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Raz Godelnik headshot

H&M's Efforts in Bangladesh Show Why We Need Systemic Change in CSR

By Raz Godelnik

There are already some lessons in corporate responsibility we can learn from the tragedy of the building collapse in Bangladesh. One of them, as Vikas Bajaj wrote in the New York Times, is that most brands and retailers offer consumers very little information about how their products are made, and hence conscious consumers have no choice but to educate themselves.

Another lesson we can learn, especially from H&M who agreed eventually to sign the Bangladesh Safety Accord, is on the limits of CSR as we know it.

The example of H&M shows that no matter what type of CSR a company is pursuing, whether it’s ethical, altruistic or strategic, there are inherent flaws in the current corporate responsibility system that we need to address if we want to see real changes in the business landscape.

First, let’s talk about the hope we had to make significant progress by having large corporations like H&M commit to sustainability. The notion was that it would be faster to achieve change by convincing a large corporation to do the right thing rather than convincing dozens of governments where these corporations operate to do it.

In their book Eco-Business: A Big-Brand Takeover by Sustainability, authors Peter Dauvergne and Jane Lister give the example of Gerald Butts, president and CEO of WWF Canada describing Coca Cola, who is among other things a leading buyer of aluminum, sugar, citrus, glass, coffee and other commodities, as “literally more important, when it comes to sustainability than the United Nations.”

“We could spend 50 years lobbying 75 national governments to change the regulatory framework for the way these commodities are grown and produced. Or these folks at Coke could make a decision that they’re not going to purchase anything that isn’t grown or produced in a certain way – and the whole global supply chain changes overnight,” he explained.

The same logic can be applied to H&M. As the second largest global clothing retailer, the hope was that its commitment “to be at the forefront of sustainability” provided a better chance to make the garment industry more sustainable. It wasn’t just the hope that H&M would enhance the pace of change, but also the belief that the company could be a better enforcer of a just system than governments of countries like Bangladesh.

And H&M indeed took action. In its sustainability report for 2012, the company reports on the progress it has made on seven commitments, from providing fashion for conscious consumers to being climate smart.

The company’s second commitment is to choose and reward responsible partners. “We set high standards for our suppliers and regularly monitor how well they live up to them,” the company writes. Here are some highlights from what it did in 2012:

  • We conducted 2,541 audits at our supplier factories (first tier). Together with training and other support, this totals an average of 3.6 activities per factory, all working to improve their sustainability.
  • 570,821 workers in Bangladesh have been trained to understand their rights since 2008.
  • 9,815 interviews conducted with workers in our supplier factories.
  • More than 100,000 workers and middle managers in Bangladesh have received additional training in fire safety.
These are all important steps and it’s good that the company took them, but the question we should ask is – is it good enough? The main problem is that like most other companies, H&M decides on its own on the bar it wants to meet when it comes to CSR, and while we can only hope this bar is high enough, most of the time we have no way of knowing if this is the case.

Well, this time we actually do know. Not just because of the latest tragedies in garment factories in Bangladesh, but also because of the safety accord that H&M agreed to sign which requires a much greater commitment from the company, including legally binding it “to invest in improving worker safety in Bangladesh and other low-cost countries.”

As the New York Times reported, H&M was, at first, reluctant about the accord. “Even after the Rana Plaza disaster, H&M required persuading," said Jyrki Raina, the general secretary for IndustriALL Global Union, a federation of 50 million workers from 140 countries who also negotiated the binding accord with H&M and other retailers. “Unless they were really pushed,” he said, “we would not be where we are today.””

While H&M denies this was the case and argues it “had already been working toward this for a long time,” for many activists, as the New York Times reports, the question was why H&M did not take that step sooner, “Especially after a deadly fire in 2010 killed 21 people at the Garib & Garib sweater factory in Bangladesh, for which H&M was a major customer.”

The answer is that companies are first and foremost businesses, and as such they would set their CSR bar at a level they feel comfortable with as a business which, in many cases, is very far from being the highest level.

As long as we have a system based on companies deciding for themselves their levels of commitment to sustainability, without any tools for stakeholders to evaluate if these efforts are good enough (here’s one exception), we will continue to have unpleasant "surprises" like the building collapse in Bangladesh. Only a systematic change in corporate responsibility can stop the next tragedy from happening.

[Image credit: Soapstar D'lux, Flickr Creative Commons]

Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and Parsons the New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.

Raz Godelnik headshot

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

Read more stories by Raz Godelnik