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Gap's Bangladesh Plan Falls Short of European Pact

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Image via Fashionbi

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Seventeen U.S. retailers including San Francisco-based Gap Inc., which owns Banana Republic, Old Navy, Athleta and Piperlime, have agreed to set up a $42 million fund over 5 years to support safety at factories in Bangladesh, following the collapse of a factory there in April that killed more than 1,100 people.

Meanwhile, European retailers, including H&M and Inditex, which owns Zara, pledged $60 million over five years, and their plan requires companies to make any repairs necessary to keep workers safe even if the cost goes beyond that amount. The North American agreement, on the other hand, says retailers, which also include Macy's, Target, J.C. Penney and Wal-Mart, can voluntarily spend beyond the $42 million for safety renovations.

Critics are disappointed that the North American retailers refused to join with the European plan. They also say that beyond the smaller amount pledged by the Gap et. al., the agreement doesn't involve unions in oversight or planning, which makes the potential for enforcement weaker.

New York City Comptroller John C. Liu, who oversees city pension funds that own more than 5 million Wal-Mart shares, had this to say to Bloomberg:

It's disappointing that Wal-Mart, Gap and other U.S. retailers have chosen to go their own way with a plan that appears to lack meaningful transparency and accountability ... their plan risks diluting the effectiveness of a stronger, global effort to improve worker safety.

Gap, Wal-Mart, and 15 other retailer organizations have signed the North American pact, calling themselves The Alliance for Bangladesh Worker Safety. They signed a letter promising to set standards for factories by October and refusing to buy from factories found to be unsafe.
· Wal Mart to Gap Group Starts $42 Million Bangladesh Fund [Bloomberg]
· Gap Investor Meeting Soured by Bangladesh Safety Issues [Racked SF]
· The Alliance for Bangladesh Worker Safety [Official Site]