North American Retailers Devising Own Bangladesh Safety Plans

By Jessica Wohl | May 16, 2013

North American retailers on Tuesday discussed forging their own Bangladesh safety agreement–an alternative to a legally binding accord that many European retailers have signed on to–though details of any alternative accord were still unclear.

The discussions Tuesday were the latest in a series of talks, some convened by large retail trade organizations and others by major retailers such as Macy’s JC Penney Co Inc, and Sears Holdings Corp, to develop a response to fatal fires and a factory collapse in Bangladesh last month that killed more than 1,000 people.

The National Retail Federation (NRF), one of the largest U.S. retail trade associations, spoke on Tuesday afternoon with other trade associations and with its member companies about a possible accord among North American retailers. Details from those calls are not yet available.

Meetings among North American retailers are shaping up as an alternative approach to an accord that European-based retailers have reached. The pact, joined Tuesday by Loblaw Cos Ltd of Canada, includes legally binding commitments to safety improvements, according to industry sources. A copy of the agreement has not yet been released.

Major European retailers such as Sweden’s H & M Hennes & Mauritz AB and Spain’s Inditex SA have signed on to the accord. Labor groups including Europe’s IndustriALL and UNI Global Union, as well as non-governmental organizations, provided the initial draft of the agreement and have set a May 15 deadline for companies to commit to its terms.

U.S.-based retailers have been reluctant to join any industry accord that creates legally binding objectives. Gap Inc said it would sign the accord only if changes are made to the way disputes are resolved in the courts. As of Tuesday, the only major U.S. company to announce its support was PVH Corp, whose brands include Calvin Klein.

Robert E. Scott, an expert on contracts and commercial transactions at Columbia Law School, said in an email that the U.S. retailers are balancing a desire to seek improvement in Bangladesh against concerns about exposing themselves to liability for safety issues.

“Perhaps American firms believe that the risk of collateral liability is too great to estimate,” Scott said. “But that’s not a contract law issue, that’s simply a question of balancing corporate benefits of being seen as a good citizen trying to control these conditions on the one hand with the risk of a possible significant liability on the other.”

Mike Posner, a professor of business and human rights at New York University’s Stern School of Business, in an email said agreement to a legally binding accord by major European retailers has put U.S. retailers under pressure. “The onus is now on American brands to step up to the plate,” he said.

Sears in a statement said the company “is not prepared to sign the current proposal. We are engaged in preliminary discussions about the alternate proposal from the retail trade associations in North America.”

A JC Penney Co Inc spokeswoman told Reuters the company was actively engaged in the talks. “There has been some discussion of possibly melding the two proposals into one hybrid industry solution,” she said.

Macy’s Inc, whose namesake stores are the largest U.S. department store chain, said it was working with the North American Bangladesh Worker Safety Working Group, which includes NRF, RILA and others.

Wal-Mart Stores Inc, the world’s largest retailer, did not have a comment on the meetings as of late Tuesday afternoon.

Wal-Mart has expanded its own safety efforts in Bangladesh over the past several months after the deadly Tazreen factory fire in November.

On Tuesday, Wal-Mart laid out enhanced plans that include in-depth safety inspections at all Bangladesh factories that produce goods for it and increasing the pace and frequency of follow up inspections.

Bob Kirke, executive director of the Canadian Apparel Federation, said that while his group did not have an announcement to make, “it’s fair to say that we’re working on different responses to the Bangladesh situation.”

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