Reference no: EM133092825

In April 2013, Rana Plaza, a Bangladesh textile, and garment facility that manufactured clothes for major European and North American brands (e.g., H & M, Gap, Zara), collapsed killing 1,138 employees and seriously injuring 2,500 others. In the aftermath, the Bangladeshi government reported that Rana Plaza was in violation of many building codes, including the fact that the upper four stories of the 8-story facility were built illegally without permits. Additionally, there were structural issues and many employees had reported seeing large cracks on walls days before the collapse.

After the collapse, companies did not readily want to admit to sourcing their products to Rana Plaza. However, Galen Weston, then Chairman of Loblaw Companies Limited, publicly acknowledged that Rana Plaza manufactured the Joe Fresh line of clothes for Loblaws. In a statement, he noted: "I'm shaken by the events that took place in Bangladesh last week. I'm troubled that despite a clear commitment to the highest standards of ethical sourcing, our company can still be a part of such as unspeakable tragedy."

Previously, Loblaws had conducted supply chain audits that examined working conditions, but never thought to examine the structural integrity of the buildings in which the garment workers worked. After the collapse, Weston committed Loblaws to undertake more extensive audits of supply chain partners, and the company donated over $4 million to a victims' compensation fund created by the International Labour Organization. Loblaws was the largest Canadian donor.

However, in 2016, a class action lawsuit was filed on behalf of the Rana Plaza victims against Loblaws and Bureau Veritas, the company that Loblaws hired to audit global suppliers. A lawyer for the plaintiffs, Joel P. Rochon, noted:

"This is an important suit for garment workers in developing countries who have the right to work in safe environments that are not a threat to their lives. Western corporations which seek to benefit from the low cost of labour in countries with notoriously poor records for workplace health and safety must be held accountable when the workers that produce their products are exposed to unnecessary risks and are injured or die as a result of unsafe working conditions."

Do large companies such as Loblaws have an ethical responsibility to ensure that factories in their supply chain comply with local occupational health and safety laws? According to which moral theory and CSR theory to answer? In addition to global companies, explain whether other stakeholder groups can play a role in improving labor conditions in the supply chain. If so, how to identify specific stakeholder groups?