Loblaw Companies joins alternative to European-based pact
(Reuters) — North American retailers are discussing the idea of forging their own Bangladesh safety agreement, an alternative to a legally binding accord that many European retailers have signed on to, though details of any alternative accord were still unclear.
May 14 discussions were the latest in a series of talks convened by large retail trade organizations and including retailers, such as Macy's, JC Penney and Sears Holdings, to develop a response to fatal fires and a factory collapse in Bangladesh last month that killed more than 1,000 people.
The National Retail Federation (NRF), one of the largest U.S. retail trade associations, spoke on May14 with other trade associations and with its member companies about a possible accord among North American retailers. Details from those calls are not yet available.
The trade associations collaborating on a possible North American plan also include the Retail Council of Canada, Canadian Apparel Federation, National Retail Federation (NRF), Retail Industry Leaders Association (RILA), American Apparel and Footwear Association (AAFA) and United States Association of Importers of Textiles and Apparel (USA-ITA),
according to people familiar with the talks.
Meetings among North American retailers are shaping up as an alternative approach to an accord that European-based retailers have reached. The pact, joined by Loblaw Companies of Canada, includes legally binding commitments to safety improvements, according to industry sources. A copy of the agreement has not yet been released.
Major European retailers such as Sweden's H & M Hennes & Mauritz AB and Spain's Inditex SA have signed on to the accord. Labour groups including Europe's IndustriALL and UNI Global Union, as well as non-governmental organizations, provided the initial draft of the agreement and set a May 15 deadline for companies to commit to its terms.
Walmart Stores, the world's largest retailer, said it is not in a position to sign the accord at this time.
"Walmart believes its safety plan meets or exceeds the IndustriALL proposal, and will get results more quickly," the
company said in a statement.
Walmart has expanded its own safety efforts in Bangladesh over the past several months after the deadly Tazreen factory fire in November.
Earlier on May 14, Walmart laid out enhanced plans that include in-depth safety inspections at all Bangladesh factories that produce goods for it and increasing the pace and frequency of follow up inspections.
U.S.-based retailers have been reluctant to join any industry accord that creates legally binding objectives. Gap said it would sign the accord only if changes are made to the way disputes are resolved in the courts.
As of May 14, the only major U.S. company to announce its support was PVH, whose brands include Calvin Klein.
Robert Scott, an expert on contracts and commercial transactions at Columbia Law School, said in an email that the U.S. retailers are balancing a desire to seek improvement in Bangladesh against concerns about exposing themselves to
liability for safety issues.
"Perhaps American firms believe that the risk of collateral liability is too great to estimate," Scott said. "But that's not a contract law issue, that's simply a question of balancing corporate benefits of being seen as a good citizen trying to control these conditions on the one hand with the risk of a possible significant liability on the other."
Mike Posner, a professor of business and human rights at New York University's Stern School of Business, in an email said agreement to a legally binding accord by major European retailers has put U.S. retailers under pressure.
"The onus is now on American brands to step up to the plate," he said.
Sears said in a statement that the company "is not prepared to sign the current proposal. We are engaged in preliminary discussions about the alternate proposal from the retail trade associations in North America."
A JC Penney spokeswoman told Reuters the company was actively engaged in the talks. "There has been some discussion of possibly melding the two proposals into one hybrid industry solution," she said.
Macy's, whose namesake stores are the largest U.S. department store chain, said it was working with the North American Bangladesh Worker Safety Working Group, which includes NRF, RILA and others.
Bob Kirke, executive director of the Canadian Apparel Federation, said while his group did not have an announcement to make, "it's fair to say that we're working on different responses to the Bangladesh situation."
