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Woolies, Coles threatened with a boycott

Some of Australia’s largest retailers have been threatened by a consumer boycott should they not agree to help improve fire safety and working standards in Bangladesh, following last month’s building collapse that killed over 1,100 workers.

An international agreement was put forward whereby the companies that signed it would be responsible for establishing and paying for an improved fire and building safety program in Bangladesh over a five-year period. However, companies such as Woolworths (ASX: WOW), Wesfarmers (ASX: WES) and Pacific Brands (ASX: PBG) have all refused to sign.

Whilst Pacific Brands has argued that it is already working with other organisations to improve working conditions in Bangladesh, Woolworths and subsidiaries of Wesfarmers, including Coles and Kmart, have all refused to sign for other reasons. Coles has stated that it does not source any apparel from Bangladesh, whilst a Woolworth’s spokesman has stated that the exports from Bangladesh that his businesses receive are not connected with the collapsed building in any way. The spokesman also argued that his company had existing “extensive” policies which demonstrated its “commitment in this area”.

US retailers have also been hesitant to commit to the agreement, but European companies such as H&M and Calvin Klein have given their support. In September last year, H&M urged Bangladesh to increase its minimum wage of around $37 per month, in order to increase the country’s living standards.

It’s clear that a number of companies employ workers overseas in underdeveloped countries due to the lower costs, however, whilst consumers want bargains as much as ever before, they are also becoming increasingly aware of exploitation and unethical behaviour. Russell Zimmerman, President of the Australian Retailers Association, stated that ”It’s very obvious consumers are more conscious of the ethics of the retailer’s supply chain. Retailers need to regularly reassess this.”

Although the deadline for signatures was due on Wednesday, Oxfam Australia is saying that it is “not too late” to sign on in support.

Foolish takeaway

It is vital that corporations support fair and safe trading. Whether or not a company sourced apparel directly from the collapsed Rana Plaza, signing the pact would offer excellent public relations exposure and gain the support of consumers.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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