Investing in Bangladesh factories–for a profit

bangladesh-garment-workersOliver Niedermaier is selling a “capitalist solution to one of capitalism’s worst problems” — the unsafe, exploitative, polluting factories in the global south. That’s the topic of my latest story for Guardian Sustainable Business.

Here’s how it begins:

After more than a decade of corporate investment in social responsibility programs, codes of conduct, teams of inspectors and public reporting – all of it intended to improve the working conditions of factories in poor countries – anyone paying attention knows the system isn’t working very well. The Tazreen factory fire and Rana Plaza building collapse in Bangladesh were poignant symbols of its failure.

Maybe it has failed because Western clothing brands and retailers – Nike, Gap, Walmart and the rest – have been behaving like regulators by writing rules and meting out punishment. At least, so argues Oliver Niedermaier, the founder and CEO of Tau Invesment Management. He advocates that businesses should instead try acting like capitalists, using markets and the potential of investment gains to reform their global supply chains.

Tau plans to raise $1bn to turn around factories in poor countries, beginning with the garment industry. Tau promises to deliver “improved transparency, greater dignity for workers, cleaner environments for communities, and enhanced performance and value for stakeholders”.

As the story goes on to say, this is an intriguing–but very much untested–idea. Can Tau raise the money? Will brands partner with the company, a newcomer to supply-chain issues? Most important, can factories in places like Bangladesh that adhere to the highest standards compete effective with those who do not?

I don’t have answers. But I do know that a new approach to the problem is desperately needed.

Comments

  1. It is interesting debate. There should be an enlightened purpose for doing business responsibly. Governments of developing countries like Bangaldesh are in a difficult situation as more than 30% of labour is engaged in textile value addition business. Multinational companies instead of being regulators should be partners in progress for ensuring healthy communities and sustainable supply chain through strategic partnering with industries and communities where they outsource the work.

  2. The Rana Plaza collapse demonstrates the risks involved in investing in existing buildings, or in businesses operating in existing buildings, in Bangladesh and similar countries. If the building is not constructed properly, it is a tragedy waiting to happen. Foreign retailers should be very reluctant to expose themselves to the potential resulting liabilities.

Speak Your Mind

*