4. Framework Agreement with IndustriALL

Inditex maintained and broadened the International Framework Agreement signed in October 2007 and later incorporated this into the new international federation, IndustriALL with the hopes of further integrating the joint decision-making process in CSR matters it shares with the trade union.

Inditex formally acknowledges the vital role played by trade union associations when supervising compliance with the Code of Conduct for Manufacturers and Suppliers, due to their close proximity to the supply chain. As an example of this, on May 4, 2012 Inditex and IndustriALL signed the “Protocol to specify the role of trade unions in the enforcement of the International Framework Agreement within Inditex’s supply chain”.

The following commitments are considered the most important elements of the protocol:

• The right of both local and national trade unions, as well as IndustriALL's structures, to:
  • be familiar with Inditex's entire production line
  • have access to the work centres of the suppliers
  • be familiar with and participate in the compliance programme of the Code of Conduct for Manufacturers and Suppliers
  • propose the necessary measures to correct any breaches detected
  • be familiar with and participate in the corrective action plans in the event a breach is detected
• IndustriALL assumed the responsibility for administrating these rights and for processing the resulting information, underlining its functions in terms of managing and coordinating trade union practice
• Development of training plans directed at both workers and management as regards:
  • the scope of the Framework Agreement
  • Fundamental Labour Rights (chiefly, freedom of association and the right to collective bargaining)
  • Work organisation

As part of this protocol a variety of activities were carried out in concert with IndustriALL, as well as with other federated trade union organisations in 2012:v

• Project for training workers and management in collaboration with IndustriALL

Continuing with the implementation of the operational protocol of the Framework Agreement, in August and September 2012 Inditex and IndustriALL agreed to draft the basis for implementing a pilot training project for the workers and managers of five suppliers in Turkey. To do so, a process was developed, with the help of local trade unions, which allowed the people working for these suppliers to freely choose 18 representatives to participate in a training course on workers' rights, competitiveness, sustainability and CSR.

Capitalising fully on this process, a “Guide to freely choose worker representatives” was drawn up. The aim of this guide, created jointly with IndustriALL, is to formalise a standardised process by which the workers in all clusters can freely choose their representatives, in line with the criteria indicated in the ILO conventions.

• Trade union approach to labour and industrial conditions in the textile sector in Morocco

In December 2012 and January 2013, Inditex CSR representatives and IndustriALL representatives paid several visits to Morocco in order to learn the opinion of the trade unions as regards the labour and industrial situation in the Moroccan clothing sector.

Most importantly, five visits were carried out in factories where it was possible to interview the management, visit the installations as well as interview employees and worker representatives.

After the first steps taken in this direction, a training process is expected to be set up for worker representatives and business managers following the example carried out in other geographical areas.

• Factory fire in Smart Fashion (Bangladesh)

On January 26, 2013 a fire broke out in the Smart Fashion factory located in Dhaka, Bangladesh leaving eight dead and 19 injured, as well as another 250 unemployed. Some garments made for Inditex were found on site and these had been forwarded without the Group's knowledge or permission . The supplier in charge of manufacturing the articles had decided to transfer production to another factory and failed to inform Inditex of this decision beforehand.

Once Inditex became aware of the incident, the Company ordered an internal investigation be carried out by its CSR teams in the cluster in Bangladesh and IndustriALL. A plan of action was drawn up jointly in order to obtain all the information related to the tragedy and, above all, to the people affected.

Likewise, the CSR team remained in permanent contact with the NGOs that provided urgent medical care to the wounded during the hours immediately after the incident. From the very first, Inditex bore the hospital costs derived from assisting the wounded.

Compensation for the victims was agreed upon by all parties involved, including the third-sector organisations that were promptly informed and were also thanked for the support given in the initial hours after the accident.

Three weeks after the fire, Jyrki Raina, the Secretary-General of IndustriALL, travelled to Bangladesh along with members of Inditex's CSR Department. The visit was organised in order to pay 100% of the agreed compensation to the workers and their families in an act attended by Sheikh Hashina, Prime Minister of Bangladesh. Hence, thanks to the swift cooperation of all parties involved, compensation was handed over less than 30 days after the incident.

On the other hand, as a result of the fire, and after assessing the corresponding evidence, Inditex immediately cancelled its relationship with the supplier in question and with the only factory that had been authorised to carry out this production, as it had outsourced the order from Inditex to Smart Fashion without the Group's authorisation.

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