Loblaws – a good news SRI story

Loblaws introduced a fashionable but very affordable clothing line into its stores in 2006. It took off. The target market – suburban soccer moms – were able to pick up clothes for their whole families at rock bottom prices while also doing the weekly grocery shopping.

It was a huge success….

Yesterday as I rushed in to pick up my favourite responsibly sourced Cajun catfish for dinner, I overheard a teenage girl say to another, “Those clothes are made by slave labour.” The other answered, “No  they are made by hard working people in Bangladesh. We need to buy them to help improve their working conditions and their quality of life.”

“Where did you hear that?”

“In my ethics class. We were learning about the factory collapse in Bangladesh. Joe Fresh really worked to try to make a difference. I like that.” And with that, she walked toward the cash with an adorable skirt.Why am I writing today about Joe Fresh? Everyone knows what happened in Bangladesh.

I am writing because this is Socially Responsible Investment Success Story.

Demand a Change

Demand a Change

Social media asked consumers to stop buying unless the workers receive justice. It worked. This is an excellent example of how shareholder and consumer advocacy working together. Investors and consumers chose to support companies who engage with suppliers and teach how to raise their standards for working conditions.

Last year, I had the privilege of listening to Bob Chant, Senior Vice President Corporate Affairs and Communication at the Canadian Responsible Investment Conference in Toronto.  Bob candidly talked about what it was like to work at Loblaws through this challenge. First he said that personally and professionally, he was glad to work for Galen Weston. Weston’s leadership is based on his ethics and values, The leadership team knew that Loblaws would work with the Bangladesh suppliers to improve working conditions and the quality of life for their employees. Imagine how the Joe Fresh leadership felt. They are human and to see all that destruction and loss of life…. Remember these Canadian employees knew many of their suppliers. They heard the stories of their family members in Bangladesh. There were personal relationships and friendships.

None of us would want to work for a company that washed its hands of its responsibilities in the wake of disaster. Bob Cant spoke proudly that Loblaws did not walk away. Prior to the collapse, there had been had inspections of this factory. No one had seen the crack in the floor…”if only we had.” he said. And everyone in the room knew his grief was real.

Cant stated that immediately, Loblaws  began to offer financial and professional resources for their suppliers’ employees and their families. Five million was allocated. Almost $4 million was allocated to a long term trust fund for the injured workers and for the families of those who died.  Monies were also given to Save the Children Bangladesh and to Rehabilitation Centres. Three months salary was given to those who could not work until another factory was prepared. Rather than bail on the people, Loblaws committed to stay and to improve working conditions for the people of Bangladesh. This is very important because it saved the jobs and the livelihoods of many. Loblaws was the first signatory and Canadian member of  The Accord for Fire and Building Safety in Bangladesh. Loblaws staffed a supply chain expert in Bangladesh to work with their 40 factory partners to develop their skills and resources in the areas of structural safety and process improvement.

Loblaws continues to work in partnership with people, the industry, government local, national and international, NGOs and the International Labour Organization to raise the bar on working conditions in Bangladesh and other developing countries.

So how did Socially Responsible Investors react?

They stayed the course with Loblaws. After the Rana Plaza collapse, the stock was trading around $33 CDN. Today, three years and a bit later, it is trading in the $72 range. Why did the SRI investment practitioners stay the course?

Loblaws took immediate action.

They went to Bangladesh and treated their suppliers employees as their own. They provided benefits for the injured (a trust fund similar to long term disability insurance and similar to a life insurance benefit). They developed the local economy by keeping the jobs in Bangladesh and developing skilled employees in structural and fire safety.

Sometimes when we discuss corporate social responsibility, we talk about the bad stories and forget to celebrate the good news. The Loblaws case study is good news. And the good news is being studied in business ethics classes so that consumers and investors can decide today and tomorrow if they want to support companies who want to make a difference. And interestingly, if someone had decided to invest and support these actions of corporate social responsibility, the investor would have almost doubled their investment in 27 months. That’s making big money and making a big difference!

What is your good news story?

yours in corporate social responsibility

Cara MacMillan

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