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VF Corporation Helping Fund Safety Improvements in Bangladeshi Factories

Image credit: Workers Rights Consortium

VF Corporation — parent company of The North FaceTimberland, Vans,WranglerLee and Nautica — and IFC, a member of the World Bank Group, this week announced they have provided loans to three Bangladeshi garment factories under a new program for funding fire and building safety improvements.

Through the financing arrangement, VF provides a full corporate guarantee for up to $10 million that the IFC and its partner, BRAC Bank, lend to VF’s contract suppliers. VF’s guarantee to back the loans makes it possible for IFC to lend at lower interest rates. This initiative helps VF suppliers in Bangladesh overcome financial obstacles to improving workplace safety conditions.

“Providing these loans to help supplier factories fund the necessary improvements is another positive step forward in VF’s efforts to ensure the safety of the people making our products in Bangladesh,” said Tom Glaser, VF’s President of Supply Chain.

The financing structure from VF and IFC helps enable factory owners to meet the stringent standards set forth by the Alliance for Bangladesh Worker Safety, an industry group of international apparel manufacturers and buyers whose work includes the inspection of Bangladeshi garment factories and development of corrective action plans for meeting acceptable standards. VF is one of 26 Alliance members.

IFC disbursed an initial set of loan payments, totaling $1.3 million, to three factory owners — Arunima Sportswear Ltd; Olio Apparels Ltd; and Radisson Apparel Ltd — who will use the capital to invest in safety upgrades such as the installation of fire sprinklers, fire doors and detection systems, along with other necessary repairs and safety precautions.

“The apparel industry has provided employment and reduced poverty for millions of people in Bangladesh,” said Sergio Pimenta, IFC Director for Manufacturing, Agribusiness and Services. “This financing model, which we think could work well for other buyers and suppliers, will help improve work conditions and facilitate growth and development.”

VF and IFC are granting loans to VF’s supplier factories in the range of $100,000 to $1 million. The lending program is part of VF’s efforts to help suppliers achieve performance standards for assessing and managing environmental and social risks and impacts, and labor and working conditions.

Speaking of improving supply chains, last month The North Face released its Backyard Hoodie, which was sourced and manufactured within 150 miles of the company’s headquarters in Alameda, California. Through collaborations with Fibershed, the Sustainable Cotton Project and Foxfibre, the company says local sourcing of cotton and skilled labor for the hoodie yielded multiple environmental, economic and health benefits. 

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