Disney, the world's largest entertainment company, removed Bangladesh in March from a list of countries where it authorizes partners to produce clothing and merchandise, according to a letter to licensees released Thursday. Belarus, Ecuador, Pakistan and Venezuela were also taken off the list, which cut the number of acceptable nations to 172 from 215, Disney said.
While Disney's contractors had less than 1 percent of the company's production in Bangladesh, marketers with more activity there will have to decide whether to stay and spend to improve worker safety or go elsewhere and potentially see the costs of their products rise even more. They need to make the calculation as they assess the risk to their brand names.
"There is a move afoot for companies to say clearly, 'We need to be part of bigger oversight procedures,'" Cory Krupp, an associate professor at Duke University's Sanford School of Public Policy, said in a phone interview. "The other way is just to move to Vietnam or Cambodia where they have better standards and the government is better at upholding them, and Bangladesh is going to learn the hard way."
Disney, based in Burbank, Calif., asked licensees making its goods in Bangladesh and the other barred countries to end production in those places by March 2014. Safety standards in Bangladesh have been in the spotlight after accidents including an April 24 building collapse in Savar that killed at least 501 people and a November factory fire that claimed 112. Disney said its products weren't made at either site.
"If your footprint is low and you make the calculus and there are other places where you have more leverage and can make improvements, that's a sound approach," said David Schilling, senior program director at the Interfaith Center on Corporate Responsibility.
The head of Disney's consumer products division, in a statement Thursday, said there's no easy answer.
"These are complicated global issues and there is no 'one size fits all' solution," said Bob Chapek, president of the division. "Disney is a publicly held company accountable to its shareholders and after much thought and discussion we felt this was the most responsible way to manage the challenges associated with our supply chain."
The Interfaith Center's approach historically been to stay and work to improve health and safety standards, Schilling said in an interview. His New York-based group has worked with Disney and other companies on safety standards.
Wal-Mart Stores and J.C. Penney were among retailers sending representatives to a meeting near Frankfurt this week to discuss cooperating to improve worker safety in Bangladesh following that nation's biggest industrial disaster.
The talks, organized by Germany's international cooperation service known as GIZ, were aimed at winning support from the companies, labor unions and non-governmental groups for Bangladesh's national action plan and for supplier assessments of fire and building risk, said Peter McAllister, a director of the Ethical Trading Initiative, who attended.
The discussions were also aimed at winning backing for remediation programs to make buildings safer, McAllister said. The European Union, the country's largest trading partner, has said it may apply sanctions in the wake of the disaster.
"There will be a strong call for as many brands as we can, who source in Bangladesh, to get behind" the call for higher safety standards, McAllister said.
Rupp reported from New York.
MORE HBJ HEADLINES
Profits plunge at major U.S. oil companies U.S. rig count drops 11 this week to 420, another all-time low There’s rare good news on the retirement front Canadian dollar rises above 80 cents U.S. mark OPEC oil output surges as Iran looks to regain market share U.S. wage increases subdued in first quarter