Fire at Illegal Garment Factory Highlights Necessity of Due Diligence

Fire at Illegal Garment Factory Highlights Necessity of Due Diligence

Last week, another major accident at an illegal garment factory in South Asia made headline news.

In the New Delhi suburb of Ghaziabad, India, a workshop fire took the lives of 13 workers and injured nine others. According to local police, the Ghaziabad fire broke out in the early hours of the morning while some of the workers were sleeping in the factory. While authorities continue to investigate the incident, locals say the workshop was being operated illegally with little regard for safety regulations or labor standards.

The fire shines an unforgiving spotlight on South Asia’s garment industry and the global companies leveraging the cheap labor it offers. The industry’s poor human rights record is a concern for many companies, whose executives are considering how their supply chains – and their reputations – could become compromised through their relationships with these factories.

A Recurring Theme

This incident was certainly not the first of its kind. The media has been flooded over the last five years with reports of fires, explosions and structural failures at factories in the region. Prominent examples include a fire triggered by a boiler explosion at a packaging factory in Dhaka, Bangladesh, which killed 25 people, and a factory fire in 2012 (also in Dhaka) which killed at least 111. Just six months later, the now-infamous Rana Plaza tragedy took the lives of 1,138.

Following the Rana Plaza collapse, the families of the deceased brought forth stories of how the workers had noticed large, new cracks in the building that same morning, yet were threatened with salary stoppages if they refused to work.

It later became clear many of the companies involved, that had sourced from the factory, required increased measures of due diligence as they had little knowledge of where their products came from, the condition of the factory and the risks associated with these conditions. J. C. Penney, which sourced some of its clothing from the Plaza through the Joe Fresh brand, made this clear when they announced they “had no insight into the development and sourcing of Joe Fresh apparel produced in Rana Plaza…”

In all of these cases, the factories were said to display little concern for safety regulations or proper working conditions. In addition, the factories were accused of employing poorly paid, often trafficked workers in conditions that have been deemed ‘modern slavery.’

Legal Developments and Penalties

These incidents triggered international action. As pressure mounted from media and consumers, American and European lawmakers saw the need to monitor and regulate corporate supply chains to ensure compliance with global human rights benchmarks. Similarly, companies also saw the need to proactively address the possibility of a compromising publicity situation.

Today, the UK Modern Slavery Act (2015) and The California Transparency in Supply Chains Act (2012) require companies to disclose the efforts they are making, if any, to address human trafficking and modern slavery in their supply chains and direct operations.

Since coming into effect, severe non-compliance penalties have been handed out to prominent companies, including $34 million awarded to Indian workers in 2016 as part of a labor trafficking lawsuit against Signal International.

No Room for Ignorance

While many companies concede they aren’t fully aware of possible regulatory breaches in their supply chains, ignorance is not bliss.

Incidents like the recent fire at the Ghaziabad factory highlight the risks companies face when sourcing from this region, and reinforces the need for robust due diligence practices throughout the supply chain. Failing to do so places them at reputational and financial risk, as they may face fines, legal actions and lose access to regulated markets.

As the compliance industry’s leading provider of anti-human trafficking and modern slavery solutions, Assent Compliance can help compliance specialists to efficiently meet their regulatory and due diligence requirements. Assent’s Anti-Human Trafficking Module leverages the industry-standard Human Trafficking Risk Template to collect vital information from the supply chain. This data can then be used to identify risks and allow companies to take appropriate mitigating activities.

Operating in harmony with the wider Assent Compliance Platform, our Anti-Human Trafficking Module allows companies to manage their anti-trafficking and modern slavery program on the same platform as their other compliance programs, including materials management and ethical sourcing initiatives. With Assent’s help, companies can take steps to ensure incidents like this one do not occur within their supply chains, thereby protecting their brand and preserving access to regulated markets.

For more information on the Anti-Human Trafficking Module, or to discuss how you can proactively take the risk out of your supply chain, get in touch with our experts today at info@assentcompliance.com.

Are you in scope of anti-human trafficking and modern slavery regulations? Download our Anti-Human Trafficking Scoping Guide today and find out.

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