The Triangle of Compliance
Earlier this month, a pair of reports were released regarding apparel manufacturing that caught my attention. One of these, a continuation of an earlier report released by China’s Institute of Public and Environmental Affairs (IPE), detailed dangerous conditions created by numerous printing and dyeing factories. The other, released by Human Rights Watch (HRW), examines similar conditions created by leather tanneries in a section of Dhaka, Bangladesh’s capital city. The conditions these reports describe are indeed deplorable, yet what intrigued me even more was how well they illustrate the immense challenge of establishing and enforcing social compliance, and why non-governmental entities, like WRAP, are essential to this process.
I’m going to focus on three key players in the arena of social compliance: government, business, and non-governmental entities. All three of these groups play an integral role in establishing and enforcing compliance standards, yet none of them can accomplish the task alone. Each must act in concert with the other two in order to achieve their goal, otherwise the process deteriorates at the expense of the very standards they are trying to create.
Let’s first examine the role of government, using Bangladesh as an example. The Human Rights Watch report focuses on the Dhaka neighborhood of Hazaribagh, which is one of the country’s top leather-producing areas. The report says that there are approximately 150 leather tanneries in the neighborhood crammed into an area of approximately 75 sq. km. Employing between 8,000 and 12,000 people throughout the year, these tanneries account for at least 90% of all tanneries in Bangladesh. Yet this small enclave is considered by many to be one of the worst sources of pollution in the country. A 2009 Bangladesh Supreme Court case calls Hazaribagh a “cancerous area” in the Dhaka Metropolitan region, with most of the pollution coming from the tanneries that line its streets. This pollution has a ripple effect across the city, eventually finding its way into other areas including the Buriganga river, which has been described as having turned from a river into a “large drain.”
Government efforts to curtail the pollution have been ineffective however, which can be attributed to several factors. One is a simple lack of resources. The Inspection Department of Bangladesh’s Ministry of Labour is responsible for finding and correcting occupational hazards in factories. Yet in an interview with Human Rights Watch, the deputy chief inspector responsible for Dhaka says there are only 18 inspectors available to cover an estimated 100,000 factories in in the city. That means each inspector would have to cover over 5,000 factories each month, a daunting task at best. Compounding matters is the Dhaka Tannery Estate Project, a government plan to relocate these factories away from the dense population of Hazaribagh. Originally proposed in 2002, the plan’s implementation has, for various reasons, been constantly delayed. The delay has impacted compliance because the Department of Environment, responsible for monitoring and enforcing environmental laws, has ceased its monitoring of these factories citing the pending relocation as its reason.
This leads us to the role of businesses in the compliance process. They are perhaps the group most closely tied to the factories, responsible for implementing any recommendations from government or NGO’s about their operations while maintaining profitability. The businesses themselves also serve as economic engines within the countries that host their facilities, forcing those governments to walk a very fine line between looking out for their people and looking out for their pocketbook. This is especially true in Bangladesh, where over US$660 million in leather goods were exported between June 2011 and July 2012. Maintaining a positive relationship with factory owners and operators is of utmost importance there, a desire which has at times affected compliance enforcement. The Human Rights Watch report says that many inspectors directed to conduct random inspections will often notify factories in advance. In the words of one deputy chief inspector, “We always try to maintain good relations with management.”
Businesses themselves face their own challenges in the compliance triangle however, especially those in the garment sector. The journey from raw material to finished fashion is a long one, and ensuring social compliance at every step along the way is often cost-prohibitive for many apparel brands. The latest report from China’s IPE indicates that when it comes to environmental management, the reach of many major fashion brands extends only to the “first tier” cut and sew factories, which often pose the lowest environmental hazard. Further down the chain are resource-intensive printing and dyeing facilities, which often create much heavier pollution. Many brands are unaware of where their materials are printed and dyed, giving these facilities little incentive not to sacrifice their environmental programs in the name of profits, creating what the IPE has called a “critical blind spot.”
Non-governmental entities operating in the social compliance arena are the final piece of the trio. These groups are able to establish and enforce social compliance standards across many facilities while remaining free of the issues faced by business and government. Yet their cooperation with business and government is still vital. Non-governmental entities must be able to maintain positive relationships with the businesses and governments they work with in order to achieve their goals. Respect for both a country’s legal traditions and a businesses’ desire to maintain profitability are essential, without the former a conversation about compliance cannot happen while absence of the latter would render the conversation unsustainable.
WRAP has been highly successful at putting these concepts into practice. We have gained significant credibility within the countries that we work and are able to quickly and efficiently train as many auditors as needed to meet certification needs. While we are independent from business and government, we work closely with both to establish and maintain standards. An example of this can be seen in Bangladesh where WRAP has partnered with the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) to help bolster exports and promote socially responsible manufacturing within a critical sector of Bangladesh’s economy. Our 12 Principles also contain a mandate for our certified factories to abide by all local laws and regulations. We also partner with many factories to offer training in safety and compliance issues. Our aim is to foster greater social compliance working with businesses, governments, clients, and other relevant stakeholders to ensure products are made safely, ethically, and responsibly.