VF Corp provides financing to improve Bangladeshi factory safety regulations
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Fashion
US apparel giant VF Corporation and IFC, a member of the World Bank Group, have teamed up through a new programme to provide loans to Bangladeshi garment factories to improve fire and building safety causes.
Under the innovative financial arrangement, three Bangladeshi factories were the first to receive loans to promote worker safety. VF Corp will be providing a full guarantee for up to 10 million dollars, which the IFC will lend to its contract suppliers.
Due to VF Corp's guarantee to back these loans, the IFC was able to lend at lower interest rates, which aids its suppliers in overcoming many financial obstacles. VF Corp and IFC will be giving out loans to the retailer's supplier factories ranging from 100,000 dollars to 1.3 million dollars, as part of the retailer's efforts to help suppliers achieve performance standard.
“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 program set up by VF Corp and IFC also helps enable factory owners to comply with the standards laid out by the Alliance for Bangladesh Worker Safety (Alliance), an industry group of international apparel manufacturers and buyers, of which VF Corp is a member of.
In the first round of loan distributions, a total of 1.3 million dollars was given to the following three factory owners: Arunima Sportswear, Olio Apparels, and, Radisson Apparel, who will use the funding to invest in upgrading current safety standards, such as the installation of fire sprinklers, fire doors and detection systems.
“The apparel industry has provided employment and reduced poverty for millions of people in Bangladesh. This financing model, which we think could work well for other buyers and suppliers, will help improve work conditions and facilitate growth and development,” added Sergio Pimenta, IFC Director for Manufacturing, Agribusiness and Services.