**London**: Recent developments at the SEC regarding a climate disclosure rule, alongside serious human rights issues in Bangladesh’s garment industry, underscore the global challenges facing corporate governance and the pressing need for ethical practices across international supply chains.
The recent developments at the US Securities and Exchange Commission (SEC) and the ongoing human rights issues in Bangladesh’s garment industry highlight significant challenges in corporate governance and ethical practices across the globe.
Mark Uyeda, the acting head of the SEC, has made the decision to suspend the commission’s legal defence of a crucial climate disclosure rule that was established last year. This rule mandates that companies publicly report their climate-related risks. Introduced in March 2023, the rule’s implementation has faced postponements due to legal challenges from various business groups and state officials, resulting in a contentious legal landscape. Uyeda, who was appointed by former President Donald Trump following the resignation of Gary Gensler, stated that he intends to inform the court to refrain from scheduling arguments in the case. He remarked, “The rule is deeply flawed and could inflict significant harm on the capital markets and our economy,” indicating his departure from the previous SEC administration’s stance on the issue.
Shifting focus to Bangladesh, the country is confronting pressing human rights concerns that are intertwined with the operations of its significant garment industry, which stands as the second-largest exporter of apparel globally, following China. A joint study conducted by the University of Nottingham, the Bangladesh Labour Foundation, and Goodweave International sheds light on the conditions within Bangladeshi factories since the catastrophic Rana Plaza collapse in 2013, which resulted in 1,138 deaths.
While there have been some improvements in safety standards—evident in the fact that 90 per cent of the 1,974 workers surveyed reported the presence of safety committees—the research also unveiled troubling statistics regarding labour rights violations. Approximately one-third of workers indicated they earned less than the legal minimum wage. Alarmingly, a similar portion reported exceeding the legal maximum working hours of 60 per week, while minors engaged in more hours than legally permitted. Additionally, more than half of the workers expressed experiencing threats or verbal abuse in the workplace.
The research emphasised that subcontractors—who supply larger exporters—exhibit significantly worse conditions, indicating that while some progress has been made at direct suppliers, the same cannot be said for the wider supply chain. Nearly all workers at subcontracting facilities reported below-minimum wages, and incidents of excessive working hours were prevalent.
The authors of the study recommended improved tracing of supply chains and suggested that clothing firms should collaborate with non-profits to enhance transparency concerning indirect suppliers. With recent European Union regulations mandating tougher penalties for companies failing to manage risks related to their supply chains, there is renewed pressure on international clothing retailers to tackle these challenges.
However, the competitive nature of Bangladesh’s garment export market complicates matters. The country has seen a decline in market share due to heightened competition from other Asian nations, and additional production costs could negatively impact its position. The researchers posited that many of the abuses stem from time pressures imposed by foreign customers seeking quick turnaround times without adequate compensation for higher labour costs.
As international clothing brands grapple with pressure from consumers and ethical expectations, the sustainability of their business models is under scrutiny. The extent to which these companies opt to advocate for suppliers and improve conditions could significantly impact both their reputational standing and the economic landscape in Bangladesh.
Source: Noah Wire Services
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