U.S. Brands Near Pact on Bangladesh Fund, WSJ Says

Gap Inc. (GPS) and Wal-Mart Stores Inc. (WMT) are among U.S. retailers finalizing an agreement to establish a $50 million, five-year fund to improve safety conditions in Bangladesh garment factories, the Wall Street Journal reported, citing a person familiar with the matter.

The fund for factory safety is contingent on the Bangladesh government meeting certain criteria that would ensure accountability for safety improvements, the Journal reported. A deal could be announced as soon as next month, the newspaper said.

The two companies and other U.S. retailers have been meeting with industry associations and the Bipartisan Policy Center, a nonprofit policy and advocacy think tank. Under the Safer Factories Initiative they are developing a plan to improve fire and safety regulation in Bangladesh factories, following the April 24 collapse of the Rana Plaza factory -- the worst industrial incident in the country’s history.

The group plans to present a pact in early July, Jason Grumet, president of the center, said in a statement today.

“At this point only a few final details remain to be worked out and agreed upon,” Grumet said.

Wal-Mart and Gap are among U.S. retailers that have faced criticism for not joining 50 other garment-sellers in a legally binding agreement to improve safety at Bangladesh factories that has won support from labor-monitoring groups. Hennes & Mauritz AB (HMB) and Inditex SA (ITX), Europe’s two largest clothing retailers, have signed that accord and pledged at least $60 million over five years to monitor safety in Bangladesh plants.

Public Inspections

Wal-Mart, based in Bentonville, Arkansas, said in May it will make public safety inspections at all of its suppliers’ authorized factories in the country. Reviews of the 279 plants will be completed within six months, and the factory names and inspection information will be posted on its website.

The Safer Factories Initiative, announced on May 15, brought together five apparel and retail trade associations in the U.S. and Canada along with workers, factory owners, buyers and the Bangladeshi government with the aim of developing an industry standard on fire and building safety. Sears Holdings Corp. (SHLD) is also participating in the discussions, Chris Brathwaite, a spokesman for the Hoffman Estates, Illinois-based company, said today.

Wal-Mart and San Francisco-based Gap are under pressure from activists to sign onto the legally-binding agreement. United Students Against Sweatshops will hold protests with labor unions and community groups at Gap and Wal-Mart stores in more than 30 cities June 29, the group said in a statement today.

The Rana Plaza accident killed at least 1,127 and followed a series of deadly fires that already had prompted activists to push Western retailers to take more responsibility for work conditions in that country.

To contact the reporter on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.