Landmark Danish NCP conclusion on menswear chain owner – but what now?

This week the Danish National Contact Point for the OECD guidelines on multinational enterprises cast a damning light on Scandinavian company PWT Group for its failure to adequately assess dangers linked to the collapse of the Rana Plaza building in Dhaka, Bangladesh, on 24 April 2013, killing 1,138 people and injuring more than 2,000 others.

While this landmark review of a complaint against PWT Group, owner of two leading menswear brands Tøjeksperten and Wagner, rightly condemns flawed practices, the full weight of its conclusion will only be felt if long lasting corporate change is secured.

The building collapse sparked an ongoing battle in which survivors have called for PWT Group, among many other global companies, to provide compensation to former workers who continue to suffer from life-changing injuries, psychological trauma, and a loss of income.

PWT Group is well known for its menswear chains, including Tøjeksperten and Wagner, and boasts 175 stores in Denmark, Norway and Sweden.

Clean Clothes Campaign Danmark, a network organisation that works to improve the conditions for garment workers in developing countries, brought the complaint against PWT Group in relation to its supplier, the textile manufacturer New Wave Style Ltd which operated in the Rana Plaza building.

The OECD Guidelines for Multinational Enterprises are non-binding standards for responsible business conduct. National Contact Points (NCPs) are tasked with the job of resolving complaints arising from alleged breaches. Since its inception in 1976, 46 states have adopted the guidelines and many others have agreed to adhere to the principles outlined by the OECD.

Following a review of the available evidence, the Danish NCP found that PWT Group had “violated the OECD Guidelines for Multinational Enterprises by failing to carry out due diligence in relation to its supplier”.

PWT through its relationship with New Style was responsible for monitoring its supplier’s employment standards to ensure its operations complied with international human and labour rights standards. Yet the Danish NCP found that the process for monitoring health and safety procedures was inadequate.

While the review has called for a more robust and systematic approach to health and safety assessments and a follow up report by PWT Group to evidence internal reforms, what is crucial is the need to compel changes to corporate practice through a range of measures.

A key concern raised by Clean Clothes Campaign was that PWT Group denied urgently needed compensation to help the victims of the accident by not paying funds to the Rana Plaza Donors Trust Fund. However, this was rejected by the NCP on the basis that it can only “assess and comment on the extent to which there is a violation of the OECD Guidelines” and “cannot impose liability or sanctions on companies”.

The NCP system sheds light on instances of malpractice, but it has to be underpinned with mandatory standard and legal accountability. Justice for victims is essential when companies fail to respect human rights and labour rights. There needs to be effective reparations for victims of corporate negligence and abuse, and if needed a criminal prosecution should be considered as a means to punish reckless practices and to offer a warning to other businesses who threaten the lives of workers.

Central to any reform is the need for a culture of learning and a stronger commitment to safeguarding the lives of workers who are often vulnerable, disenfranchised and voiceless in the face of such abuses.