Big business and financial investors, not consumers, will force better conditions in the world’s textile factories, according to the head of an investment firm aiming to pump $500m (£306m) into creating a more ethical garment industry.
With his Italian shoes, expensive watch and glossy hairstyle, Oliver Niedermaier seems a far cry from an eco-warrior or workers’ rights activist. But the former partner at US private equity firm Advent International is sitting in one of Dhaka’s swankiest western-style hotels, arguing for super-ethical clothing factories where respect for workers and the environment is paramount.
It is nearly 18 months since one of the world’s worst industrial disasters, in which more than 1,100 people died and many more were injured when the eight-floor Rana Plaza garment factory building in the Bangladeshi capital collapsed last year. Since then many international retailers, workers’ rights groups, factory owners and government bodies have come together to try to improve conditions in the country’s $24.5bn garment industry. But few expected Wall Street to join the party.
Niedermaier is the head of Tau Investment Management, a group which wants to invest $500m in upgrading and modernising factories. It aims to attract big western brands by offering a supply base that uses modern technology to assure them of ethical standards as well as affordable prices. An in-house investigative team will aim to give assurances about the ethics of production from the cotton field to the retailer. Backed by the Soros family and Yahoo co-founder Jerry Yang, Tau is raising money to fund minority stakes in factories in Bangladesh, Indonesia, Cambodia, Vietnam and Sri Lanka this year or next.
Tau is not a charitable organisation; it believes there are profits to be made in cleaning up and modernising supply chains to create more sustainable and ethical sources of production. It may invest in fewer than five factories in Bangladesh, for example, but the aim will be to use those operators as the base to buy up other businesses and consolidate a fragmented industry made up of more than 5,000 factories.
It would be great if this worked.