Four Things We Learn From Wal-Mart's Bangladesh Factory Audit

After the Rana Plaza fire in Bangladesh killed more than 1,100 garment workers in April, all of the big European apparel retailers (and some American ones, too) signed on to a binding agreement to work with labor organizations and other groups to improve safety conditions at the factories they use. Wal-Mart and Gap, among other American retailers, formed a separate alliance that isn’t quite as demanding.

Walmart on its own released the results of its first round of factory audits on Nov. 18. Here’s what a close read reveals:

Walmart is trying. Few retailers publicize the factories they use in Bangladesh or anywhere else. Walmart just did. It lists 75 of the more than 200 factories in which its apparel is manufactured; the rest will be named in subsequent reports.

But only to a point. The company hired Bureau Veritas to carry out the building and electrical safety inspections. The organization developed a complicated grading system that involves weighted risk factors and points, dividing the points by the square footage of factories and multiplying by 1,000. This is converted to grades, from A to D. Got that?

System is light on specifics. ”It’s a scoring system of what hazards are worth, but we don’t know which hazards are 10 points and which are 3,” says Scott Nova, executive director of the Workers’ Rights Consortium, a member of the European alliance. “I want to know if they have the proper number of enclosed stairwells, if they have manual alarm systems, if they have sprinkler systems. This is what workers want to know. Depending on how Walmart defines the grades, a relatively modest hazard can still kill a lot of people.”

Walmart—and Bangladesh—have a ways to go. According to Walmart, of the 200 or so factories inspected, 34 moved from a D or C rating to an A or B rating. But how many didn’t? According to my own count, of the 75 factories listed now, only four were initially given grades of B in both building and electrical safety. The rest received at least one C or D. Many improved their grades in the follow-up assessment. So even though we don’t know exactly what was being assessed, that seems somewhat encouraging.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE