Monday, December 14, 2009

Otto raises the bar for retailers

A new model for producing clothing responsibly is taking shape in Bangladesh. Germany's Otto Group, the world's largest mail order company, has partnered with Nobel Laureate Muhammad Yunus' Grameen Trust to set-up "the factory of the future."

Otto and Grameen have formed a joint-venture to establish Otto Grameen Textile Company in Dhaka, Bangladesh. The factory will produce clothing for export under socially and ecologically sustainable conditions, according to Otto.

Otto is providing interest-free loan for the project to cover the cost of setting up and running the factory. The loan will be paid back in 10-15 years from the profits of the factory. The factory will initially hire 500-700 workers with plans to expand in phase-two.

The company says that the profits will not be distributed to shareholders. The profits will serve to expand and modernise the company, and to pursue social objectives locally. The earnings will be used to offer healthy lunch for workers, set-up daycare centres for workers' children, and launch educational and health care initiatives for workers and their families.

On the environmental front, the factory will be carbon neutral. The company says that the ecologically-optimised, CO2 neutral building will be fitted with the most up-to-date insulation, energy-saving lighting and optimised air-conditioning systems, paying special attention to the use of renewable energies.

Dr. Michael Otto, Chairman of the Supervisory Board of the Otto Group says: "The Grameen Otto Textile Company will show that it really is possible to reconcile ecological and social criteria with economic goals. It should become a model for textile production in Bangladesh and for similar factories all around the world."

The plan includes expanding the number of factories across Bangladesh over time and even spread to other countries.

What Otto has committed to do is revolutionary and sets a new benchmark for retail brands who often don't do more than lip service when it comes to the welfare of workers and their families. The big question is: will socially conscious customers flock to stand behind Otto?

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