TORONTO (Reuters) - Loblaw Cos Ltd (L.TO), Canada’s largest grocer, will continue to produce clothing in Bangladesh after a deadly textile factory collapse on April 24, but promised to improve the facilities it uses there, Executive Chairman Galen Weston said on Thursday.
“I am deeply troubled. I am troubled that despite a clear commitment to the highest standards of ethical sourcing, our company can still be part of such an unspeakable tragedy,” Weston told reporters ahead of an annual meeting of Loblaw, the company behind the discount clothing brand, Joe Fresh.
More than 400 factory workers were killed after an illegally built building, Rana Plaza, which housed several garment factories, collapsed last week in Savar, a commercial suburb of Dhaka, Bangladesh.
Some of Loblaw’s Joe Fresh apparel was made in Rana Plaza.
Ahead of the building’s collapse, Walt Disney Co (DIS.N) said in March it would no longer allow its branded products to be made in five countries, including Bangladesh, in an effort to ensure production in safe conditions.
Loblaw said it would remain in Bangladesh because well-run factories can help lift people out of poverty in developing countries. The company said it currently produces in 47 facilities in Bangladesh.
“I believe we can do more good and drive lasting change by staying in Bangladesh, and we are committed to doing that,” said Joe Mimran, the designer behind the popular Joe Fresh brand.
Loblaw promised to start a relief fund for victims and their families and said it expected other apparel manufacturers to contribute to the fund.
The company will add “building integrity” into its audits of contractor facilities and put Loblaw workers on the ground to ensure local building codes are adhered to, and that suitable conditions are maintained.
Loblaw said four senior executives would travel to Bangladesh next week to meet with government and labor officials.
Weston repeated his contrite message to shareholders at the meeting, even as company representatives made a concerted effort to keep reporters from speaking with investors, saying they didn’t want to be bothered.
Still, Brenda Mallouk, a university professor who owns some Loblaw shares, expressed disappointment at the company’s failure to address broader aspects of the outsourced apparel trade.
“Notice that they are not even talking about conditions under which they work. It’s just the building structure they’re talking about, not the fact that they’re all piled into one room. They’re not even talking about the hours,” she said.
“I’d like to know what’s going on behind the curtains. This is the right thing to say, but are they saying and not doing?”
Anti-poverty groups urged companies using cheap workers in developing countries to look beyond unsafe buildings.
“Canadian companies can start with building codes, but must also look at other human rights issues including wages, health and the exploitation of children,” said Dave Toycen, who heads World Vision Canada.
Weston, whose father was ranked as Canada’s second-richest man by Canadian Business magazine, said he was troubled by the “deafening silence” of other apparel retailers. He noted that as many as thirty international apparel brands had goods manufactured in the building.
Loblaw shares were up 4 percent at C$46.55 in afternoon trading on the Toronto Stock Exchange.
Editing by Jeffrey Hodgson, David Gregorio and Bernadette Baum