Your staff can be ‘well treated’ and your supply chain ‘ethical’, but when people lie dead in the rubble of a factory in your supply chain, serious questions have to be asked.

Your staff can be ‘fairly paid’, ‘well treated’ and your supply chain ‘ethical’, but when almost four hundred people lie dead in the rubble of a factory in your supply chain, on top of acknowledging the sheer human tragedy of the situation, serious risk management questions have to be asked.

This is the situation facing western high-street fashion brands such as Primark and Bonmarché after the collapse of the Rana Plaza building in Savar, Bangladesh last Wednesday (24 April), where one of their suppliers occupied a floor of the building.

Questions must be posed about the steps taken to protect workers by those supplying western brands from the building.

A statement from Primark said the company was ‘shocked and deeply saddened’ by the tragedy, adding: ‘Primark has been engaged for several years with non-governmental organisations and other retailers to review the Bangladeshi industry’s approach to factory standards. Primark will push for this review to also include building integrity.’

Bonmarché’s statement echoded that view, stating: ‘While we have always implemented processes in line with or exceeding industry requirements and standards, there are lessons to be learned from this event right across the retail sector.’ 

In other words, while these firms have been proactively managing their supply chain risk and worker welfare, they do not seem to have previously reviewed the fundamental integrity of the buildings housing their workers.

This is where the idea of reputation kicks in. The issue is clearly crucial for Primark, which hosts a standalone ethical trading website detailing its efforts to ensure ‘that workers making our products are paid fairly, treated well, and work in decent conditions’.

The firm has boasted of reviewing health and safety systems, management and human resources, interviewing workers and carrying out almost 2,000 audits on ‘every first tier factory’ that makes its products.

But now the reputational risk of western retailers does not pertain to ethics but to safety, and their futures will hang on their ability to react appropriately to this tragedy unfolding 7,000 miles away.

For now, the immediate questions Primark and Bonmarché must answer are these: What happened to ensuring that workers were safe? When was the building last inspected? Why are they yet to sign up to a building safety program? And is there any truth to reports that factory managers told workers anxious at visible cracks in the structure that they had to get back to work or risk losing their jobs?

But the biggest question of all is why western retailers have to ask these questions now rather than before the event. And if, as you might suspect, this was an unidentified risk, what other issues are yet to be identified?

Once those questions have been answered, retailers need to ensure they manage building safety risks at other locations – no matter how far down the supply chain these may be from their operational core. In an interconnected world focused on corporate culpability and accountability, organisations must take responsibility for anything remotely connected with their all-important brand – especially when human life is at risk.

Predicting the next supply chain failure is an impossible task – the hard drive shortages caused by flooding in Thailand, automotive anxieties driven by the Fukushima earthquake and tsunami, and the horsemeat scandal across Europe show the diversity of potential events – but preventing it, or at the very least being prepared for it, is the least an organisation can do.

  • Steve Fowler FIRM is the chief executive of the Institute of Risk Management (IRM)