(Photo Source: Google)
24th April 2016, the collapse of Rana Plaza garment factory complex, the deadliest industrial accident in the history of Bangladesh, marked its 3rd anniversary. To commemorate the loss, thousands of survivors, activists, relatives of the deceased and victims gathered at the factory site in the outskirts of Dhaka.
Three years ago, the disaster boldly highlighted the unsafe labor conditions in the country while claiming nearly 1,138 lives and left more than 2,000 seriously injured or disabled.
Although dozens of officials and inspectors have been arrested over the incident, no one has been convicted yet. Post disaster, the entire episode put pressure on the government as well as several western garment brands to improve labor conditions and pay the compensations for the loss.
International Labor Organization (ILO) estimated that some $40 million was needed to compensate the families and disabled garment workers alone.
The Rana Plaza garment factory debacle brought about massive movements for similar industries to sign up for the newly implemented Bangladesh fire and building safety accord. Although some progress have been made in the direction of maintaining a safe working conditions, there still remains several unresolved issues such as lack of full implementation of newly-legislated labor laws, absence of a comprehensive building safety inspection process, and inadequate arrangements to compensate the victims of industrial accidents.
The garment industry of Bangladesh generates $25 billion revenue annually while supplying 60% clothes to Europe, 23% to the US and 5% to Canada. Immediately after the disaster some key garment buyers and international retailers withdrew from Bangladesh while others responded with an objective of improving the factory condition including building infrastructure, fire safety and working conditions of the workers.
At the time, there were about 30 major foreign retail brands which were supplied by more than 5,000 garment factories in Bangladesh. It was sad to see that, in the wake of the disaster, only half of the retail brands came forward to compensate the family and the injured workers as part of their Corporate Social Responsibility (CSR).
Corporate Social Responsibility (CSR)
Businesses need to understand that the social responsibility of private sector goes beyond the day-to-day operation of producing efficient products and services for customers. The CSR of a company is not concerned just with its clients, suppliers, employees and shareholders but also with communities and other downstream stakeholders who take an interest in the behavior of the company.
Sometimes private businesses are so busy making money they forget to see the complete picture and misinterpret CSR as mere charity works in bits and pieces. Of course there are short term benefits associated to these philanthropic activities to both business houses as well as communities but the targeted social and business impact gets diluted as often budget is limited and not sustainable for the desired cause.
(Photo Source: Google)
Businesses definitely need to rise above the charity and the compliance requirements set by the government or international bodies and work on building a solid & sustainable platform where private sectors, communities and stakeholders can come together for shared values and well being of people & environment as a whole. CSR can bring fundamental value to the private companies only if they learn to incorporate it into their growth strategy and sustainable business model.
Potential Business Threats
As per Bangladesh Garment Manufacturers and Exporters Association (BGMEA), foreign buyers cancelled orders worth USD 110 million from 37 factories in 2014. The number of new ready-made garment factories also declined from 113 in fiscal year 2012-2013 to 65 in fiscal year 2013-2014.
On one hand Bangladesh has this immense need to address its existing safety and disaster preparedness issues such as fire and building safety accord while on the other it has more immediate challenge to quickly restore confidence of the foreign retailers so that the garment business continues with minimal disruption.
Although identifying and fixing structural flaws of other similar business complexes, developing emergency preparedness & response plans and establishing proactive safety management system within private businesses will definitely take some time, Bangladesh cannot afford to lose its foreign retailers by not meeting the basic safety requirements just now.
The country and the private sector need to move together and faster if they want to recover and restore the garment businesses as ethics, brand image and consumer awareness are rapidly becoming the competitive grounds for the growth of any organization.
Further delaying and not meeting the basic safety standards might signal the international market or retailer brands to diversify to other countries which can provide with private businesses which are safety compliant, better prepared to face such disasters, have capabilities to respond to such emergencies and are well equipped to quickly recover from the tragedy.
Similar industrial accidents had happened in Bangladesh in the past but probably were not loud enough to register a wakeup call for the government or the concerned authorities. Most importantly, the Rana Plaza disaster could have been predicted and prevented or well-responded had they adequate safety and disaster risk reduction measures in place.
Disaster Risk Management (DRM) & Business Continuity Plan (BCP)
When a disaster of such magnitude strikes, the entire business community go frantic, not sure what to do next? Now, let’s imagine the extent of multiplying impact when a disaster like this replicates many times over in the event of a massive disaster, say earthquake. When the scale of disaster is enormous, even the government and outside agencies become helpless in supporting the private companies before it is too late. According to the Insurance Information Institute, USA, up to 40% of businesses affected by a natural or man-made disaster never reopen.
After a disaster, companies would get under great pressure while managing activities related to emergency response, disaster recovery and finally continuing the business as usual. Unless these companies are prepared with adequate contingency plans guided by Disaster Risk Management (DRM) principles, it is hard to visualize their continued operation in the post-disaster scenario.
During such crisis, the most urgent need of businesses would be to quickly respond to the emergency (saving lives & property) and secondly, to recover its operational activities (becoming functional & continuing business as usual) at the earliest. Hence there arises the need for a comprehensive Business Continuity Plan (BCP).
BCP of an organization presents a holistic management approach which ensures that critical business functions will remain operational and the disaster recovery will be handled in a timely manner with minimal interruption. An effective BCP aligns with the overall DRM and CSR strategies, if an organization is willing to envision its long-term security, creative business leap and opportunities for growth.
(Photo Source: Google)
BC Planning is a capability building process for an effective execution of risk reduction, emergency response and disaster recovery plans of any organization. Long-term sustainability of businesses depends on various stakeholders including employees, their families, shareholders, communities, suppliers, customers, government, media and other support groups.
During an emergency, it might be overwhelming to manage them all and make quick decisions, especially when a great deal of money is involved. Therefore, BCP, a proactively thought-out procedure, can help a business to swiftly manage its resources as well as supports from other stakeholders.
Having a closer look at the increasing number of natural, human-induced or technological disasters these days, the need for BCP is aptly justified for any small, medium or large scale organization. Developing a BCP will improve the likelihood that businesses/industries will not only survive and recover themselves, but will also help their neighbors, communities and the entire country to recover more quickly.
Strategically planned companies would first invest in BCP to build their disaster resilience which in turn would enable them to continue their CSR efforts in the event of a catastrophic disaster. At the same time, BC Planning itself could be a significant part of CSR building process for any organization that is truly responsible to its employees, communities and customers. If an organization’s vision is well aligned with its DRM objectives and CSR values, business continuity planning is bound to happen in that organization.
Lesson to Learn
The collapse of Rana Plaza building served a lesson to Bangladesh. It has woken up a great number of private sectors, government bodies, employees, stakeholders and other groups from in and outside the country. Considering the parallel in demography, infrastructure, government policies, business culture and the level of preparedness for disaster, it really brings us closer to the Rana Plaza experience and provides a real-time lesson to learn from.
In Nepalese context many small, medium and large businesses, with 70% public investment in them, hold up the backbone of the country’s economy. Therefore, developing BCP could prove to be the right foot forward by the private businesses. In order to support strategic DRM needs and elevate sustainable CSR value of a company, BCP implementation could be a milestone initiative by the private businesses in Nepal. This certainly is a wake-up call to the government, private sector businesses and their stakeholders in Nepal.
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