Certainly, the events in Dhaka demonstrate a serious failing in the safety audits carried out at the factories and the need for stronger accountability and transparency of the authorities who failed to act and disregarded safety warnings about the suitability of the site for development. As the rescue efforts continue, a number of multinational companies linked to the factory are facing calls for accountability and demands for compensation.
However, regardless of liability or concerns about who is responsible, these tragic events will undoubtedly lead companies to think further about how they manage their supply chains. This is clearly a difficult and complex area for businesses in many sectors. Some of the common issues faced by business include:
It is apparent that there is an increasing focus on how far a company’s responsibility extends down its supply chain – not only in terms of safety standards and worker rights, but also to other issues such as environmental sustainability and a company’s anti-corruption efforts. Some commentators have suggested that events such as those last week strengthen the argument for tighter regulatory supervision and scrutiny of company supply chains. This is to an extent already reflected in emerging policy at both UK and EU level, with legislators considering a range of proposals and initiatives ranging from the reporting of human trafficking risks in company supply chains to the responsible sourcing of conflict minerals.
As a strong advocate of responsible business practice, we think it is right that companies look at how they can improve practice throughout their supply chains and manage the environmental and social impacts of their operations. That said, it is vital that any new legislative proposals are workable, reflecting the complexity of international supply chains and supports responsible business practice.