Thank you very much, Mr. Chairman, and honourable deputies.
My focus today is on the Government of Canada's overall effort to support responsible business practice among Canadian firms operating and sourcing abroad.
Responsible business practice is embedded in Canadian values. Canadian businesses operating responsibly increase their chances of success and contribute to prosperity and development in the countries in which they operate. The Government of Canada expects and encourages Canadian companies operating internationally to respect all applicable laws and international standards, to operate transparently and in consultation with host governments and host communities, and to conduct their activities in a socially and environmentally responsible manner. This includes sourcing responsibly.
Many countries in which Canadian businesses operate lack the capacity to ensure that business operates responsibly there. Consistent with Canadian values, we help fill the gap through a variety of initiatives to assist Canadian companies with the challenges they face operating responsibly abroad. Canada's adherence to the OECD's guidelines for multinational enterprises in 1976 was a significant early step.
The Government of Canada engages interdepartmentally on a variety of cross-cutting issues impacting responsible sourcing, including widely varying standards of regulation and widely varying standards of enforcement in other markets.
The work addressing the challenges involved in responsible business practice in the ready-made garment sector is coordinated through an interdepartmental working group, including the Department of Foreign Affairs, Trade and Development; Industry Canada; Employment and Social Development Canada; the National Research Council of Canada; and Public Works and Government Services Canada.
We also engage with industry, civil society partners, and multilaterally to explore how to encourage good practices. Recently, both my department and Employment and Social Development Canada held separate information sessions specifically focused on responsible supply chain practices in the ready-made garment sector. Some of our partners are witnesses today.
We welcome industry initiatives and encourage companies to consider signing onto those that support improving working conditions, such as the Accord on Fire and Building Safety in Bangladesh or the Alliance for Bangladesh Worker Safety.
Canada's missions abroad are core to our efforts to help Canadian business operate responsibly. Through a variety of initiatives, they can have a tangible impact. My colleague, Peter MacArthur, will illustrate some of the roles our missions play using the example of our high commission in Bangladesh. One example is the high commission's publication of a book for companies in Bangladesh on how to operate responsibly.
While attention has recently been focused on the ready-made garment sector in Bangladesh, responsible sourcing applies to numerous global supply chains in a variety of manufacturing sectors. Therefore we remain committed to assisting Canadian companies with responsible business practice wherever they are active and in whatever sector.
The Government of Canada will continue to promote responsible business practice across all sectors and provide tools and advice to help Canadian companies operate responsibly and successfully abroad.
Thank you for the opportunity to present to you today, and I look forward to your questions.
Mr. Chair and honourable members, you have heard from my colleague Duane McMullen about how the Government of Canada promotes corporate social responsibility, or CSR, globally. I will now outline for you how the Government of Canada responded to the collapse of the Rana Plaza building, housing several ready-made garment factories outside Dhaka, Bangladesh, on April 24, 2013.
At the time of the collapse, our embassy in Dhaka had been active in following developments in the ready-made garment sector and in promoting corporate social responsibility. In January 2013, it hosted a seminar titled Social Responsibility as a Safe Factory, which highlighted the importance of practising CSR in factories, with an emphasis on occupational health and safety, and fire safety. As Mr. McMullen mentioned, some 8,000 copies of a bilingual book—in English and Bengali—were produced and distributed to key contacts in Bangladesh in support of this Canadian-based values initiative.
Following the collapse, our department was contacted by Loblaw, owner of the Joe Fresh brand that had garments produced in Rana Plaza, and we provided advice and logistical support for senior executives who visited Dhaka in early May 2013. The Canadian High Commissioner to Bangladesh, Heather Cruden, arranged meetings for Loblaw executives with key stakeholders, including local government ministers and labours unions. A Loblaw executive returned to Bangladesh this past February and met again with our embassy. Loblaw and our department remain in close contact, and this relationship is a testament to the benefits of government responding to Canadian industry to collaborate in the improvement of working conditions in the Bangladesh ready-made garment sector.
The Canadian government has also been very engaged in policy dialogue and advocacy in this field. High Commissioner Cruden is a member of a group of ambassadors resident in Dhaka, ambassadors of like-minded countries of Canada, which meets monthly with high-level officials from the Government of Bangladesh, including the deputy ministers of foreign affairs, commerce, and labour.
The meetings provide an opportunity to monitor progress by the Government of Bangladesh on its commitments to improve conditions in the ready-made garments sector and for pressing for positive reforms. The Canadian High Commission also participated in stakeholder consultations regarding the minimum wage law in this sector and a needs assessment of the victims of the Rana Plaza.
I'd like to point out as well that the Canadian High Commission recently hosted a seminar on March 1, 2014, on social responsibility and the international standards implementing ISO 26000 in Bangladesh.
The Government of Canada has also tabled statements through our high commission in Dhaka to two separate Government of Bangladesh standing parliamentary committee hearings that addressed safe work environments and proposed amendments to the Government of Bangladesh's labour law.
Canada also intervened at the International Labour Organization's committee on the application of standards in June 2013, in Geneva, to express concern that Bangladesh's proposed updates to its labour law did not conform to international obligations under ILO Convention C087 with respect to freedom of association and protection of the right to organize.
At the most recent governing board of the ILO held in Geneva in March, just last month, Canada joined a statement by the Netherlands and the UK on trade unions in Bangladesh.
Last autumn, my colleague, Jeff Nankivell, and I travelled to Bangladesh for bilateral foreign policy consultations with the Government of Bangladesh, at which time we discussed in some detail the RMG sector at senior levels, including the deputy minister of foreign affairs and commerce minister. We emphasized the need for further reform to reinforce a message that has already been passed by our high commissioner in Dhaka, but also by me, as director general here in Ottawa, to the Bangladeshi high commissioner and the high commission here in Ottawa.
This trip demonstrated our newly integrated approach as an amalgamated department featuring foreign policy, trade, and development, during which we also visited a model factory.
As Mr. McMullen has alluded to, Employment and Social Development Canada hosted a tripartite round table on international labour issues on April 9, 2014, comprising government representatives, and labour and business organizations.
Jeff Nankivell and I, along with representatives from the ILO's better work program, the Retail Council of Canada, and the United Food and Commercial Workers Union, participated as panellists in the discussion on the ready-made garments sector in Bangladesh.
In April High Commissioner Cruden in Dhaka was appointed to the advisory board to the board of directors of the private Alliance for Bangladesh Worker Safety. As high commissioner she is actively engaged with both the alliance and the separate accord on fire and building safety in Bangladesh. Her appointment provides the opportunity for us to further influence and enhance coordination between the alliance and the accord to make sure that both efforts are more accountable and more effective.
In addition, Canada through official development assistance is providing $8 million over four years to a joint ILO-led initiative focused on improving worker conditions in Bangladesh's ready-made garment industry, together with our partners, the United Kingdom and the Netherlands. This project aims to strengthen the Government of Bangladesh's governance, regulation, and inspection of the garment sector; to implement labour legislation and policies, including those related to occupational health and safety at the factory level; and to facilitate coordination amongst stakeholders including the Government of Bangladesh, the accord, and the alliance.
As I draw my comments to a close I would like to point out that Canada has also funded two smaller projects related to this collapse, a research project with the Centre for Policy Dialogue on workers' rights and compliance and, with the Centre for the Rehabilitation of the Paralyzed, the socio-economic integration of nine persons severely injured in this terrible disaster.
Improving working conditions in Bangladesh is a major collective effort between governments, brands and buyers, workers and factory owners. Canada will continue to remain engaged on this issue.
Thank you for the opportunity to speak to you today.
Thank you, Chair. Thank you to the members of the panel for their intervention. They have provided us with some updates from a year ago when we were seized with this issue, Chair. Of course, it's the anniversary of the collapse of the Rana Plaza this past week.
When we were seized with it last year I tried to put it in a human context. From reading the witness statements and some of the articles in the press, I was really taken with the story of the 11-year-old girl, Tahmina, who I think represented what was going on here for the many people trying to understand. Of course, her case scenario was that she didn't want to go to work because she was concerned about her safety—an 11-year-old girl. Those of us who are parents try to conceptualize having our kid at 11 years of age having to go to work, and then, to add to that, having to go to work in a place they felt was unsafe.
So I think if you put this in the right context that is what we're dealing with. To be very blunt, they are going to work to give us cheap clothes. I'm not saying I'm for or against it, but that it just seems to be the fact.
So I think, Chair, our responsibility is a collective one. We must have our government doing the right thing and being engaged, as we hear from our friends from the department. But we also have to say that we must have some goals here. So what are those goals? My goal on this auspicious day—because today of course is the day that we commemorate those who have died and been injured in the workplace in Canada—would be that a young girl like Tahmina at 11 years of age doesn't have to choose between going to work and dying.
So to the departmental officials, I'm glad that we're engaged. I'm hearing some of the things that they are doing. But when it comes to these two initiatives, we have the one initiative, the Alliance for Bangladesh Worker Safety, and the accord. In regard to the accord, I acknowledge and give credit to Joe Fresh and Loblaws for signing on to that accord. But I also note that the Alliance for Bangladesh Worker Safety is a voluntary process. I would like to get from our guests an explanation for the following. We have our high commissioner participating over there, but are we not concerned that we are taking part in a process that doesn't have teeth right now at a time when this is an urgent issue? In my opinion this isn't about studying the situation, but about trying to study how we deal with this situation. So my concern is that while the government is supporting both of these processes, why do we feel we're going to be able to make a difference in a process that's voluntary in nature? And are we, including the high commissioner, asking for something that involves absolute compliance like the accord on fire and building safety?
Thank you very much, Mr. Chair.
Thank you, gentlemen, for being here.
I was in Bangladesh four years ago, so I have a little bit of a picture in my head of some of the things we're talking about. We visited one of the garment factories while I was there, and I was struck by some of the construction.
I worked as a draftsman in an engineering company for a number of years, and I understand some of the robust building codes that we have implemented in Canada to ensure safety for our own workers. Even though I know, from a little bit of research, that Bangladesh has a very good building code—through my research, I also discovered that it was reviewed as recently as 2007 by the University of Tokyo, so I have to assume that engineers in Tokyo know what they're looking at—the problem really is the enforcement piece of the building code.
My understanding—and perhaps you can verify this from your knowledge—is also that Bangladesh does not have gravel of its own. It's all imported. I'm assuming that the strength of the concrete being produced for these buildings is questionable. When I drive past any of these buildings and I see rebar sticking out of the top of the buildings—because as long as you don't finish the top floor, you don't pay taxes—I know that the rebar is being compromised every time it rains. The water will run down. It doesn't take an engineering degree to know that rusted rebar and compromised concrete are going to create more of a problem.
My question really is this. Following this terrible tragedy a year ago, are we working with any of the building departments in the Government of Bangladesh to, first of all, help them improve what's being built and, second, take a look at what has already been constructed that is not safe?
If we're not doing that or assisting with that, are we not then just waiting for another tragedy to happen?
Mr. Chairman, I can speak to that with reference to the project that my colleague, Mr. MacArthur, mentioned. The Government of Canada is providing $8 million for a larger project, a $24-million project also being funded by the United Kingdom and the Netherlands in a tripartite initiative, which the International Labour Organization is managing, as they typically do, with government, employers, and unions.
A major component of that program is specifically focused on both short- and longer-term measures to address the issues around enforcement of building codes and building standards. The fact that Bangladesh is also in an earthquake zone, on top of everything else, poses additional challenges. One challenge—and Rana Plaza is a good example of this—is that what was meant to be a shopping mall had industrial equipment and thousands of workers put into it. So you can have the right codes but the wrong use. That outlines the challenges.
In the context of that project, there are very specific targets that have been set and measurements that we have set with the ILO, the Government of Bangladesh, and the other partners. So over the next few years, as a partner in this project, we're going to be tracking things such as the number of building remediation orders issued and the number of factory inspections completed.
As I said, there are short- and long-term measures being taken. The first is a big push to get out to the factories. A major component is training inspectors, and there are both short- and long-term aspects to that. It's about getting out and doing initial inspections, and setting up a database of thousands of factories.
The database is now constructed, but information about how factories do on these inspections has to be filled in and made available online. Structural integrity of the building and safety are significant parts of that, as are fire safety measures, fire safety equipment, and those kinds of things.
They're both voluntary arrangements as to of whether or not one joins them. Once you've joined them, you have obligations, but which differ between the two associations.
In terms of the negative consequences, those would be in regard to your access as a supplier to the kind of reputable large-volume buyers around the world for your business. In that sense it's like other standards, ISO standards or other kinds of voluntary codes. I mean, compliance with the law is compliance with the law. Signing up for these types of arrangements is a way for you, as a factory owner, to get access to the buyers who represent a huge share of the market and who pay a better price for the product.
If I may, I would come back to the question about what's happening in the rest of the world. Canada does support what's called the Better Work initiative of the International Labour Organization, a global initiative that is working at these issues and that funds, among other things, research that can demonstrate to factory owners in different countries—this is part of the program we're supporting in Bangladesh—that if you improve the conditions and if you pay better wages and provide a better environment for your workers, you can actually become more profitable.
They're now working with the International Finance Corporation arm of the World Bank to develop financial products that can provide working capital to factories in different countries around the world. They're just starting up the program for...thinking about the program for Bangladesh, but the hope is that in future you can develop lending instruments that will provide working capital to factories who agree to upgrade their standards.
One of the barriers they face in doing that is often lack of access to working capital. Because of the terms they have with their suppliers and their buyers, they're chronically short of capital. So that provides an incentive for the factory owners to join these kinds of arrangements.
Thank you very much to our witnesses here today.
Mr. Garneau said he was surprised there were so many women who were working in the industry—the number of women—but the percentage of women should not be surprising because sewing is involved, and I'm sure that when the garment industry was strong in Montreal, there were a lot of women who would have been sewers at that time.
I know that in the furniture business, especially with fabric-covered furniture, women usually sew and men do the heavier work, the upholstering and the frame construction.
Education in some of these countries is quite the thing. Lots of times women don't get the same education as men. In the garment industry it's repetitive. It requires a great skill in sewing or cutting fabric. Women excel at those particular things.
Buyers work lots of times at fashion shows or in a marketplace. Maybe now they go on site a little bit more, but lots of times they will probably buy that product, because they like the line and can get it for a certain price. Those will happen.
The garment industry again has less investment. That's why it's in Bangladesh, Haiti, the Dominican Republic, Honduras, and Vietnam. It takes a smaller investment for sewing machines, sergers, cutting tables, scissors, and those types of things. The biggest thing is probably the buildings.
I know in Bangladesh a number of years ago one of our Canadian companies, Gildan, bought a factory. I think it was a working factory, but when they looked at it, they found there were no fire escapes and there was no elevator. It was a five-storey building. Also, when they looked at the building they didn't think it was built strong enough. It's my understanding they spent approximately $1 million—in Bangladesh $1 million is quite a bit of money—to upgrade to, to put in an elevator for safety. The people were walking the stairs, carrying cuttings from top to bottom.
In that instance, would Gildan have come to you? Or would they have gone and had someone say that you had to do this? It's my understanding they took it upon themselves to do this. Would I be correct?
Welcome back to the second hour.
Joining us we have three witnesses. Here in Ottawa from Fair Trade Canada, we have Tom Smith, the executive director. Welcome, Tom. We're glad to have you here today.
From Loblaw Companies we have Bob Chant, the senior vice-president of corporate affairs and communications. It's good to see you again, sir.
Joining us via video conference from the Retail Council of Canada we have Diane Brisebois, the president and chief executive officer. Welcome, Diane, we're glad to see you as well again.
Why don't we get started right here with you, Tom? We'll have Tom, and then Bob Chant, and then we'll go to Ms. Brisebois to finish off. You have up to 10 minutes. Less is better if you can, but you have up to 10 minutes and then we'll go around the room for the remaining hour to get some questions on the floor.
Mr. Smith, I will turn it over to you, sir.
Good afternoon, Mr. Chair, and members of the committee. Thank you for the opportunity to speak today.
My name is Tom Smith. I'm the executive director of Fairtrade Canada, and I've worked in the fair trade movement and with co-operative organizations, both in Canada and internationally, for over 20 years.
Fairtrade Canada is the Canadian member of Fairtrade International. Fairtrade is the most widely recognized ethical label in the world. Our vision for fair trade is a world where trade justice and sustainable development principles are developed globally, thereby moving world farmers and workers from a position of vulnerability to security and economic self-sufficiency.
Currently the global fair trade movement is made up of 26 national fair trade organizations, primarily in northern purchasing countries, with more than 1,200 producer organizations worldwide, primarily in southern developing countries. In fact, producer organizations now own 50% of the global fair trade system, through a governance change in 2013, ensuring that workers and farmers are represented at every step of the way.
We just passed the first anniversary of Rana Plaza in Bangladesh, the worst industrial accident in living memory. Over 1,000 people were killed because laws and company codes were openly disregarded. However, all too often such an incident hits the headlines and then fades away. Meanwhile, millions of men, women, and children continue to labour day in and day out in tough and hazardous conditions, earning a subsistence living in order to produce the food we put in our mouths and the clothes we put on our backs.
Standard free-market doctrine is convinced that trade is crucial for economic growth and will create trickle-down effects that will eventually reduce poverty. Fairtrade believes in the first but not in the second. Trade alone is not sufficient. It must be accompanied by measures that promote equality, human rights, and environmental protection.
Finding the right balance between facilitating trade development and compliance is an arduous task that requires continuous improvement and fine tuning. Fairtrade has been doing this for 25 years, and our experience has taught us valuable lessons. In the process we have learned a great deal about how to meet the often conflicting needs of the private sector and disadvantaged producers and workers, and we're still learning.
Growth solves some problems, but inevitably breeds others. Fairtrade has seen farmers take shortcuts with organic certification, turn to bad labour practices to meet deadlines, or cut down forests to increase production. We have also confronted significant human rights abuses. Fair trade producer communities are not immune to the difficulties faced across the developing world, and indeed the developed world. Power dynamics can manifest themselves at every level, from co-operative boardrooms to the lives of individual farmers and workers.
Today I'd like to share with you three key ingredients, which we would encourage the Government of Canada to incorporate in its approach to ensure an end to not just the Rana Plazas, but to the constant grinding poverty and hardship of millions of small producers and workers across the globe.
Let me begin with ingredient one, where fair trade begins, which is best practice in standards and certification. Fair trade standards are set in accordance with the requirements of the ISEAL code of good practice for setting social and environmental standards. This means that standards are set on the basis of consultation with major stakeholders in the fair trade system. Standard setting in fair trade is not a one-time exercise. The realities on the ground, as well as new challenges and changes to external environment, dictate that we constantly review and fine-tune our standards.
While Fairtrade International sets the standards and supports producers to meet them, a separate certification company, which is ISO-65 accredited for fair trade certification, FLOCERT, regularly inspects and certifies producers and traders against the standards. FLOCERT auditors are experts in their field. They are familiar with the local and sector-specific realities that they are facing on site. They know the elements and the fair trade standards that carry the highest risk for non-conformities. As well, auditors receive regular training on identification and response required to mitigate those risks.
The second key ingredient to fair supply chains is fair pricing. At its heart, we get what we pay for. If products and goods are too cheap, there is a cost. Value is still too unevenly spread. Market concentration in food retail is getting worse. Competition is so fierce that there is a real risk of a race to the bottom in key commodities. Fairtrade wants to stop the race to the bottom, whereby suppliers in different countries compete against each other by lowering terms and conditions of work in order to receive business from the north. An example of this would be flower plantations moving from Kenya to Ethiopia, where wages are lower and tax incentives are given to new investors, or clothing brands moving their sourcing from China to Bangladesh after wage levels in China had begun to rise following strikes.
Half the world's hungry are farmers. This is not only a moral outrage but also a critical business risk for the security of supply. It is impossible to achieve sustainability if producers cannot capture an adequate share of value to fund sustainable business practice. Farmers are bearing the brunt of this squeeze. Smallholders are giving up, and plantations are casualizing labour and suppressing sustainable wages. We also see the cost in poor or unfair contracts, in failure to move towards living wages and in the supply chain’s trapping plantation workers or factory workers in a cycle of poverty, or in poorer worker rights. An example would be less freedom of association.
The Fairtrade minimum price is a vital protection for producers; however, it's not enough. Overall, we need to pay more for our goods if we want to see our supply chains delivering an end to poverty and promoting human rights rather than trapping people in poverty and preventing progress on rights. Higher living wages cost money, so do safer factories, so does environmentally sustainable farming, and so does paying the full cost of sustainable production.
Fairtrade has been a trailblazer for a living wage in the rural sector by commissioning the development of a living wage estimation and methodology. So far, we have developed robust living wage estimations for South Africa, Dominican Republic, Malawi, and Kenya. We have formed partnerships in industry and civil society, to help workers move towards a living wage, but we also need governments on our side.
In Europe, the Dutch and German governments organized the living wage conference in Berlin, in November 2013, to a common declaration with industry, unions, and NGOs. We encourage the Canadian government to follow this example.
Ingredient three is empowering farmers and workers, and bottom-up governance. The challenge faced by farmers and workers in developing countries goes beyond the scope of any certification system. Fairtrade International is building expertise in various program areas that can affect farmers and workers across all products, and is developing global strategies to help the most vulnerable.
For example, the last five years have taught us that our standards based on relevant international laws must go beyond producer groups and their members’ simply being able to recite fair trade requirements on child labour. Instead, we see an increasing leading role for producer organizations to become change agents in the fight against unacceptable social practices.
In order to support producers to fulfill this role, Fairtrade has adopted a children-first approach. Fairtrade has conducted rights-based focus groups with approximately 500 children and youth in fair trade organizations and their communities. Working children can teach us about their lives, the impact of their work on themselves and their peers, and the alternatives as they understand them. Of those participating, only five children and youth in these communities saw any prospect of a sustainable livelihood in agriculture—a warning shot across the bow to those who buy and consume commodities produced by their parents.
In conclusion, we encourage the Government of Canada to promote fairness in trade by requiring credible efforts of Canadian companies sourcing from developing countries and an expectation of business to respect human rights, including a living wage for workers. This will send a strong message. This has been embedded in the United Nations guiding principles on business and human rights as the leading international framework for governments and businesses to respect, prevent and, where necessary, remediate adverse impacts on human rights.
Transparency is key. Without transparency, business is simply marking its own homework as far as rights and wages are concerned. Transparency needs to be systematic. This is where credible standards and certification play a leading role. Another step that the Government of Canada could do to is to follow in the footsteps of the EU and lead by example by revisiting the federal government's public procurement standards to choose Fairtrade certified products and other sustainable procurement considerations. Other Canadian institutions are currently doing this with our Fairtrade towns, cities, and campus programs.
Finally, but most importantly, we need to invest in strengthening communities, farmers, and workers themselves. When people have the strength and capacity to speak for themselves and negotiate, conditions and wages improve. Without the space and permission for workers to advocate for their own rights, at the end of the day, regulation can only go so far.
Thank you very much for your attention. I look forward to your questions.
Good afternoon. My name is Bob Chant. I serve as the senior vice-president of corporate affairs and communication at Loblaw Companies.
Mr. Chair, thank you for the opportunity once again to address the committee in relation to this important matter. I don't need to remind everyone that last week was the anniversary of the tragedy at Rana Plaza, and on behalf of our entire organization, all of our colleagues, I'd like to once again extend sincerest condolences to the victims and the families who were affected by the tragedy. While we do not forget its tragic beginnings, we are proud to have made Loblaw a contributing voice in the response to Rana Plaza and its unfolding legacy related to workplace safety.
We continue to believe that the manufacturing community and overall economy of Bangladesh benefit from our presence, our attention, and our long-term commitment. Over the past 12 months Loblaw has worked with a number of individuals, industry, government, NGOs, and the International Labour Organization to respond to the human tragedy of Rana Plaza and to improve the standards that will define and protect the safety of workers from here forward.
When I addressed this committee last May I shared with you the Loblaw plan of action, and today I'm proud to report on the considerable progress we have made.
In the past year Loblaw has become a lead contributor in the financial response to this tragedy, having committed $5 million for local relief and compensation. That includes over $3.7 million in victim compensation provided to the ILO-led trust fund for long-term compensation to injured workers and the families of deceased workers.
In addition, $1 million is being provided to Save the Children in Bangladesh and the Centre for the Rehabilitation of the Paralysed for textile workers in Savar. An additional $285,000 was provided in short-term compensation to bridge between the time of the incident and the long-term compensation that has just started to flow in the last couple of weeks.
As I mentioned, Loblaw has publicly committed to maintaining production in Bangladesh while also contributing to improving workplace conditions in the country. The company has made every effort to be a leading voice on this topic, making public commitments and public statements on an issue that many other brands have chosen to avoid.
We also became an early signatory and the only Canadian company committed to membership in the accord for fire and building safety in Bangladesh. The accord is an independent legally binding agreement to make all garment factories in Bangladesh safe workplaces. It includes independent safety inspections at factories and public reporting of the results of these inspections. Where safety issues are identified, retailers commit to ensuring that not only are repairs carried out, but that sufficient funds are made available to make those reparations and that workers at these factories continue to be paid a salary while the improvements are being done.
We have raised the level of our standards and inspections of all factories where our products are sourced. In the summer of 2013 the company audited all the factories in Bangladesh producing our goods, and the information on all factories producing for us was shared with the accord. These standards, as you may recall, did not, prior to Rana Plaza, include building-integrity or building-structure inspections, and they do now.
In addition we are building a team of employees in the region to ensure the rigour of our factory audits and to monitor workplace conditions and local relationships. This team is led by Frank Merkley, a long-time Loblaw supply chain expert from Canada who has relocated to the region. The team's goal is to ensure that goods produced for sale by us are made in an environment that reflects Canadian values.
Now, it may seem easier to simply pull production from Bangladesh. Loblaw believes that the apparel industry can be a force for good. When I've travelled to Bangladesh over the past year, one message that we received loud and clear from day one from every single individual we met was “please don't leave” or “thank you for not withdrawing your production from this country”.
Helping victims and their family members find and hold a job is a critical piece of the recovery process, because jobs in the garment industry do help lift people out of poverty. We are proud to have committed to keeping our apparel production in the country. We believe that properly well-built factories can, indeed, be an agent for economic development and stability in countries like Bangladesh.
While the last year has seen meaningful change, in our view the collective industry response to Rana Plaza has taken too long, and various necessary steps have yet to be taken. Further, based on the initial compensation model that was calculated on a shared basis between government, industry, and brands, Loblaw, as one of the top contributing organizations, is contributing more than its share. However, we do believe that progress is occurring, most notably in the improvement of factory audits, and particularly the related information sharing that's happening within industry. And we are pleased with unprecedented coordination, albeit between a relatively small number of other retailers and our company, to account for the very real human and financial costs of the Rana Plaza collapse.
Loblaw is committed to driving long-term change that will benefit the Bangladeshi people, and in the coming months and years we will continue to work with our industry colleagues to do so.
Thank you very much.
My name is Diane Brisebois. I am the President and Chief Executive Officer of the Retail Council of Canada.
Mr. Chair and members of the committee, thank you for the opportunity to speak again this year, as we did in May of last year.
As many of you know, RCC is a not-for-profit industry association representing more than 45,000 storefronts across Canada. Our membership includes independent merchants, regional and national chains, mass merchants, big-box retailers, and online merchants. Our membership represents all categories of retail, including general merchandise, grocery, and drugs.
As you know, the one-year anniversary of the tragedy at Rana Plaza just passed last Thursday. Over the past 12 months, RCC has been actively engaged in addressing the issue of worker and building safety in Bangladesh, which is a top priority for the retail industry.
As I mentioned last year, our members believe that any successful effort to correct the situation in Bangladesh requires support, shared responsibility, and action, not only among retailers and consumer brand companies, but also with factory owners, the Bangladeshi government, factory workers, NGOs, unions, and other stakeholders. We are committed to working collaboratively with all of these groups toward long-term solutions.
Several RCC members have launched their own projects to help improve working conditions following the tragic collapse of the Rana Plaza industrial building. Collaborative initiatives, such as the alliance and the accord, have also been put in place to provide industry with tremendous opportunities to tackle complex security challenges and to strengthen the effectiveness of measures for improving the safety of workers in Bangladesh.
RCC works with all its members to raise standards and foster concrete change, either through our members' independent initiatives, or in conjunction with the alliance and the accord.
Much like the Department of Foreign Affairs, Trade and Development, we support both the Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety in equal measure.
Our support of both initiatives reflects the fact that our members are participating in both of them. As a trade association representing the entire industry, it is not our role to dictate to our members which initiative they should join. That decision must be made by the individual companies based on the needs of their business and the other factors that impact them.
In addition, we believe that the fire and building safety problem in Bangladesh is a complex one that does not have just one solution. There is a range of political, economic, legal, and cultural factors to consider. As such, we are concerned that endorsing just one initiative would limit the solutions on the ground at this time.
We've been coordinating efforts in Canada between the accord and the alliance as much as possible. We have provided feedback to both efforts to ensure that they work together and that their efforts align with Canadian retail needs from the perspective of both large and small companies.
We've also hosted the management of both the accord and the alliance to provide an opportunity for them to talk to Canadian retailers directly. As much as possible, we've also engaged with stakeholders that deal directly with both initiatives, other NGOs, the Government of Canada, and in Bangladesh, international retailers, the International Labour Organization, among others.
We've also actively participated in joint advocacy with our peers in Canada and the U.S., including the Canadian Apparel Federation, the American Apparel & Footwear Association, the United States Fashion Industry Association, the National Retail Federation, and the Retail Industry Leaders Association, on several topics of interest, including letters to the Bangladesh government on reducing tariffs for building and fire safety equipment, on labour strife in Cambodia, and over the usage of cotton from Uzbekistan, where forced and child labour are a serious problem.
We've also been sharing various tools, resources, and intelligence with our members and other stakeholders, including with our peers in the Department of Foreign Affairs, Trade and Development; NGOs; and as mentioned, many other trade groups.
We applaud the work that the Canadian government has undertaken in Bangladesh, including active work on the ground in collaboration with other governments, support of various charities to aid injured workers, contributions to ILO programs and, more recently, High Commissioner Heather Cruden's role on the advisory board of the alliance, to facilitate alignment of activities between the accord and the alliance.
We look forward to further collaboration with you and will continue to offer whatever assistance we can in solving this very urgent and complex issue.
Merci. Thank you.
First of all, we don't own any of the factories in Bangladesh. As I said 11 months ago, we operate through the vendors we contract with, who then subsequently either own the factories or contract with factories on the ground.
There has been significant progress in doubling back and inspecting the facilities for both regular workplace conditions, environmental conditions, and what some call CSR audits, which now include building inspections or inspections of the physical or structural integrity of the buildings. I would say that most of the large brands have gone back and done that. We completed all of our audits by the end of July last year, shared our information with the accord, and now the accord process is under way and factories are being inspected a dozen per week, or thereabouts.
The pace is fairly slow and there are a large number of factories that have to be inspected. But my understanding is that the way the accord—and I believe the alliance, and Dan may be able to speak to this better—is doing this on an at-risk basis, so an assessment of what the riskier locations are....
We've also reiterated, reinforced our no tolerance policy for subcontracting, or at least unauthorized subcontracting. Subcontracting is okay as long as we are aware of it and as long as we have audited or inspected the factory that's going to be doing the subcontracting, but it's not okay if we're not aware of it so we don't allow that.
Thank you for being here today.
In my previous life I was involved in fire safety inspections as part of my company's business and was literally covering thousands of buildings, many of the large retail grocery stores, superstores, and what have you, for fire sprinkler suppression systems, extinguishers, etc.
It wasn't possible to have that many contracts out until 1985. They had to legislate it because we were going through a period of time when people simply didn't inspect these systems on any regular basis. They only found that the systems didn't work when people pulled a pull-station and it didn't work at a time when they probably needed it.
We know that this happens not only Bangladesh, because there was a shopping mall that collapsed here in Ontario two years ago, I think it was, for structural reasons. They didn't do a good structural examination there either. So it's unfortunate that we have to learn how to do better under fire conditions.
This arrangement that you have, I take it, is with the accord. Does that give you satisfactory reporting, device by device, location by location, a complete building audit in some detail? Is that transmitted to you, or do you have access to those records when you're negotiating a large manufacturing contract with them? Do you ever have those double checked for accuracy?
I think it's a huge almost culture shift in the way that governments and civil society organizations can approach fair trade today. I think there are recent and stunning examples. We accredit two significant programs in Canada: the fair trade towns and cities program, and the fair trade campus program. For the most part, they're engaged and led by young champions in both of those types of organizations.
I can give you the example of the university of McGill, which was recently accredited as a fair trade university. Their administration, with leadership from their auxiliary services department, really took the lead and have changed their procurement practices so that coffee, tea, sugar, and cocoa products at McGill are bought from fair trade vendors and are fair trade products. So that's a significant change.
A really significant example is Simon Fraser University in British Columbia, where their students came to the auxiliary services department—the administration—and said they really wanted a Starbucks café on their campus, and Starbucks is a partner in fair trade. They went to Starbucks, and the first café that Starbucks opened on the Simon Fraser University campus is totally fair trade. It's a great example and was so successful that they're now getting ready to open a second café.
From a local standpoint, I hope you heard the announcement two weeks ago that the University of Ottawa has taken steps to become a fair trade campus. They are currently working with Fairtrade Canada to talk about fair trade suppliers that are engaged in the fair trade arena and can provide good supply chain solutions.
The other thing I would stress to the committee is that this isn't about forcing someone to change their procurement suppliers. This isn't about punishing suppliers but the university of McGill telling their suppliers to go find fair trade products. They don't want to change the suppliers. They want to change their purchasing practices, and that's a substantial, important thing to get across.
So we've seen some significant changes. For Canada I think it's important that the Government of Canada has significant purchasing power, from the various institutions under the control of government, and when you think about.... Well, I'll give you an example. Just back on your stand, you are promoting fair trade coffee, but you also have Lantic sugar. Lantic sugar just became the first major Canadian initiative on sugar products, and you will be selling, buying, or sharing fair trade sugar—
Thank you, Mr. Chair. My question is really directed to Ms. Brisebois and Mr. Chant.
We talked about buying. Really, what it comes down to is changing a culture in North America. We used to have a very robust garment industry in Toronto. In fact, up until 30 years ago, we still had shops on Spadina Avenue downtown. I visited some of those shops. I was in a shop in Brampton 10 years ago that probably was very questionable, and probably needed some inspectors to go in there.
I would hazard a guess that if we went around this room here today, we would find that the clothes that we are wearing were not made in Canada, or very few of them were made in Canada. They were probably made in Vietnam, Cambodia, or Bangladesh. What it comes down to is a price point.
I guess my question for you, Ms. Brisebois, because you say that you represent 45,000 retailers across Canada, is this. It takes selling a whole lot, selling hundreds and hundreds of $10 T-shirts for your retailers to pay the cost of the rent in some of the malls they occupy, so where does the price point hit, that it no longer becomes viable or that we start increasing the prices to the purchasers here?
We all know our attitude. Everybody says, “Look what I got on sale”, so it becomes a very fine balancing act from the point of view of a business active in Bangladesh. You say that Bangladesh wants you to stay there, Mr. Chant. So how do we make that happen, that we hit that happy medium where we are providing the safety and security for the people in Bangladesh, and yet you are still able to operate there and we still find Canadian retailers who want to sell to Canadian purchasers who want to purchase at that price? Where is that balancing point, and how are you managing that, first of all, for the retailers, and for the producers?
I was going to throw that question to Bob, but I think Bob would want me to take that.
It is a very interesting question and I wish we had more time. I can see that we have very little. It's very challenging for Canadian retailers, specifically because we are dealing in a global environment. Retailers in Canada are small in comparison to their competitors, most obviously in the United States, so price points are extremely important for retailers.
There's no question that this is one of the reasons they try to source around the world to try to get the best prices. That said, they're also aware that customers want quality and assortment, so it's a balancing act.
I think the challenge has also been for those manufacturing companies in Canada to find people who want to work in those factories for wages that are often not seen as competitive. It's a very, very challenging environment for retailers.
I believe, though, that consumers have and will, as Bob mentioned, send very clear signals about quality of product, where product is made, and also price points. Retailers have to stay very close to their customers, follow their lead, and try to respond as quickly as possible.