Walmart will not join a growing group of European retailers in a deal to improve factory safety in Bangladesh because it does not want to agree to the dispute resolution mechanisms it contains.
But Walmart, the world’s biggest retailer by sales, said on Tuesday that it was “not in a position to sign the . . . accord at this time” and announced its own safety plan instead. It said it would reconsider its position on the broader deal if its concerns were addressed.
Its announcement came on the eve of a sign-up deadline set by the deal’s creators and less than a month after the collapse of a building that killed more than 1,100 people close to Dhaka, the worst disaster in the history of the garment industry.
Walmart said it agreed with much of the proposal, but expressed reservations about requirements including “governance and dispute resolution mechanisms” that it said were “unnecessary to achieve fire and safety goals”.
Many retailers have been reluctant to sign similar agreements in the past because they do not want to be held accountable for their safety records – and face uncertain consequences for failures – by labour activists and other outside groups.
Asked if Walmart was averse to a legally binding agreement, the company told the Financial Times: “We think it’s best to focus on urgent worker safety issues.”
The agreement, drafted by Industriall and the UNI Global Union, is enforceable through arbitration and, if necessary, the courts.
It requires companies buying clothes from factories in Bangladesh to commission independent safety inspections and pay for building repairs.
At the same time on Tuesday Walmart announced its own safety reform plan, which it said met or exceeded the plan signed by its European peers and would “get results more quickly”.
It included some pledges made in January following a fatal factory fire in Bangladesh last year, but Walmart said that within six months it would conduct safety inspections of all 279 factories that produced goods for it and publish the results.
It said it expected the cost of repairs and safety investments “to be appropriately reflected in its costs of goods purchased”.
“As a result, workers in these facilities can be assured of safer working conditions, and the entire market will be lifted to a new standard,” it said. It also published a list of factories already banned from producing for Walmart.
Walmart’s plan does not include a mechanism through which it can be held accountable for its performance. “Transparency is the ultimate accountability mechanism,” it said.
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