The recent tragedy at Rana Plaza illustrated the lack of safety standards and structural stability of garment factories in Bangladesh, the world’s second-largest exporter of textiles. For organizations that source their goods from emerging regions, this event must place a renewed and urgent focus on three major risk areas:
- Supply Chain Risk: Retail industry organizations and their suppliers need to take action to fully understand their risk exposures, strengthen workforce safety practices, bolster their supply chains, and enhance their ability to withstand — and recover from — a disruption or crisis. Pushing for multi-tier factory audits of suppliers and highly detailed contracts with suppliers can reduce the retail industry’s vulnerability and create a unified culture of safety throughout the supply chain.
- Compliance Risk: A major overhaul to the approach to compliance and standards is needed, despite current company efforts and third-party programs. This requires a more robust, transparent and frequent audit process, including greater worker engagement. Apply strictly adhered to baseline assessment evaluations applied when evaluating the life, fire and building safety risks of both their own and vendors operations.
- Reputational Risk: Younger consumers tend to be more sensitive to issues broadly related to social responsibility, as recently illustrated in “fair trade” goods, and failure to enforce ethical sourcing practices can quickly jeopardize the brand’s reputation.