A group of 17 U.S. and Canadian retailers has signed a five-year pact aimed at increasing safety and working conditions in Bangladesh factories.

The agreement, which applies to Canadian Tire Corp., Wal-Mart, The Gap, Hudson’s Bay Co. and other retailers operating in Canada, will see North American companies advancing money for training and upgrading to factories in Bangladesh.

Among the North American retailers who've signed the deal are:

  • Canadian Tire.
  • Carter's.
  • The Children's Place.
  • Gap.
  • HBC.
  • IFG Corp.
  • J.C. Penney.
  • The Jones Group.
  • Kohl's.
  • L.L. Bean.
  • Macy's.
  • Nordstrom.
  • Public Clothing Co.
  • Sears.
  • Target.
  • VF Corp.
  • Wal-Mart.

The alliance was created in response to consumer pressure that has mounted since a building collapse in Bangladesh this April that killed 1,129 workers. The tragedy followed a fire last November that killed 112 Bangladeshi workers.

Among the terms of the agreement:

  • Inspection of all member factories in the first year.
  • Developing common safety standards over the next three months.
  • The creation of worker participation committees at each factory.
  • Inspection reports that are transparently shared.

U.S. Senators George Mitchell and Olympia Snowe helped spearhead the North American retailers, who have called their pact the Alliance for Bangladesh Worker Safety.

Mitchell called the accord "a meaningful plan of action to dramatically improve worker safety in the garment industry in Bangladesh."

Different from global agreement

European retailers, including Swedish retailer H&M and Italian clothing company Benetton, signed a similar safety pact last week, committing cash to Bangladesh factory improvement.  Joe Fresh, the Canadian-based retailer that had clothing made at the factory that collapsed, was among 72 retailers to sign the European agreement.

The North American agreement puts more onus on the Bangladeshi government to play a role in worker safety in future through upgrading national fire and building standards. The government and the U.S. State Department took part in negotiations.

A total of $42 million US has been pledged by North American retailers for a safety fund. The amount each company pays is based on the amount of production in Bangladesh. The fund will pay for inspections and help workers displaced while factories are upgraded.

Money committed to upgrading

 An additional $100 million has been committed by retailers for low-interest loans to factory owners who must upgrade or rebuild to meet safety standards. The alliance plans to choose a non-governmental organization (NGO) to inspect factories sometime in the coming month.

Bangladeshi workers will get an anonymous hotline to report safety infractions and a Worker Participation Committee in each factor will be involved with establishing ongoing safety training for workers.