Interview: Legislative Compliance Requires Carrots and Watchdogs

Photo: Sharing Value Asia

Legislation governing corporate and social engagement initiatives is gaining notable international attention. While it has not been widely tabled or promulgated, discussion on its application and relevance is growing.

Following the 2013 Rana Plaza collapse in Bangladesh, the global garment industry was compelled to expand and strengthen its regulatory frameworks and standards. To date, proposed commitments made in the aftermath of the incident that killed 1,129 have fallen short of original recommendations.

The issue of how to develop inclusive legislation and ensure compliance remains unresolved.

In the first of an ongoing series of short interviews ahead of the Summit 2015, SharingValueAsia spoke with its 2014 alumni, ActionAid Bangladesh’s Country Director, Farah Kabir, on the role that legislation can play in partnership and strategy looking through the prism of Bangladesh’s own experience.

QUESTION 1: Who would benefit from the enactment of appropriate legislation? Can the creation of Shared Value, or indeed any social engagement, be adequately legislated? 

National legislation is the key to effective implementation given that international laws and guidelines are, ultimately, reliant upon national authorities for enactment and enforcement. Legislation gives government the power to act and therefore adequate, revised, relevant legislation benefits all parties – if it is enacted and complied with.

We encourage voluntary actions and social engagement, but this is, by definition, not binding and is dependent on volunteerism and the companies’ willingness to participate. While voluntary participation is the bedrock of any successful programme, it is also the inherent limitation of social engagement and shared value.

From where we sit I see that there should be adherence to local laws, clear-cut labour standards and fair wages – that is the shared value that companies should be contributing.

QUESTION 2: If legislation is to be supportive and conducive, what should it address?

Legislation has to be for all parties, private and public, and there must be mechanisms to make all parties accountable, but it cannot be reliant upon top-down implementation.

Legislation’s central purpose must be to address the entire value chain, not individual components, while providing support and protection that encourages the industry to grow. This requires a comprehensive and holistic approach, but there must also be a well-defined competitive angle at the heart of any legislative plan.

Competitive advantages have been used to bring big businesses to Bangladesh with great success, but this has in turn also created a certain degree of impunity, particularly within the garment industry. Yet the reality of today’s global economy is that its inter-dependent nature provides sufficient ground and leverage to negotiate businesses’ operational policies and to ensure that standards are both realistically set and enforced.

As companies in the global south now rise, this is the opportune moment to ensure that we have ‘the conversation’ and that companies start operations with the premise of providing better working conditions and looking after the welfare of their workers.

Such action will go a long way to building trust between the various parties, which is critical. While the problems I have seen are due to a range of issues, including ingrained social prejudice, a lack of enforcement and token gestures, trust remains a core issue. Both sides, companies and workers, expect to be exploited by the other – The manufacturer believes that workers will try and take advantage if companies are understanding, and workers come with the premise that they will be exploited by the company.

Trust, good practices and the highlighting of best practice and role model companies will go a long way to strengthening industry relations. But none of this is possible without government intervention, watch dogs and customers to make more informed decisions on which brands they support.

QUESTION 3: What are the viable alternatives to legislation? Has self-regulation proved sufficient, necessary, or even relevant to this debate?

The only viable alternative has proven to be social awareness and raising civil society movements, but it is the regulatory framework that is most crucial at the end of the day and that is the responsibility of the government and state. There is no by-passing that. Without state involvement, every initiative or programme will have inherent problems. A legislative framework is needed and I don’t think we need to look for alternatives to legislation.

What we do need to do is focus on the enactment of legislation, implementation and compliance. If there are failings in this, the key question is what can be done. Responses do not need to be punitive, but should be encouraging and motivating, without tolerating impunity. Recognition and reward are immensely powerful motivators. In Bangladesh this has been demonstrated by the government’s tax fair that recognises those who have paid their income tax and awarded prizes for those doing so. People are now queuing up to pay their taxes!

QUESTION 4: Does legislation arguably support innovation, or could it create a race to the bottom in terms of baseline compliance?

Legislative frameworks can arguably precipitate a race to the bottom if operational costs are the principal consideration – which is a scary scenario in a country with 30% living below the poverty line – but it is typically entrenched mind-sets and deliberate non-compliance that create bottlenecks to effective legislation.

Companies must be far more conscious of the rights of their workers, particularly of women. If they do so their returns will not be diminished, nor will their profits be compromised – indeed it shall add to the security of their production capacity.

Indeed, we have seen that legislation is no barrier to innovation, which is more than capable of existing in legislated environments and to argue otherwise is quite false. For example, Dr Mohammed Yunis’ campaign to promote social entrepreneurship amongst Asia’s youth is proving just how successful and prolific innovation can be when today’s youth are provided an arena to create employment for themselves.

  • The interview was originally published by SharingValueAsia. Farah Kabir is Country Director for ActionAid Bangladesh. Follow her on Twitter at @Kabirfarah