Determining what accounts to produce The major export industry of Bangladesh is clothing. Many…

Determining what accounts to produce The major export industry of Bangladesh is clothing. Many multinational clothing companies are keen to buy their wares from suppliers in Bangladesh because the products can be both high in quality and very low in price. However, there have been many injuries and fatalities within supply factories in Bangladesh, most notably the Tazreem factory fire in November 2012 that killed 112 people and seriously injured over 300 others, and the collapse of the Rana Plaza in April 2013, which killed approximately 1200 factory workers and seriously injured many more. In more recent years, many other fatalities have been reported within the country’s factories. Given this information, let’s explore a few questions about what accounts should be produced in this context.

If a multinational organisation buys clothes from a Bangladeshi supplier, should that multinational organisation provide an account of what it’s doing to ensure the health and safety of the supplier’s employees? Whether or not the managers of a multinational organisation should provide an account of the health and safety of the employees of supply factories is a matter of opinion. This would depend on whether the managers are considered to have some responsibility for how workers in supply factories are treated. As supply factories are not typically owned by the organisation that uses them, it could be argued that the organisation is not responsible for the welfare of the factory employees. People with such a view might therefore provide no accounts. However, evidence thankfully shows that the managers of many (though not all) large multinational companies are accepting responsibility for employees within the supply chain. They are showing a willingness to provide information about the health and safety policies they expect their suppliers to adhere to, and the implications for suppliers if they are found to have breached these expectations.

What should be included in an account of the health and safety of employees within a multinational’s supply chain?

The types of disclosures that could be made include:

• whether accepted international safety codes have been adopted by supply factories and whether compliance with these codes has been assessed by independent third parties

• what policies exist in factories in relation to child labour and reasonable working hours, and how performance with respect to these policies has been monitored for compliance

• what training is being provided to employees in relation to health and safety

• how hazardous products and materials are being safeguarded within the factory

• what actions have recently been undertaken with regard to fire and building safety

• where problems are found to exist, what mechanisms are in place for swift corrective action.

Once prepared, to whom should these accounts be made available? If the managers of an organisation believe they have a responsibility to certain stakeholders for particular aspects of performance, then the organisation should provide the stakeholders with an account of such performance. These accounts could be made available to stakeholders such as investors, customers, government, factory employees, and lenders.

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