ETH 5900 Module 4 Written Assignment: A World of Ethics and the Rana Plaza Collapse Example

More Than a Supplier's Problem: Global Responsibility After the Rana Plaza Collapse

Student Name

Master of Science in Management, Thomas Edison State University

ETH-5900: Ethics for Managers

Mentor Name

Month Day, Year

More Than a Supplier's Problem: Global Responsibility After the Rana Plaza Collapse

What Happened

On April 24, 2013, the eight-story Rana Plaza building in Savar, near Dhaka, collapsed during the morning shift. It housed five garment factories producing for European and North American brands. Cracks had appeared in the walls the day before, and a bank on the ground floor closed, but factory managers ordered workers back, reportedly threatening lost wages. More than 1,100 people died and over 2,000 were injured. The upper floors had been added without proper permits, and heavy machinery and generators added loads the structure was not built to carry.

Who Was Responsible?

The owner who built illegally, the factory managers who ordered workers inside and the officials who failed to enforce building codes bear direct responsibility. The harder question is the brands'. They did not own the factories, but they chose suppliers, set prices and delivery schedules and, in many cases, had their own social audits of the factories on file.

Jimenez and Pulos (2016) describe corporate social responsibility as extending to the effects of a company's decisions along its supply chain. Under integrative social contracts theory (Donaldson & Dunfee, 1994), local practices that are tolerated, such as unsafe buildings in a weakly regulated economy, are not authentic norms when the people affected, the workers, would never consent to them, and they violate the hypernorm against exposing people to grave, preventable danger. Brands that profited from low production costs while knowing that enforcement was weak shared responsibility for the conditions that made those costs possible.

Why Voluntary Audits Failed

Before the collapse, most brands relied on social audits: inspections, often by paid firms, against a code of conduct covering wages, hours and safety. Audits typically checked fire exits and paperwork but not building structure, were often announced in advance and were paid for by the factory or the brand, creating little incentive to find costly problems. Workers had no safe way to refuse dangerous work.

The Binding Alternative

Within weeks, more than 200 brands, mostly European, signed the Accord on Fire and Building Safety in Bangladesh, a five-year, legally binding agreement with global and Bangladeshi unions. It required independent structural, fire and electrical inspections, public reports, remediation plans funded with brands' help and worker safety committees with the right to refuse unsafe work. Most large North American brands instead formed a separate, nonbinding Alliance. Reinecke and Donaghey (2015) argue that the Accord's strength came from the coalition between unions and consumer-based campaign groups, which gave workers' representatives a formal role brands could not withdraw from at will.

Recommendations for a U.S. Retailer

Consider a composite U.S. clothing retailer with 140 stores that buys about 30 percent of its products from factories in Bangladesh and Vietnam. It should:

1. Join a binding safety agreement where one exists, such as the Accord's successor, the International Accord, rather than rely on its own audits.

2. Map its supply chain to the actual factory floor, including subcontractors, and publish the list.

3. Price for compliance. Include the cost of safe buildings and legal wages in purchase prices, and avoid last-minute order changes that push factories to unauthorized subcontracting.

4. Give workers a voice. Support grievance channels workers can use without retaliation, and treat a credible safety complaint as a reason to stop production until it is resolved.

Conclusion

Rana Plaza showed that when standards and enforcement differ across borders, a company cannot discharge its responsibility by pointing to a supplier's ownership or its own code of conduct. Binding commitments, transparency and prices that pay for safety are what turn a code into protection for the people who make the products.

References

Donaldson, T., & Dunfee, T. W. (1994). Toward a unified conception of business ethics: Integrative social contracts theory. Academy of Management Review, 19(2), 252-284. https://doi.org/10.5465/amr.1994.9410210749

Jimenez, G. C., & Pulos, E. (2016). Good corporation, bad corporation: Corporate social responsibility in the global economy. Open SUNY Textbooks.

Reinecke, J., & Donaghey, J. (2015). After Rana Plaza: Building coalitional power for labour rights between unions and (consumption-based) social movement organisations. Organization, 22(5), 720-740. https://doi.org/10.1177/1350508415585028