Loblaw to compensate Bangladesh collapse victims who supplied Joe Fresh items

TORONTO – The only Canadian retailer to publicly acknowledge it used a manufacturer in a poorly made Bangladeshi building which collapsed and killed hundreds last week said Monday it will pay compensation for the families of victims.

Loblaw Inc. — which had some products for its Joe Fresh clothing line made in one of the garment factories in the building — said it aimed to ensure victims and their families “receive benefits now and in the future.”

“We are working to ensure that we will deliver support in the best and most meaningful way possible,” company spokeswoman Julija Hunter said.

“Our priorities are helping the victims and their families, and driving change to help prevent similar incidents in the future.”

At least at least 382 people died after the illegally constructed eight-storey Rana Plaza collapsed in Savar, Bangladesh, on Wednesday. About 2,500 survivors have been accounted for.

Loblaw (TSX:L) had already said it was working with other retailers to support local efforts and provide aid in Bangladesh. The company was also sending senior officials to Bangladesh to get answers on what caused the collapse.


The compensation announcement came as Loblaw and other companies met with the Retail Council of Canada’s responsible trade committee on Monday to discuss how to prevent similar tragedies in the future.

Retail Council president and CEO Diane Brisebois has said one of the challenges has been that Canadian agencies don’t have the power to mandate that certain codes or regulations are followed in another country.

Loblaw has said its vendor standards were designed to ensure that products are manufactured in a socially responsible way, but that current measures do not address the issue of building construction or integrity.

While details of the meeting weren’t expected until Tuesday, some observers hoped the gathering would help companies figure out how to push manufacturers to provide safe workplaces and allow for the empowerment of employees.

Some even suggested the federal government could make retailers list third-party certifications on product labels so shoppers know their purchases were made under conditions that met a certain standard.

“What’s needed is enhanced oversight by Canadian retailers,” said Kernaghan Webb, a law professor who heads Toronto’s Ryerson Institute for the Study of Corporate Social Responsibility.

“They could use this as an opportunity to say ‘Lets take a fresh look at our entire set of commitments on everything’ — minimum wage, issues of whether or not workers can unionize, health and safety — and they could revise those.”

Ensuring manufacturers allow employees to organize in committees or unions, and pushing for checks on the structural integrity and fire safety of factories are high priority items, said Webb.

To ensure intended workplace standards are implemented, Webb said unannounced audits and inspections are typically carried out. What is needed now, he said, is to ensure those checks are performed by reliable third-parties, who could be a mix of local non-governmental organizations, universities and worker groups.

Webb suggests the Retail Council reach out to Ottawa to discuss a law that would require companies to list on their labels and websites whether they are certified by third-parties which ensure certain workplace standards are met.

Adriana Villasenor, of Toronto-based retail adviser J.C. Williams Group, agreed, saying consumers didn’t have sufficient tools to determine whether their products were ethically sourced.

A low price, she added, does not necessarily indicate the conditions in which an item was made as it could just signal oversupply, good supply chain management, or a special promotion by a retailer.

“Right now the only information is a label where it was made and probably the price, and that is not enough for us to see what were the conditions.”

The Maquila Solidarity Network, a Canadian labour rights organization which works to support workers in global supply chains, said the factory collapse should jolt retailers into taking action.

“This isn’t the time for yet another study group or task force. It’s the time for some clear unequivocal steps on the part of Canadian retailers,” said director of advocacy Kevin Thomas.

“It’s not a bad thing that companies are sourcing goods from Bangladesh, it’s only bad if they aren’t taking steps to make sure that those are produced under fair and safe working conditions.”

Loblaw’s announcement on Monday came hours after British retailer Primark, which has ties to the Weston family which controls Loblaw, also said it was providing emergency aid and compensation to victims who worked for a supplier housed in the collapsed building.

Wittington Investments Ltd, a company owned by the Garfield Weston Foundation and members of the Weston family, owns a controlling stake in Associated British Foods, the company which owns Primark.