Finance for Remediation to Accord Standards
Accord Article 17:
In order to induce factories
to comply with upgrade
and remediation
requirements of the
program, participating
brands and retailers will
negotiate commercial
terms with their suppliers
which ensure that it is
financially feasible for
the factories to maintain
safe workplaces and
comply with upgrade and
remediation requirements
instituted by the CSI. Each
signatory company may,
at its option, use alternative
means to ensure factories
have the financial
capacity to comply with
remediation requirements,
including but not limited to
joint investments, providing
loans, accessing donor
or government support,
through offering business
incentives or through
paying for renovations
directly.
Responsible Brand role
Factory role
Accord role
GUIDANCE FOR SIGNATORY COMPANIES & FACTORIES TO PLAN FINANCE FOR REMEDIATION
RESPONSIBLE BRAND ROLE SUPPLIER ROLE
Evaluate means to ensure remediation is Estimate costs of Corrective Action Plan (CAP)
Guidance on costs
financially feasible e.g.
• Identify materials/works for all CAP items Estimated costs for common
• Obtain written quotations from service providers equipment & list of service
Improve cashflow: Reduce payment terms; • Obtain comparative quotations if possible providers on Accord website
Prepay orders • Create itemised cost estimate
Increase revenue: Guarantee orders for longer
Evaluate financial capacity
period and/or higher volume; Increase price Facilitate discussion
per unit 1. Assess revenue projections & profitability
2.  Assess financing options e.g. own capital Accord case handlers can
investments, loans, change commercial terms facilitate discussions for shared
Inject capital: Joint investment, provide a loan,
buildings if expressly asked by
guarantee a loan, access donor or government
N.B. If rented building, establish owner’s contribution the signatory or factory
support, pay for renovations directly.
Finance
mechanism
IFC offers a
loan guarantee
scheme for
Negotiate & agree finance plan Facilitate discussion
Accord
signatories & Factory & Sourcing Managers Accord case handlers can facilitate discussions
RMG factories • Review cost estimate, factory’s financial capacity & finance option between signatories and factories if expressly
• Evaluate finance options including commercial terms asked by the signatory or factory
Finalise CAP
• Confirm to Accord which type of finance plan agreed
(details will not be disclosed)
• CAP approved by the Accord
Monitor remediation Verification
• Factory to give CAP progress updates to lead brand & Accord Accord Engineers conduct follow up
• All companies to review CAP progress on factory visits inspections and verify remediation. Accord
• Escalate concerns to Accord case handler non-compliance letter will notify factory &
• Accord case handlers request updates from owner, brands & labour companies of inadequate remediation progress
For further information, please visit http://bangladeshaccord.org/resources