Corporate
Governance
Cases
01 02
03 04
Major Retailers Join Bangladesh
Safety Plan
May 13, 2013
• The retailing giant H&M, based in Sweden, is the largest
purchaser of garments from Bangladesh.
• Three weeks after a building collapse in Bangladesh that
killed more than 1,100 workers, several of the world’s largest
apparel companies – including the retailing giant H&M and
Inditex, owner of the Zara chain — agreed on Monday to sign
a far-reaching and legally binding plan that requires retailers
to help finance fire safety and building improvements in the
factories they use in Bangladesh.
• Consumer and labor groups hailed the move by Sweden-
based H&M – which is the largest purchaser of garments from
Bangladesh – as an important step toward improving factory
safety in Bangladesh, saying it would increase pressure on
other Western retailers and apparel brands to do likewise.
• Within hours of H&M's Monday statement, C&A of the
Netherlands and two British retailers, Primark and Tesco,
also joined in.
• The factory safety agreement calls for independent,
rigorous factory safety inspections with public reports and
mandatory repairs and renovations underwritten by
Western retailers. A legally enforceable contract, it also
calls for retailers to stop doing business with any factory
that refuses to make necessary safety improvements, and
for workers and their unions to have a substantial voice in
factory safety.
• PVH, the parent company of Calvin Klein, Tommy Hilfiger and Izod, also
said it would sign on, an expanded version of an earlier proposal that
PVH was one of two companies to sign. The new plan lasts five years,
the previous one two years.
• Ever since the collapse of the Rana Plaza building on April 24 on the
outskirts of Dhaka, Bangladesh’s capital, H&M, Wal-Mart, Gap and other
companies have faced intense pressure to sign the agreement. Until
Monday, only PVH and Tchibo, a German retailer, had.
• In announcing its move, H&M said that “in order to make an impact and
be sustainable,” the agreement “would need a broad coalition of
brands.” A company statement said the agreement committed a
company to the goal of a safe and sustainable garment industry in
Bangladesh “in which no worker needs to fear fires, building collapses
or other accidents that could be prevented with reasonable health and
safety measures.”
• “Fire and building safety are extremely important issues for us and
we put a lot of effort and resources within this area,” said Helena
Helmersson, head of sustainability at the retailer. “With this
commitment we can now influence even more in this issue. We
hope for a broad coalition of signatures in order for the agreement
to work effectively on ground.”
• H&M and Gap were the target of an online petition that obtained
more than 900,000 signatures and was sponsored by Avaaz, a
human rights group. The petition said, “Your companies and other
multinationals profit from cheap labor, and can do much more to
reduce the dangers of the places where your products are made.”
• “H&M’s decision to sign the accord is crucial,” said Scott Nova,
executive director of the Worker Rights Consortium, a
Washington-based factory monitoring group backed by 175
American colleges and universities. “They are the single largest
producer of apparel in Bangladesh, ahead even of Wal-Mart. This
accord now has tremendous momentum.”
• Gap has resisted signing on, objecting to its legally binding
nature and saying it was already doing a lot on its own,
having hired a fire inspector and promised $22 million in
loans for factory improvements.
• Bangladeshi labor groups that have sifted through the
Rana Plaza rubble have not found any evidence that H&M or
Gap had garments made at any of the five factories in the
building.
• Bangladesh is the world’s second-largest apparel exporter,
after China, and also has the lowest minimum wage in the
world — $37 a month. Its low wages and lack of regulation
have helped it attract billions of dollars in orders from
Western retailers and apparel brands.
https://www.nytimes.com/2013/05/14/business/glob
al/hm-agrees-to-bangladesh-safety-plan.html
Nestle removes noodles from
India shelves
NESTLE India says its Maggi noodles are completely safe, despite deciding to take
them off the country's shelves.
June 5, 2015
• NESTLE India has decided to take its popular brand of
instant noodles off the country's shelves after several
Indian states banned it for allegedly containing unsafe
levels of lead.
• THE company said in a statement on Friday that the trust of
its consumers and the safety of products was its first
priority, but added "Maggi noodles are completely safe and
have been trusted in India for over 30 years".
• In May 2015, a test of Maggi noodles showed lead levels of
0.05 mg/kg, which was below the 2.5 mg/kg limit.
• Tests for other heavy metals, including mercury, arsenic,
cadmium, and tin, also showed levels within the limit.
• Nestlé ran over 3,500 tests on batches of Maggi noodles in
accredited laboratories.
• Food standards authorities in the US, UK, Singapore,
Australia, and other countries also found Maggi noodles
made in India to be safe.
• Nestlé temporarily stopped selling Maggi noodles in June
2015 due to consumer confusion, but they returned to sale
in November 2015.
What are the different
characteristics of Good
Corporate Governance
embodied in the case?
Briefly Describe
The Concept
