Coles defends supply chain

A Bangladeshi factory manager told an ABC TV program that Coles was paying suppliers so little they could not operate safe factories. Coles has publicly denied this allegation.

Coles denied paying suppliers so little that they couldn’t run safe factories. The company said its lone Bangladeshi supplier for a small Mix clothing order has been audited to international standards and complies with Coles’ ethical sourcing policy.

Yes — Coles said it is currently contracted with just one supplier in Bangladesh for a small Mix clothing order, which it expects to complete within the next few weeks.

Coles stated that sourcing from Bangladesh has always been small, accounting for less than 5% of the total Mix clothing range.

Coles said it is pulling out of Bangladesh within "the next few weeks" and currently has no plans to source further product from the country. The company also said that if it returned it would sign the garment industry safety accord.

According to Coles, the factory working on its current Mix order has been audited to international standards and complies with its ethical sourcing policy. Coles also said it would audit any factory supplying to them in the future and would be prepared to sign the Bangladesh Safety Accord if it resumed sourcing there.

The article describes the Bangladesh Safety Accord as a garment industry safety agreement put together after the collapse of a factory building that killed more than 1,100 people in April. Coles said it would sign this accord if it returned to sourcing in Bangladesh.

Investors should note Coles’ statement that its exposure to Bangladesh is small (less than 5% of the Mix range), that it currently has only one Bangladeshi supplier nearing completion of a small order, and that the company reports audited factories and a willingness to sign the Bangladesh Safety Accord if it resumes sourcing there. These facts are Coles’ public response to recent allegations about supplier pay and factory safety.