Retail groups split on factories in Bangladesh

H&M is among 30 international companies that have signed on to a factory safety contract.
Leon Neal/AFP/Getty Images
H&M is among 30 international companies that have signed on to a factory safety contract.

NEW YORK — The nation’s largest retail industry organization fired back Friday, outlining reasons why a legally binding global pact to make Bangladesh clothing factories safer would subject merchants to undue legal exposure. The move came as US retailers face increasing pressure from a large coalition of religious groups and investors to work together to develop a plan.

‘‘It is a very complex set of issues and there is no simple solution,’’ said Bill Thorne, a spokesman for the retail trade group, in a media call with reporters Friday. ‘‘There is not one answer.’’ The National Retail Federation is leading a coalition of North American retail and apparel groups to develop an alternative broader proposal.

More than 30 international brands, including Swedish retailer H&M, Italian clothing maker Benetton, and French retailer Carrefour, have signed on to the five-year, legally binding contract that requires them to help pay for fire safety and building improvements in Bangladesh.


But only two US companies have committed so far: PVH Corp., the New York-based parent company of Tommy Hilfiger, and Abercrombie & Fitch of New Albany, Ohio.

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As part of the global pact, companies would be required to pay up to $500,000 annually to run the program. They would also be required to underwrite repairs to make the factories they use safe.

Based on the number of companies now participating, the plan will cover more than 1,000 of the 5,000 garment factories in Bangladesh, according to IndustriALL Global Union, a Geneva based-labor union involved in the negotiations.

On Wednesday, as more European retailers were signing on to meet a deadline that evening, the National Retail Federation, which has 9,000 members, issued a scathing statement, saying the plan was a ‘‘one-size-fits-all’’ approach promoted by special interests.

On Friday, the retail trade group made available for the media an international labor lawyer who rebuked the global pact and said that it is too vague for retailers to sign. At the heart of the criticism: The contract would expose retailers to legal liability for the failure of factories to comply with the set standards even though merchants don’t own the facilities.


‘‘The vagueness and uncertainty should be resolved in the drafting stage, instead of leaving it to the arbitration process,’’ said Johan Lubbe, lawyer with Littler Mendelson.

Terry Lundgren, chief executive of Macy's Inc., which sources about 5 percent of its goods from Bangladesh, said that he believes that there are ‘‘lots of holes’’ in the global pact.

He is backing the alternative plan being pushed by the US retail trade groups.