Institutional investors and shareholders with more than $2.5trn in assets under management are adding pressure to retailers sourcing clothing from Bangladesh to implement a number of reforms, including signing up to the new Accord on Fire and Building Safety.
The move, according to Mike Flanagan, CEO of Clothesource, "might be the biggest single change in the dynamics of our industry since garments first started being made in foreign countries".
He continues: "Most hard evidence is that consumers do not allow ethical issues to influence the garments they buy very much - and that recent disasters have not deterred commercial buyers from sourcing in Bangladesh.
"But constant pressure from real institutional shareholders - with $2.5trn of funds that now might not invest in companies with bad safety records in overseas garment factories - is another thing."
More than 40 - predominantly European - retail brands have now signed the pact that was rolled out last week, after a series of deadly accidents at Bangladeshi factories killed more than 1,500 workers.
But US retailers such as Gap and Walmart say they will ramp up their own safety plans instead, and a coalition of North American retailers is also taking separate steps with a new Safer Factories Initiative aimed at improving worker safety in Bangladesh and around the world.
However, two groups of investors have expressed their concerns at US retailers who have refused to sign the Bangladesh safety accord.
In what is thought to be the first major investor statement on recent events in Bangladesh, investors with a combined US$1.35 trillion in assets and assets under management said they "expect companies in our portfolios to ensure the integrity of their supply chains." They singled out Walmart and Gap, urging them to act "swiftly and effectively."
Coordinated by Amalgamated Bank Longview Funds, they said: "We are dismayed by public statements from any company that states it is unaware that a factory produces its products.
"Companies must know which factories produce their goods in order to properly manage a complex global supply chain, including being effective at monitoring safety and other compliance risks at the facilities.
"Companies must also actively ensure compliance. It is not sufficient to place the onus for compliance on suppliers alone while pricing systems actively undercut requisite investment in infrastructure or encourage covert subcontracting.
"We expect portfolio companies to pursue cooperative relationships with suppliers that enable compliance and promote stable production."
Separately, a coalition of more than 160 investors coordinated by the Interfaith Center on Corporate Responsibility (ICCR) say they want to see "systemic reforms that will ensure worker safety and welfare, and to adopt zero-tolerance policies on global supply-chain abuses."
Specifically, the investors are calling on companies to commit to strengthening local trade unions, publicly disclose all of their suppliers and divulge the health and safety programmes they have in place, as well as their progress in meeting health and safety objectives.
They also call on companies to ensure a living wage for workers, to make sure their suppliers have the means in place to address worker grievances and to join the Accord on Fire and Building Safety.
