Perpetrating Silence

Since the disaster in Bangladesh that claimed 1,127 lives, analysts have tossed blame around various parties, including (in no particular order) the owner of the Rana Plaza factory building, local government, the multiple subcontracted firms that operated within the building, and Western retailers. Others contend that it is the stinginess of consumers¹ that drives the neglect found in factories like the one in Rana Plaza, which have been caught in a spree² of fatal disasters throughout the country. In fact, just six days ago a fire in a Dhaka sweater factory killed the owner and seven workers.

My intention here is not to deny that any or all of these parties maintain some degree of responsibility. Rather, it is to bring attention to a largely undiscussed perpetrator of irresponsibility in this catastrophe: corporate shareholders. Right or wrong, corporations maintain that they are driven to subcontracting--even with unreliable companies--in order to meet their fiduciary responsibility to shareholders.  Shareholders hold a considerable amount of power, whether they know it or not, as they are invited to participate in annual meetings where many corporate policy decisions are made. Additionally, they hold the right to draft resolutions for consideration.

Given that resolutions may be of fiduciary consequence for other shareholders (for example, divestment as a product of failed or passed policy), they should be treated with the same concern for fiduciary responsibility as those policy decisions that come from executives. Indeed, although many European garment retailers have agreed to a binding accord mandating that they improve and contribute financial resources to the improvement of workplace safety, American retailers (The Gap and Walmart, though The Gap is spearheading the resistance) have refused, hiding behind their conflicting conception of fiduciary responsibility. As if public shaming does not threaten their ability to profit. And shareholders, though they possess the potential to form a critical mass in decision-making, are often ignorant of, or indifferent to their opportunities and responsibilities to motivate changes. Frequently shareholders assume that their only role as an investor is as a collector of returns on purchases of shares. But investors can--and should--also see themselves as members of a community whose decisions reflect not only their individual interests, but their integrity as well.

Unfortunately, accountability is much harder to achieve. The well-crafted art of "plausible deniability" makes prosecution of responsible parties challenging--perhaps, given the politics of business, impossible. But this is no reason to throw in the towel on labor rights. These disasters themselves are not inevitable, even under the present circumstances. Correcting the problems just requires different actors to assume stewardship roles. For shareholders, this is not a role that is earned, but one acquired in tandem with the purchase  or acquisition shares.

It's time for shareholders to realize that as partial owners of these corporations, they too have a responsibility to ensure that their companies meet--if not surpass--the basic rights of the laborers they employ, no matter what country.

¹ Interestingly, NPR's Marketplace offers the view that "Ultimately, the pressure driving the cut throat competition for cheaper clothing comes from one place," citing Stanford University professor of Economics Nicholas Bloom: “American consumers want to buy clothes for low cost...Companies -- even big ones like Walmart or Target “are just rats in a maze. We are the maze." For a critical look at this proposition...stay tuned.

² According to an article published by Human Rights Watch, "The Rana building collapse is the latest in a long list of factory building tragedies in Bangladesh, Human Rights Watch said. In April 2005, 73 garment workers died in a factory collapse in Savar. In February 2006, 18 workers were killed in a garment factory collapse in Dhaka. In June 2010, 25 people were killed in a building collapse in Dhaka. In November 2012, more than 100 workers died in a fire at a factory in Dhaka."