How Benetton faced up to the aftermath of Rana Plaza

Benetton is renowned for visually striking and provocative ad­verts focusing on social causes such as HIV/Aids or race relations. But in February the Italian apparel company became the target of a campaign that pointedly imitated the multicultural style of its United Colors of Benetton marketing.

The billboard - mounted on a van and driven round Treviso, home of Benetton's global headquarters, for several days - was the handiwork of activists dismayed by its failure to pay into a compensation fund for victims of the collapse of the Rana Plaza garment factory building in Bangladesh in 2013.

"Benetton: show your true colours," demanded the slogan. The photograph on the billboard was of a Bangladeshi woman on a stretcher, four days after being rescued from the rubble of the building on the outskirts of Dhaka, the Bangladesh capital. More than 1,100 people were killed in the collapse, the worst industrial accident ever to hit the garment industry, and nearly 2,400 were injured, many severely.

Marco Airoldi, the former Boston Con­sulting Group partner who took charge as Benetton's chief executive in May 2014, just over a year after the disaster, concedes that the activists' campaign was "a bit of a kick". Waged at some of Benetton's European stores and on social media, as well as on the streets of Treviso, it drove home the need for the Italian company to deal with unfinished business connected to Rana Plaza, from which it sourced about 266,000 shirts in the six months before the tragedy.

Now Mr Airoldi hopes Benetton is closing a chapter in the story with its move last week to pay $1.1m into The Rana Plaza Trust Fund, just ahead of the second anniversary of the disaster on Friday. The fund was set up under the International Labour Organisation, the UN agency that deals with labour issues, to raise money to compensate families of those killed in the disaster, and the injured and traumatised survivors, for lost earnings and medical expenses.

In the immediate aftermath of the tragedy, Benetton had paid $500,000 to BRAC, a respected Bangladeshi non-governmental organisation, to help victims access urgent medical care and longer-term support.

Benetton's $1.1m announcement fell short of the $5m western labour unions and social activists had hoped it would pay given Benetton's image as a socially conscious brand. But Mr Airoldi insists it has fulfilled its responsibility.

"We are now ready to move to something else," he says, in an interview in New Delhi. "Does it mean the is­sue of the Rana Plaza fund is closed? No. But I think it is closed as far as Benetton is concerned. We not only did what a brand like ours was expected to do. But I think we did more."

Yet in its evolving response over the past two years, Benetton has often seemed caught between its professed humanitarian ideals, and the cold calculations of an organisation struggling to overhaul itself to compete more effectively with newer, nimbler rivals.

"They have the brand that says, 'We really believe in a better world'," says Dalia Hashad, an activist with Avaaz, the web-based activist group behind the "show your true colours" campaign. "This was an opportunity for them to step up and show us that they really live the principles that they push publicly."

The eight-storey Rana Plaza housed five factories making shirts, trousers and leggings for nearly 30 western ret­ailers and brands, including Primark, Loblaw, Walmart, Mango and The Children's Place. It collapsed on April 24, 2013, after big cracks developed the day before. Officials had ordered an evacuation, but around 3,500 garment workers had been sent back to their sewing machines by deadline-conscious bosses.

Benetton's initial handling of the aftermath was clumsy. After media re­ports that a factory in the building was a Benetton supplier, it issued a forceful denial. Five days later, it had to admit it had sourced items from one factory, but claimed the manufacturer had been removed from its approved supplier list. In fact, New Wave Style had been making shirts for Benetton on a subcontract issued with the company's knowledge and approval. The last of the shirts made for it were shipped on April 1.

Following the collapse, Benetton rapidly signed up to the Accord on Fire and Building Safety in Bangladesh, a joint initiative of western European brands and unions set up to verify the structural integrity of Bangladeshi garment factories producing for the participating companies. It also donated to BRAC for victims' relief. But when Mr Airoldi took the helm at Benetton, which was in the middle of a painful restructuring after the withdrawal of the Benetton family from active management, he was dismayed at how the issue of victims' compensation had played out.

Immediately after the disaster, the ILO led a process, with the backing of unions and brands, to assess claims for medical care and lost wages. It conc­luded that $30m was the minimum required. But western companies argued over which of them should pay, and how much. In the end, payments were voluntary, with no guidelines. Brands could donate without publicly disclosing the size of their contribution.

"We accept and agree that it's a shared responsibility for those who were there," Mr Airoldi says. "But the odd thing was you defined an amount, then decided only voluntary contributions, without any guidance, and they are un­disclosed. Only a miracle would have brought $30m."

After the campaign by Avaaz, Benetton finally asked PwC, the professional services firm, to advise it on a fair payment to the compensation fund. PwC estimated that Benetton took less than 2 per cent of Rana Plaza factories' total output in the year before the collapse, and recommended a $550,000 contribution, which Benetton doubled.

Mr Airoldi says other buyers from Rana Plaza factories should as­sess their responsibility, and pay accor­dingly. "We did what we think is right," he says. "We would have been relieved at finding criteria we could adhere too, but not having found them, we had to create it."

Meanwhile, Benetton says it is consolidating and upgrading its supply chain and assessing the structural integrity of suppliers' buildings in other developing countries. Mr Airoldi hopes to collaborate with other western brands, including rivals, on safety initiatives.

As he points out, they have worked together in Bangladesh since Rana Plaza. "Under the pressure of the emergency, brands have been forced to co-operate," he says. "My intention is to intensify our relationship with them on these issues, which are not competitive but co-operative issues. We cannot change the world alone, we need to change the world together."

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