Bangladesh Factory-Safety Agreements: A Case Study of H&M’s Commitment to Ethical Sourcing

In the aftermath of the tragic Rana Plaza factory collapse in 2013, which claimed the lives of over 1,100 garment workers in Bangladesh, the global fashion industry faced intense scrutiny. 

The disaster highlighted the dangerous working conditions in many Bangladeshi factories, prompting calls for greater corporate accountability and improved safety standards. 

Among the companies that responded to this crisis was H&M, one of the world’s largest fashion retailers and the largest producer of clothing in Bangladesh.

The company played a significant role in the development and implementation of the Bangladesh Factory-Safety Agreements, setting a precedent for ethical sourcing and corporate responsibility.

The Bangladesh Factory-Safety Agreements

In response to the Rana Plaza disaster, more than 200 apparel brands, including H&M, signed the Accord on Fire and Building Safety in Bangladesh. 

This legally binding agreement aimed to ensure a safe and sustainable garment industry in Bangladesh by implementing rigorous safety inspections and remediation processes. 

The Accord was a groundbreaking initiative, representing a collaborative effort between brands, trade unions, and NGOs to address factory safety issues.

H&M Leads the Way

H&M emerged as a leader in the push for safer working conditions. 

The company not only signed the Accord but also committed significant resources to ensure its effective implementation. 

H&M pledged to improve transparency in its supply chain, conducting regular inspections and publishing the results to hold factories accountable. 

This level of transparency was unprecedented in the industry and set a new standard for corporate responsibility.

Challenges and Criticisms

Despite its commitment, H&M faced numerous challenges in the implementation of the safety agreements.

The primary challenge was the scale of the task – inspecting and upgrading hundreds of factories in a developing country with limited infrastructure and regulatory oversight. 

The remediation process was slow and expensive, requiring extensive collaboration between multiple stakeholders.

H&M also faced criticism from labor rights groups who argued that the company was not doing enough to ensure fair wages and labor rights. 

While the Accord focused on safety, broader issues related to workers’ rights and living wages remained contentious topics. 

Critics urged H&M to extend its commitment beyond factory safety to address these systemic issues within the garment industry.

Impact and Progress

Despite the challenges, the Bangladesh Factory-Safety Agreements have led to significant improvements, including the installation of fire doors, strengthening of structural supports, and enhancement of electrical safety systems. 

These improvements have made factories safer for the millions of workers employed in the garment industry.

Moreover, the Accord has been extended and evolved into the International Accord for Health and Safety in the Textile and Garment Industry, reflecting a broader commitment to worker safety beyond Bangladesh.

The executive director of the Bangladesh Center for Workers Solidarity, Kalpona Akter, told Vogue

“The new Accord is [no longer just] for structural, fire and electrical [issues]; the new initiative will look into health and safety as a package. This will work in other production countries, too, to make similar improvements that have been done in Bangladesh. The Accord saves lives.”

H&M’s leadership and ongoing participation in these agreements demonstrate its dedication to ethical sourcing and corporate responsibility.

Lessons Learned

The case of H&M and the Bangladesh Factory-Safety Agreements highlights the importance of corporate accountability and collaboration in addressing complex global issues. 

It highlights the need for transparency, rigorous standards, and ongoing commitment to ensure lasting change. 

While significant progress has been made, the road to a fully ethical and sustainable garment industry continues, with H&M’s experience serving as a valuable case study for other brands.

Cultural Thinking Orientation & the Bullwhip Effect: Does the Way We Make Decisions Impact Supply & Demand?

Economists and researchers have long studied consumer thought and decision-making in order to understand supply and demand.

They’ve uncovered a phenomenon called the “bullwhip effect.”

This is a supply chain event where small oscillations in demand at the retail level result in increasingly larger oscillations in demand at other supplier levels, such wholesale, distributer, raw material, and manufacturer levels.

When you consider this phenomenon, visualize the cracking of a whip.

A small flick of the wrist sends a wave outwards.

Panic-Buying & The Market

One example of the bullwhip effect is panic-buying.

Consider the instinct to buy up all the toilet paper and hand sanitizer during the COVID pandemic. 

As stores struggled to keep their shelves stocked, orders increased, and manufacturers worked hard to meet that demand.

But eventually, they overproduce, as consumers stop panicking and ease up on the supply.

This is one way the bullwhip effect manifests.

But does our cultural thinking orientation influence this, as well?

Researchers of this study were interested in the dynamics of a culture’s holistic versus analytic thinking orientation – and what its relationship is to the bullwhip effect.

The Hypothesis: Holistic Thinking Reduces Bullwhip Effect

The hypothesis of the study posits that a stronger holistic thinking orientation might be associated with a reduction in the bullwhip effect. 

This is because holistic thinkers tend to make more extensive use of information, and higher reported information use might also be linked to a reduced bullwhip effect.

The Study’s Results: The Short Answer is ‘No’

Using the “beer game” – a simulation designed around the complexities of supply chain management – researchers found no evidence supporting the hypothesized relationship between the overall holistic versus analytic thinking orientation and the bullwhip effect.

One possible explanation for this lack of correlation could be cognitive limitations faced by individuals when dealing with an abundance of information in the beer game. 

If both holistic and analytic thinkers have similar cognitive capacities, neither thinking orientation may have an advantage in handling the overwhelming information. 

As a result, even if holistic thinkers focused more on contextual information, they might not integrate it into decision-making to a greater extent than analytic thinkers due to these cognitive constraints. 

This is further supported by the finding that the thinking orientation did not correlate with the reported use of information, indicating that both groups utilized available contextual information similarly.

What the research found was that thinking orientation didn’t impact this relationship on the whole…although, it did impact the decision-making of different subdomains of thinkers.

The Subdomains

A negative correlation was observed between a specific subdomain of the holistic versus analytic thinking orientation and the bullwhip effect. 

This indicates that certain aspects of decision-makers‘ thinking styles might indeed influence supply chain variability.

When considering the subdomains of the holistic versus analytic thinking orientation, the relationship between the subdomain concerning causal attribution and the bullwhip effect stood out. 

Decision-makers who assumed less complex causal relationships performed worse in terms of the bullwhip effect.

Moreover, the study revealed that holistic thinking did not correlate with reported information use. 

Instead, only the reported use of specific information demonstrated a negative association with the bullwhip effect. 

This finding implies that the nature and relevance of the information being utilized might be critical in mitigating supply chain fluctuations.

This study of the dynamics within supply chains can serve as a basis for developing more effective strategies to manage demand variability.

A balanced combination of holistic and analytic thinking might yield the most beneficial outcomes, with a focus on immediate processes (analytic thinking) while considering more distant processes to some extent (holistic thinking).