Walmart, Gap Launch Bangladesh Factory Safety Group

Walmart (NYSE:WMT), Gap (NYSE:GPS) and 15 other U.S. and Canadian retailers and apparel makers said Wednesday (July 10) that they have committed $42 million to a five-year plan for factory safety in Bangladesh.

The plan requires all factories producing apparel for the 17 companies to be inspected within a year and the results made public. The group will also develop safety standards for the factories by October and blackball factories that are deemed unsafe, and provide money to assist workers displaced by factory improvements or factory closures.

Along with Walmart and Gap, the Alliance for Bangladesh Worker Safety includes Target (NYSE:TGT), Macy's (NYSE:M), Nordstrom (NYSE:JWN), Sears (NASDAQ:SHLD), JCPenney (NYSE:JCP), Hudson's Bay, Kohl's (NYSE:KSS), LL Bean, Canadian Tire, Carter's, The Children's Place (NASDAQ:PLCE), Jones Group (NYSE:JNY), and apparel makers Public Clothing, VF (NYSE:VFC) and IFG.

The companies will pay up to $1 million per year for five years into a fund supporting the inspections and worker relief. The group said the plan was developed with the help of former U.S. senators George Mitchell and Olympia Snowe, both of whom will provide reviews of the program for at least the first two years.

The plan undoubtedly won't satisfy groups that have been pushing more North American retailers to join the Accord on Fire and Building Safety in Bangladesh, which said this week that 75 retailers have signed on to its legally binding factory-safety program. A relatively small number of U.S. and Canadian retailers, including Loblaw and PVH (NYSE:PVH), have signed onto the Accord.

But in practice, Walmart was never likely to have signed onto a union-backed plan like the Accord, and Gap expressed concerns early on about the possibility of lawsuits against U.S. retailers after the next factory fire or collapse. Getting these chains to coordinate factory inspections and worker relief—and potentially get more retailers on board simply because of the critical mass of the chains involved—is an improvement. It may not be the best of all possible worlds, but when it comes to Bangladesh, nothing is.

For more:

- See this Reuters story
- See this Bloomberg story

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