The garment industry in Bangladesh faces unprecedented challenges due to political unrest and infrastructural crises, including the recent violent crackdown on protests against the government’s employment quota system and a worsening gas shortage. The Resource Centre has been monitoring disruptions to the country’s apparel industry, including reports of factory closures and work stoppages that cost the sector an estimated $150 million and $500 million per day over the four-day period from 20-23 July 2024. The indirect losses are even greater, with industry insiders estimating nearly Taka 6,500 crore ($543 million) due to delayed shipments, stock piling and raised shipping costs and fears of the longer term impact on the country’s apparel industry.

The reported impact of this on workers includes mandatory overtime to meet lead times, increased production targets to offset financial losses or avoid order cancellations, increased transportation costs for workers to reach factories, and non-payment of wages or delayed wage payments.

In response, the Business & Human Rights Resource Centre (BHRRC) reached out to the top 15 international buyers from Bangladesh, alongside five strategic companies identified by trade unions in the country, through a five question survey requesting information on how companies are addressing these disruptions, how existing purchasing practices are being upheld, and what support is being provided to suppliers and, in turn, to affected workers.

Out of the 20 brands contacted by BHRRC, 12 responded to the questions outlined in the survey (adidas, ASDA, C&A, H&M, Inditex, Marks & Spencer, Next, PUMA, PVH Corp., Target, Tesco, Primark). Two companies, Gap and Walmart, provided a partial response. The remaining six brands did not respond to the survey (BESTSELLER, Mango, JC Penney, Kontoor Brands, Levi Strauss, Tom Tailor). The full survey sent out to brands can be found here. Explore the table below to understand how each brand responded to the questions asked by BHRRC.

Key Findings

Several brands are reluctant to provide information on the impact of the protests

As outlined, six brands (Bestseller, Mango, JC Penney, Kontoor Brands, Levi Strauss and Tom Tailor) contacted by BHRRC did not respond to our survey and provided no information on how they have ensured responsible purchasing practices and protection of worker welfare during the recent unrest. Corporate accountability and transparency at times of heightened risks to worker rights is critical and BHRRC urges the fashion sector to provide a public account of how they are engaging with suppliers in Bangladesh and centering the needs of workers.

Forgiveness of Delivery Delays, Imposition of Penalties, and Seeking Price Concessions

Brands were asked if they had directed their sourcing teams to forgive delivery delays due to recent disruptions in Bangladesh’s garment industry, and whether they refrained from imposing penalties or seeking price concessions from suppliers during this time on new and current orders. We also inquired if any penalties had been imposed on suppliers for delayed deliveries. Among the responding brands, all 14 companies indicated that they have forgiven delays and not imposed penalties for late deliveries following the supply chain disruptions.

While these assurances from 14 key brands are welcome, questions remain for the sector regarding how widespread the commitment to forgive delays is. Vice President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Fazlee Shamim Ehsan, noted that exporters are still incurring significant costs, including at least Taka 1,000 crore ($83 million) due to late shipment discounts demanded by buyers and high air freight charges as suppliers attempt to deliver goods on time and mitigate delays. And while efforts are being made by industry bodies to negotiate relief from penalties, costly air shipments remain a concern.

Worker wages

The Resource Centre inquired how brands monitored worker wage payments and ensured that wages were paid on time and in full for the July-August period. Gap, PUMA, PVH, Primark, Tesco, Next and H&M stated that July wages were paid on time and in full. Adidas, ASDA, and M&S outlined how they monitored wage payments for July and August, but they did not provide confirmation that wages were paid on time and in full. Target stated it had paid July-August wages in full, but did not indicate if this was paid on time. Their responses lack the necessary assurance of payment compliance. C&A, Inditex and Walmart did not answer this critical question, therefore providing no information on assurances that wages had been paid to workers.

Order stability

13 responding brands (adidas, ASDA, C&A, H&M, Inditex, Marks & Spencer, Next, PUMA, PVH Corp., Target, Tesco, Primark and Walmart) affirmed they have not transferred orders to other countries, maintaining order stability in Bangladesh despite the crisis, with Gap not providing information to this question. PVH, Tesco, and H&M further cited their alignment with ACT member brands’ commitment to responsible purchasing practices to maintain stability in Bangladesh.

Resource Centre monitoring has nonetheless identified reports of orders moving from the country since the start off the protests in July, including reports in the Financial Times that brands have diverted orders to Cambodia or Indonesia. It will be crucial to continue to monitor order stability in the coming months as the political situation in Bangladesh evolves.

Financial support to suppliers

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has requested a soft loan of 1,900 crore Bangladeshi taka ($159 million) from the interim government to help its members to cover the payment of workers' wages for August. BHRRC therefore asked brands if they have provided any forms of financial assistance or improved payment terms to help suppliers ensure workers’ wages for July-August were paid in full. This included inquiries regarding accelerated payments, improved terms on new orders, low or no-interest financing, direct financial assistance, and covering air shipment costs.

Brand responses on provision of financial support to suppliers during production disruption show varied levels of commitment. Among the 14 brands that responded, Gap, Inditex, PUMA, Target and Walmart declined to answer this question. Next, PVH, Primark and Tesco responded that they have not provided any specific financial assistance to suppliers.

There were both financial and non-financial commitments made to assist suppliers during the crisis. ASDA offered a supply chain finance option, while M&S provided vendor finance and letter of credit options to ease cash flow issues. C&A outlined that they have provided low-interest or no-interest financing to suppliers and have also covered the cost of air shipments to mitigate delivery challenges. Additionally, Primark extended production and delivery timelines, offering non-financial support to help suppliers manage production disruptions and meet deadlines without penalties.

Long-term commitment to worker welfare

When contacting trade unions within the Bangladeshi garment sector, they highlighted significant concerns to BHRRC regarding worker welfare and safety during the ongoing crisis. Issues raised included mandatory overtime to meet production targets, heightened anxiety about the future, increased transportation costs, and instances of non-payment or delayed wages. In light of these concerns, we asked brands how they have ensured that workers were adequately supported during this challenging period.

Among the 13 brands who responded, there is a general trend towards acknowledging the importance of worker wellbeing, with some brands highlighting steps taken to involve workers directly in identifying and addressing their concerns. For instance, adidas conducted onsite interviews to capture firsthand concerns regarding workers' physical and mental health, and ASDA cited ongoing factory visits and engagement with suppliers directly and via their sourcing office in Bangladesh. However, no brands provided details on the outcome of these activities, with no mention of how specific problems identified during the crises or the mitigation strategies they employed. Throughout their responses, brands highlighted their role in engaging trade unions through ACT, however they provided no further information on how this was tackling worker welfare.

Find more information on our monitoring of the crisis, current status, and concerns over brand purchasing practices amid the violent protest crackdown affecting Bangladesh's garment industry here