Zara Inditex EMS protest [Photo by Thundershead, on Flickr]
On October 8th last year, 9 people were killed in a fire that broke out in a garment factory close to Dhaka, the capital of Bangladesh. However, this seems like a minor event compared to the fatal “accident” in the Rana Plaza building on April 25th this year. The factory stored textiles for large Western retailers such as El Corte Inglés, Primark and Mango. The death toll rose to 1,132 and more than 2,000 people were injured.
As a consequence of this disaster, these large companies once again ended up in the eye of the storm. The horrible working conditions and the lack of safety these workers face are a harsh reality in many Asian and African countries.
A tragedy which could have been avoided
Ineke Zeldenrust of the Clean Clothes Campaign says:
“Brands can no longer justify putting off signing the Accord on Fire and Building Safety in Bangladesh. Following the Tazreen Fashion factory fire in 2012 claiming 117 lives, the retailers have come up with inadequate solutions, such as videos or safety classes. But what is the use of a video when the floors are cracked or there are no emergency exits? The workers need a structural solution, not a quick fix. The failure to take immediate and adequate action to tackle these kinds of problems amounts to criminal negligence.”
Platforms such as Avaaz are gathering signatures for a petition. Retailers should step up their actions to ensure measures such as compensation payments to the victims and their families are being implemented immediately. Furthermore, they should commit to the prevention of future tragedies.
However, foreign companies manufacturing clothing in Bangladesh have failed to create a compensation fund for the hundreds of victims. Only one third of the retailers sourcing from these factories turned up for a two-day conference on the issue in Geneva. Key absentees were Wal-Mart, Benetton, Mango and Zara, among others. Almost one year later, many retailers that sold garments produced in Bangladesh are refusing to join an effort to compensate the families, especially the American ones.
Is corporate social responsibility an oxymoron?
The concept of Corporate Social Responsibility (CSR) is evolving and opinions are divided on a clear definition of CSR. According to Economistas sin Fronteras (Economists without Borders), CSR is the way in which companies do business while taking into account the impact their activities have on their clients, employees, shareholders, local communities, the environment and the society at large. This entails obligatory compliance with national legislation and international conventions (such as ILO and European Parliament regulations) concerning fiscal, social, labour, environmental issues and human rights. It also includes any other voluntary action undertaken by companies to improve the living conditions of their employees, the communities involved and society in general.
Ethics and social responsibility of businesses are not the same thing and do not always go hand in hand. Several Spanish IBEX 35 companies are very active when it comes to social responsibility, but their actions still havea negative social and environmental impact because of the company’s global significance. Businesses such as BBVA have signed international treaties, organized campaigns and seminars about CSR and are listed on CSR indices. In the meantime however, these businesses are also investing in arms – which is odd, to say the least. When it comes to CSR, the progress made by large companies cannot be denied. However, there is still a long way to go. The general idea seems to be that CSR actions undertaken by companies are not the result of a moral business vision, but mere intentions to brush up their image. So are we facing a new utopia?
The Inditex case
Worldwide fashion giant Inditex takes pride in being a pioneer in the application of a model of sustainability committed to CSR. It created an internal code of conduct to guide its manufacturing, distribution and sales activities all over the world. Furthermore, the company also committed to several international agreements as well as voluntary standards. After what happened in Bangladesh, it also pledged to sign the Accord on Fire and Building Safety this year.
However, in spite of its efforts to create a socially responsible business image, there is evidence to believe that the company has committed grave negligence: it is involved in several scandals about not complying with labour standards in its supply chain factories all over the world.
According to the Social Responsibility Observatory’s report on the IBEX 35, Inditex:
Owns companies active in countries considered tax havens and it appears there are no intentions to cease activities in those places.
The information on its own staff’s wages is lacking, it is not broken down into categories, by contract type, sex or country; it does not provide information about the method used to calculate the variable wages, the number of people receiving them or their weight compared to the total income of its employees.
Outsources its production to contractors in countries where human rights are not guaranteed.
Declared to be committed to including environmental factors in the “planning and development of the group’s activities and the activities of its business partners and to promote environmental awareness among its staff, suppliers and society at large”. However, it neither explicitly adopts precaution and prevention principles, nor does it take responsibility for the impact its activities have on the environment and human health.
Does not promote responsible consumption among its customers, nor does it invest in innovating the production process using raw materials that are more sustainable or sourced from more ethical trade partners.
Has a board of directors consisting of 9 members, of which only 2 are female.
Does not offer any proof that its annual report is the result of analysis by and dialogue with the various stakeholders.
Shows a lack of transparency when it comes to aspects such as the total number of suppliers, the impact on individual rights or the origin and (social and environmental) sustainability of the raw materials used while manufacturing its clothing and accessories.
Provides very little information in its annual reports.
Following numerous allegations oflabour exploitation in factories throughout its supply chain, the company has developed a corporate social responsibility strategy which is used as an example in business schools working on this concept. It even signed an international framework agreement on social responsibility with the International Textile, Garment and Leather Workers’ Federation.
Nevertheless, over the past five years, cases of economic exploitation, persecution of trade unionists and violation of the freedom of association have been rampant in Bangladesh and Cambodia. These countries ‘benefit’ from a large competitive advantage over other countries because they are known for the lowest wages in the world. In Bangladesh, a textile worker earns on average some 34 euros per month, while in Cambodia this would be approximately 60 euros. While these wages may be in keeping with the law, they are barely sufficient to provide for decent food. In both countries, workers’ movements devoted to an increase of the legal minimum wage have encountered harsh repression by the state and their employers. The “No more excuses” campaign calls on Inditex to comply with its own code of conduct, to respond to the demands put forward by the workers in its garment factories in Cambodia and to pay these workers decent wages.
In December 2011, the Clean Clothes campaign published a report about the living conditions of textile workers in Tangier [link in Spanish]. It exposed situations of economic exploitation involving female workers producing clothes for the international market. Moroccan trade unionist Naima Naim appealed to Inditex’s board of shareholders,describing the working conditions of seamstresses in the textile industry and denouncing the constant violations of the workers’ fundamental rights.
In August 2011, the NGO Reporter Brasil disclosed that the Regional Labour and Employment Office in São Paulo had discovered illegal workshops in which Latin American immigrants were forced to manufacture clothes for Zara in conditions nearing slavery. Furthermore, the Brazilian Ministry of Labour claims that they encountered the same irregularities in at least another 33 workshops linked to the Inditex group. The dispute was settled after an agreement was reached between Inditex and Brazil. The company promised to allocate 1.4 million euro to social purposes.
In Argentina, the cooperative La Alameda exposed very similar cases, documenting situations of slave labour in which Bolivian immigrants had to sew garments for Zara.
As a consumer, you can make a difference!
Globalization and the international division of labour of course make it harder to hold multinational corporations accountable. As consumers, we also have an important role to play when it comes to sustainability. We are responsible for what we consume, where we invest or deposit our money. Furthermore, there are different ways in which we can “punish” those companies that do not respect certain universal rights.
Why doesn’t Inditex try to avoid or resolve these scandals? Perhaps this is down to its size, as mentioned before: the supply chain is simply immense. However, the explanation may also lie in a simple cost-benefit analysis: taking action would require a costly effort, and there are no incentives to do so: in spite of the outrage, the group is still market leader in its sector and its market value does not seem to be suffering.
Translation of the original article in Spanish by Ellen Vosters
This is a non-profit explanation