H&M ‘Phasing Out’ Myanmar Sourcing
H&M Group is exiting Myanmar.
“We have been monitoring the latest developments in Myanmar very closely and we see increased challenges to conduct our operations according to our standards and requirements,” the Swedish giant said in a statement obtained by Sourcing Journal. “After careful consideration, we have now taken the decision to gradually phase out our operations in Myanmar. During this process, we will continue to engage with our stakeholders as part of our enhanced due diligence process.”
More from Sourcing Journal
The news, which was first reported by Reuters, comes a day after the Cos and Monki owner said it would be investigating 20 alleged instances of labor abuse at its supplier factories in the beleaguered Southeast Asian country, which has descended into chaos and violence since the military ousted the civilian government in 2021, placing companies in a quandary about whether to stay or go.
The Business & Human Rights Resource Centre, which published a report this week identifying the alleged incidents, of which there have been 212 over the past two years, found that reduced wages and wage theft continued to be the most frequently reported rights violations since the takeover, followed by unfair dismissal, inhumane work rates, forced overtime and harassment, intimidation and abuse.
Other brands named in the report include Adidas, Bestseller, Guess, Mango, Marks & Spencer, Moschino, Primark and Zara owner Inditex.
“Our data reveals an alarming image of abuse and indignities for garment workers in Myanmar—and it is only right the fashion brands relying on them for their profits come under pressure to further interrogate human rights risks in their supply chains,” said Natalie Swan, the human rights advocacy group’s labor rights project manager, said in a statement. “Where any business sources from a country where armed conflict or widespread violence is taking place, it is that business’ responsibility to demonstrate how they are meeting this specific challenge.”
Swan said that it’s crucial that brands ask themselves whether they can protect garment workers against exploitation, as well as guard against employer-military collusion, particularly as conditions seem to be deteriorating despite claims of oversight.
“Brands, as well as their investors, who fail to do this while benefiting from the low cost of production in Myanmar can no longer avoid being complicit with a regime that is associated with brutal rights violations and repression,” she added.
Inditex revealed in June that it was dropping out of Myanmar. Aldi South, C&A, Mango, Primark, Marks & Spencer, Tesco, Uniqlo owner Fast Retailing and Muji parent Ryohin Keikaku have also withdrawn or are in the process of withdrawing from the country.
A watershed Ethical Trading Initiative report, which concluded last September that it “wasn’t possible” for responsible businesses to apply normal human-rights due diligence, precipitated some of the departures, including Primark and Marks & Spencer’s. A number of brands, including Adidas and Bestseller, however, have said that they will double down on enforcing compliance. Next has said that it considered withdrawing from Myanmar but was concerned about the “huge damage to local communities and workers, depriving them of desperately needed investment and wages.”
Vicky Bowman, director of the Myanmar Centre for Responsible Business, an initiative to encourage responsible business activities in the country, said that she regrets H&M’s decision as “it will have a negative impact on thousands of women workers in Myanmar.”
“But I am not surprised by their decision in the light of the increase in arrests by the military of trade unionists and labor rights activists from Action Labor Rights whose input has contributed to H&M’s heightened human rights due diligence,” she told Sourcing Journal, referring to the Yangon-based union. “I hope that H&M’s exit will be transparent, and gradual over at least a year, and like that of Primark, accompanied by ongoing support to workers and factories on the ground.”
Earlier this month, an Italian civil society group called ??Italia-Birmana Insieme filed an Organisation for Economic Co-operation and Development complaint against Moschino sub-brand Love Moschino and OVS. It charged the companies with breaching the intergovernmental organization’s guidelines for responsible business conduct by multinational enterprises, including respecting the right of workers to organize and collectively bargain.
H&M Group lists nearly 40 Burmese factories on its public supplier list. Swan said that it was crucial that it now ensures it exits responsibly, without causing greater harm to workers in its supply chain.
“This means ensuring to the greatest extent possible that worker layoffs are limited, final wages are paid and any outstanding grievances are remedied,” she told Sourcing Journal. “This will require continued oversight of facilities producing garments for H&M, up to and beyond final orders. As our report highlights, meaningful engagement with workers is particularly difficult in the context of Myanmar. Nonetheless, companies exiting the country must ensure that workers and their families are at the heart of the process and that they engage, where possible, with trade unions locally and internationally as per their human rights commitment to freedom of association.”
Khaing Zar Aung, the exiled president of the Industrial Worker’s Federation of Myanmar, said that H&M made the right decision.
“The fashion brands who continue doing business in Myanmar are becoming more responsible for forced labor, sexual harassment, wage exploitation, child labor and military oppression of workers in their supply chains. That puts their reputation at high risk in the global market,” she said. “The only way for the brands and employers to survive under military dictatorship is by loading all burdens onto workers’ shoulders, committing serious violations of forced labor and wage exploitation.”
Solve the daily Crossword
