The Walt Disney Company’s decision to not allow sourcing in Bangladesh was an appropriate response to a lack of governmental labor enforcement that has manifested itself in a lengthy series of tragedies, including a fire that took the lives of over 100 workers in November and last week’s building collapse that killed more than 400 workers.
Disney permits licensing of its name and characters for production in more than 170 countries, with a range of social, environmental and economic performance. The company states it is simultaneously looking to reduce risk to its valuable brand and focus its efforts where it can improve working conditions. Its limited economic activity in Bangladesh may have afforded little leverage with factory management. Disney chose instead to exercise the significant leverage of its global brand, by publicly withdrawing and sending a clear message to the Bangladesh government to implement the International Labor Organization's Better Work program.
Bangladesh presents a series of systemic problems from low wages to safety, as well as a history of unreported subcontracting that can make it very difficult for brands to ensure acceptable working conditions, or even know where their products are made.
Companies can choose to stay and make the difficult, long-term commitments that will be needed to benefit workers, or they can make a noisy exit, as Disney has. Both courses of action are responsible, and both can be effective. Disney's public departure may, however, in the end, have more impact than its monitoring efforts, had they allowed their licensees to stay.
I applaud those companies that are committed to making a difference in Bangladesh, but when a company’s leverage and economic commitment is minimal, I don’t expect them to stay and suffer the reputational harm resulting from repeated tragedies that are outside their control. I expect them to publicly declare that "enough is enough," and set conditions for their return.
All companies should establish a rigorous and transparent country selection process, backed by meaningful human rights due diligence. They should enter these countries with a commitment to improving conditions by working with all affected stakeholders and, perhaps most important, by strengthening local trade unions. If they simply place orders without that degree of commitment, however, they risk making conditions worse and suffering the ire of their consumers and shareholders.