when companies take action together.”

Earlier this week, numerous European retailers, including H&M, Carrefour, Tesco, El Corte Inglés and Marks & Spencer rallied behind the new factory safety plan. Under it, companies commit to having tough, independent inspections of the factories they use in Bangladesh and to help finance needed renovations for fire and building safety.

Of the 31 companies that have signed that accord, just two are based in the United States: Abercrombie & Fitch and PVH, the parent company of Tommy Hilfiger, Izod and Calvin Klein.

The signers of the letter, including Boston Common Asset Management, Missionary Oblates of Mary Immaculate, Domini Social Investments, Trillium Asset Management, the Xaverian Brothers and United Church Funds, highlighted the significance of the recent factory disasters. “As shareholders who have been engaging apparel companies and retailers to foster responsible sourcing practices, including human rights due diligence with robust audit oversight in global supply chains, we see the events in Bangladesh as a watershed moment for the industry,” the letter said. “Regardless of whether products are being sourced from Bangladesh, Guatemala, China or the Philippines, morality dictates that the price/value calculus for all manufactured goods must begin with the fundamental human rights of workers, including health and safety, freedom of association and collective bargaining and a living wage.”

A group of institutional investors with a combined $1.35 trillion in assets also sent a letter to retailers on Thursday, warning them of the “significant reputational, operational and legal risks that are ubiquitous in global supply chains.

The letter, signed by 15 large investors, including the New York State Common Retirement Fund and the California State Teachers’ Retirement System, called on retailers to ensure compliance with safety standards and to disclose all of the factories they use – a demand that many major retailers have resisted.

“We expect companies in our portfolios to ensure the integrity of their supply chains,” the institutional investors wrote. “We are dismayed by public statements from any company that states it is unaware that a factory produces its products.”

Other signers included Amalgamated Bank LongView Funds, the Connecticut State retirement plans, the Illinois State Board of Investment and the International Brotherhood of Teamsters Pension Plan.

“Lots of other folks have stepped up to the plate on this issue, and as investors, we feel it’s important to be clear in terms of what we want to say to the companies and to workers around the globe,” said the Rev. Seamus P. Finn, representing shareholders from the Catholic organization Missionary Oblates of Mary Immaculate. “There is no ad hoc, stitch-up solution to this. It’s got to be a serious systemic approach.”

Father Finn said that if the retailers rejected these appeals, the faith groups and investors would not sell their holdings, but would instead push harder by, for example, sponsoring shareholder resolutions.

“Our general approach is we stay and fight,” he said. Also on Thursday, Democratic Senate and House leaders sent separate letters calling for higher standards in the overseas factories. Eeight Democratic senators – including Harry Reid of Nevada, the majority leader; Charles E. Schumer of New York; Sherrod Brown of Ohio; and Tom Harkin of Iowa – sent a letter to Wal-Mart, Gap, the Children’s Place, J.C. Penney and several other top retailers, urging them to join the broad international safety plan for Bangladesh factory inspections.

The senators wrote, “Your companies are in a position to put an end to these tragedies by requiring your suppliers to follow transparent processes and clear, enforceable standards for worker safety and basic human rights.”

In the House, Minority Leader Nancy Pelosi of California and several others wrote to the Bangladesh prime minister, uring that worker safety in the country be ensured.


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