Italian fashion retailer Benetton announced yesterday that it would pay $1.1 million into an international fund to compensate victims of the Rana Plaza factory collapse in Bangladesh two years ago in which 1,138 people died.
Benetton, which initially denied using any firms located in the nine-storey factory complex which workers and local journalists had warned was unsafe before it collapsed with thousands of people inside, said it was donating double the amount advised by experts.
"We have decided to go further to demonstrate very clearly how deeply we care," Benetton Group chief executive Marco Airoldi said in a statement.
Benetton commissioned experts at consulting firm PwC to estimate how much it should contribute to an international compensation fund based on the level of its commercial association with the Rana Plaza, which collapsed on April 24, 2013.
Benetton said the experts, using a report prepared by the UN's International Labour Organisation (ILO), concluded it should contribute $500,000 of the $30 million the Rana Plaza Trust Fund is seeking to raise.
"Whilst there is no real redress for the tragic loss of life we hope that this robust and clear mechanism for calculating compensation could be used more widely," said Airoldi, adding it was making PwC report publicly available to all stakeholders.
Benetton said the contribution would take its total to $1.6 million as it also helped the victims via its own support programme in partnership with the Bangladeshi non-governmental organisation BRAC.
The payment follows more than a million people signing a petition on the campaigning website Avaaz urging Benetton to contribute to the compensation fund that was put into place eight months after the disaster.
"Benetton is not giving nearly enough to ease the death and suffering their clothes have caused, but a million people forced them to reverse two years of refusing to pay any compensation," Avaaz's Campaign Director Dalia Hashad said in a statement.
"This sets a precedent for global brands everywhere: when workers die, you cannot walk away. All eyes are now on holdout companies like Carrefour, JC Penney, Walmart, and The Children's Place to step up and fill the funding gap so all victims get what they need and deserve," she added.
However, PwC has not factored in contributions from other third parties, such as the Bangladesh government and the Bangladesh Garment Manufacturers Exporters Association, unions and others. This means that, if its mechanism were followed by all brands operating at the Rana Plaza, after payments from other third parties the total fund could significantly exceed $30 million.
"Based on Benetton's commercial association with Rana Plaza, we believe this is a fair basis to calculate payments to the Rana Plaza Trust Fund as quantified by ILO," said Sudhir Singh Dungarpur, Partner PwC India.
Benetton was one of the first signatories of the Accord on Fire and Building Safety, which has improved factory safety in Bangladesh in the wake of the Rana Plaza disaster.
Now, in addition to applying the Accord globally, the company plans to work with its suppliers to raise workers' living standards.
The Rana Plaza Trust Fund, organised by the ILO, has raised $21 million to date but needs another $9 million to meet its compensation commitments.