Covid-19 shows Rana Plaza lessons have not been learnt

By Lara Wolters and Agnes Jongerius

Bangladesh is among the countries that have so far been spared a mass outbreak of Covid-19. Casualties are currently ‘only’ in the double digits. But appearances can be deceiving. Bangladesh is suffering immensely from the pandemic. Unlike here in Europe, the reason is to do with the mobility of goods rather than with the mobility of people. Clothing exports amount to 84% of the total export of the Bengali economy. The country has long served as the world’s tailor shop; Western clothing companies have been using and abusing its low wages and lack of social standards for years.

And now, at the time of the 7th anniversary of the Rana Plaza disaster in which over 1,000 Bengali workers lost their lives, these companies are treating Bangladesh to a cynical birthday present. Over the past weeks, as a consequence of the corona-imposed closure of retail clothing shops, big Western brands have cancelled more than 3 billion euro’s worth of orders and are demanding big discounts from their manufacturers in Bangladesh.

The demands and related power play deal a severe blow to export-dependent Bangladesh, and will force some of the poorest people in the supply chain to foot the bill for the current health crisis. Of the estimated 3.6 million garment workers in Bangladesh, surveys show that 47% have no income at all; another 11% are on leave with partial pay.

When and if they do return to work, working conditions in Bangladesh are still deplorable — they have hardly improved since Rana Plaza. According a recent statement by the NGO Cleanclothes, wages are still low, trade unions still run the risk of being persecuted, many factories still fail to meet safety standards.

This leaves workers in countries at the bottom of Western supply chains between a rock and a hard place in crisis situations. Many have now lost their job, and those who do still work do this in dire health conditions. Some of them are manufacturing masks without being adequately protected themselves.

The story of the cancelled orders by Western giants again demonstrates the flagrant power asymmetry between Western purchasers and local producers. Garment companies seem to not only want to profit from a lack of social protection in the good times, but also from a lack of accountability in the bad times.

This has to stop. In and outside of the current crisis, Western businesses ought to be taking their responsibility, in line with international standards such as the UN Principles on Business and Human Rights and OECD guidelines and ILO conventions. These standards are still voluntary and hard to enforce and so we must, urgently, do better.

In order to do better, we need European legislation on “due diligence” — perhaps best summarized as corporate social, environmental and governance (ESG) responsibility. Such legislation would instill obligations on companies to manage ESG risks in their entire supply chain, and it would make international standards enforceable under EU law. This in turn, would improve the accountability of Western companies — including those acting abroad in three ways. We urge the European Commission to table a proposal including (but not limited to) the following.

First, the legislation as we envisage it would require firms to build buffers to mitigate and compensate for health- and social impacts. This would internalize the external costs of social exploitation next time around. Second, if a crisis like Covid-19 struck again and a company considered canceling orders, we would want legal requirements in place requiring that adverse impacts stemming from that decision would be addressed (for instance by offering garment workers compensation). Third, the legislation should give local communities, or NGOs or trade unions acting on their behalf, access to the European legal system to stand up for their rights.

Covid-19 has laid bare global inequality and power asymmetries once more. Western giants outsourcing adverse consequences to the globally most vulnerable is unacceptable and must be stopped. We need solid due diligence legislation at EU level, that would requires businesses to take their responsibility, and in the process make global supply chains more sustainable and resilient.