On Thursday, October 24, 2013, British and Canadian retailers Primark and Loblaw announced plans to pay additional compensation to the victims of the collapsed garment factory in Bangladesh. The Rana Plaza complex collapsed on April 24, 2013 killing approximately 1,130 workers.
According to Reuters, roughly 3.6 million of Bangladesh’s 155 million citizens work in the garment industry where it ranks second only to China in the overall size of its clothing exports. The overall size of the export market, however, has not translated into high earnings for locals, some of whom receive as little as $38 a month. The building collapse was the largest loss of life in an industrial accident since the explosion in Bhopal in 1984, yet numerous smaller incidents routinely occur. Taken together, these incidents raise important questions regarding corporate social responsibility for both private industry and governments. To date, legislation concerning corporate social responsibility has been piecemeal with few national, let alone international, agreed upon standards.
Here at home one notable exception is a Los Angeles native – American Apparel. Known more for its eye catching advertising, the local clothing manufacturer boasts a sweatshop free work environment with perks such as onsite massage therapy and a medical clinic. The company’s commitment to ethical corporate practices extends to its stewardship of the environment with robust standards on reducing, reusing and recycling resources from water and electricity to discarded fabric at its downtown Los Angeles factory.
American Apparel’s model in Los Angeles does not need to be universally replicated in order to make a difference. The cost of doing business will understandably be different as one traverses the globe. Nevertheless, overseas investors can influence their operating environments if they chose. Similarly, successful U.S. based companies have shown they can hold on to their competitive edge while not only turning a profit, but doing so in a responsible manner.