'Human rights, environmental due diligence are very important for putting products in the European market'

As apparel workers in Bangladesh faced numerous disasters in the past, many organisations became heavily invested in this industry, and they have been working tirelessly to improve the working conditions in the factories. 

Today, Bangladesh's apparel industry is one of the safest in the world. Still, there are many areas left where improvement is due, and these organisations are working along with the suppliers and buyers to accomplish their mission.

Ethical Trade Norway is one such member-based organisation that works on encouraging ethical and sustainable trade. Their aim is to promote responsible business conduct in supply chains so that trade helps to ensure human rights and workers rights, while taking care of the society and environment.

Heidi Furustøl, executive director of Ethical Trade Norway recently visited Bangladesh. During her visit, she sat with The Business Standard for an interview, where she shared important information and insight on how business ethics and due diligence are going to play a strong role in future trade with Europe and the US - the largest destination for Bangladesh's RMG.

Here is an abridged version of the long interview.

We understand European customers will buy only ethically and sustainably manufactured products. In terms of that, where does Bangladesh stand in comparison with other competitors like China, Vietnam and India? 

If you're going to sell your products and services on the European market and also in the US, you have to make sure that your products and services are sustainable not only in name, but also in practice. 

The working conditions are expected to meet certain standards and the environmental and the climate footprint needs to be reduced. Human rights and the climate really go hand in hand. I'd say that in all these countries, the awareness is rising. 

China has been on this journey for a long time, so are India and Vietnam. And of course Bangladesh is also working on improving working conditions for a very long time. When it comes to mitigating climate risks, we definitely see that has been happening in China. 

You also see that now in Bangladesh. We have visited some of our members - and they use technology to reduce climate footprint - they don't use that much water, and the chemicals are not discharged into the environment. That's really an improvement. I'd still say this is the beginning of the journey. 

In Europe, with the rise of due diligence legislation, the buyers have to do the due diligence on their supply chain and they have to show traceability, and they have to be transparent about the risks in their supply chain. 

For instance, forced labour can be found in many places, but in China forced labour is imposed by the state. In that respect, China has become a difficult case for the due diligence process. If you're sourcing from the Xinjiang province, it's a high risk for the businesses, because it might involve forced labour. 

And we see in Europe and in the US that they have this Uyghur Forced Labor Prevention Act, meaning that you cannot source a product that has likely been made by labourers who were forced to do it.  

As a result, we see that more businesses are moving out of China. European buyers are ending their relationships with Chinese suppliers.

When it comes to India, from my perspective, the current political situation in India is also worrying where you have this growing Hindu nationalism. We're also tracking their labour rights and it's not moving in the right direction. It's also been difficult to do due diligence in India.

I know Vietnam mostly from the foods and farming sector. They are of course a non-democratic country. We're working both on worker rights and freedom of association there. 

When it comes to Pakistan, you have a security situation there, and businesses do not like risks. I mean they are trying to mitigate that, and they would like to have a low risk. 

I think that is an advantage for Bangladesh. You haven't had any terrorist attacks since 2016. I was here in 2017 and I could really tell the difference between now and the fear it generated particularly, for the international society, back then. Now, it's a safe place to be in.

You still have some big challenges when it comes to the export processing zones, where the labour rights do not apply. That's also an issue when it comes to due diligence. 

Human rights due diligence and environmental due diligence is so important that it's really difficult to put the products on the market, both due to legislation and also due to the customer demands. 

What is ETI's role in that?

Well, Ethical Trading Initiative is an independent organisation, a multi-stakeholder initiative. We are mainly working with businesses but we also have civil society, employer organisations, trade unions and in Norway, we also have the public sector. We have a sister organisation in the UK - they were the first to start and then Norway came along. Then we have Denmark, ETI Bangladesh, and Sweden. 

So it's the Nordic countries plus the UK and then Bangladesh.

What we work on is how to make businesses more sustainable. And at the core of that is the methodology of due diligence. Due diligence is very well known for businesses, but the way that we work with due diligence is how you can reduce the negative impact of your business, on workers and on the environment. 

Are Bangladeshi apparel manufacturers very welcoming of these initiatives?

They have been very welcoming because the manufacturers see that this is also good for business. Our members and the buyers are looking for good factories and they know that the projects that they do together with the ETI is good for the workers. It is also good for the buyers. 

But progress takes time, and it is important that you have this long term commitment. Our advice and recommendation to the buyers is that they should do a proper due diligence process before committing to a factory. 

But once they've done that, they should really stay with the supplier, because the supplier will also invest their time and money in improving working conditions and taking care of environmental issues. And if the buyer then pulls out, they are left with all the costs and who's going to bear that? That will be the workers. 

So, having that long term commitment is really, really key. Of course if the buyer sees that the supplier is not sticking to the agreements that you have, if salient issues are popping up, for instance, if it turns out that you're having night shifts that no one knows about, or having immigrants who didn't have their salaries or contracts, or if child labour is detected, you of course have to deal with that. 

But we do not say to our buyers that they should exit immediately; rather they need to have that conversation with the factory and see if it is possible to solve the issue. Give them time and if the issue is not solved, then of course you could go out of the contractual relationship that you have. 

What due diligence laws do you have in Europe?

In Norway we have the Norwegian Transparency Act. It's the equivalent of Germany's Supply Chain Due Diligence Act and it was actually adopted on the same date. I was part of this government appointed expert group who wrote the draft of the Norwegian Transparency Act and we were the first one to have this legislation. It went into force before the German one. 

So, we actually have a very unique knowledge base on how to do mandatory due diligence. And for us and for Ethical Trade Norway, it was very important that we made this legislation based on the international standards - the UN Guiding Principles For Business and Human Rights. 

At the core of that legislation is the methodology of doing due diligence. For some customers when you talk about sustainability, much is said about certifications and doing audits. But the ETI mission is really to move beyond the compliance and the audit. Because if you are to make improvements for the workers and the climate, you have to work on due diligence projects. 

Please tell us more about the collaboration between ETI Norway and the industry in Bangladesh.

Here in Bangladesh we have this Norwegian government funding from NORAD - the Norwegian Agency for Development Cooperation.

We have started the project called Green Social Dialogue, and the gender sensitivity programme where we work with existing entities, like the sexual harassment committee where we do a lot of training of the workers on how they should know their rights and also the obligations they have together with the management. 

It is about raising awareness about what is sexual harassment. It's not good for the work environment, nor is it good for production, and this is something that is also on the agenda for the buyers. 

We are very strong believers in following the workers' voice together with the management, so that worker representative committees become an equal partner of the factory management.

This social dialogue mechanism is really the key not only to enhance workers' conditions but also to reduce the climate footprint. Through this green social dialogue we've started to raise the awareness among the workers as well as the management when it comes to the climate issues and what kind of activities they themselves can do in order to reduce the impact; for instance, how the factory facilities can reduce water and chemicals usage. 

So, it's also about empowering the workers and we also work on empowering the female workers, which is important to build their confidence so that they know they can raise their voice and can be heard. 

I'm a political scientist and I'm a strong believer in democracy, so this is also a way to develop democratic skills and build a democratic foundation from below. 

Have you entertained the possibility that these training sessions might fail? What if the workers do not feel safe to be vocal about repression in front of the factory management when ETI representatives aren't around?

That's a big challenge. We visited a factory yesterday where they have succeeded in making a safe space for the conversation between the management and the workers. But it really takes time to integrate that into the structures and routines. But it is possible, with commitments from everybody.

There are widespread allegations of corruption and bribery, especially when it comes to inspections from government agencies. It negatively impacts the whole production ecosystem, and the production cost actually rises due to corruption. On the other hand, many businesses are reportedly involved in money laundering. Does ETI work on such unethical practices?

ETI Norway does not work directly with the Bangladesh government. That's something ETI Bangladesh will do - have that dialogue with the government.

However, we also work on anti-corruption measures. Part of the due diligence process is also to reduce the risk of corruption. So, when you do due diligence, you also make sure that you're not contributing to corruption. I think that due diligence legislation will be a kind of a driving force, in order to have transparency and be open about your financial situation. 

When we talk about European legislation, it has been mostly on human rights and and on the environment, but for members of Ethical Trade Norway, they have to comply with due diligence on anti-corruption, and to include anti corruption measures both within their own operations, as well as through the supply chain. 

This is a field that is rapidly evolving and our members have to do a public report on the status of their due diligence work annually. We also ask them for the corruption indicators. When you put your money with the supplier, you also have an obligation to follow that money to a certain scale.