Solidarity Fund divests of Gildan, citing sweatshops in Honduras

Following two years of controversy, Quebec's giant Solidarity Fund is selling its 11% interest worth $90 million in shares of Montreal-based Gildan Active Wear. In a release Nov. 12, Solidarity Fund said it will sell its shares gradually.

Gildan is a publicly listed company whose shares are traded on the Toronto and New York Stock Exchanges.

The Solidarity Fund states that its decision is mostly due to Gildan’s refusal to hire back employees that were laid off following union activity. Such behavior is forbidden by the Fund’s code of conduct which was adopted in 2001. According to a report published last year by the Maquila Solidarity Network, Gildan had laid off 38 employees from its El Progresso factory in Honduras ten days after they had filed for union certification at the Honduras Minister of Labour.

For two years, Gildan has been refusing to follow the Fund’s recommendation to adopt its code of conduct, which includes  higher standards for wage (recognition of the need for a living wage) and liberty of association. The Fund has also been pressing Gildan to recognize the layoff of employees at its Honduran facility and to appropriately resolve the matter, something the company is refusing to do. The fact that Gildan adopted the Fair Labor Association code of conduct seemingly did not convince the Fund of the company’s intent to change its practices.

The fund said it holds close to 2.5 million Gildan shares with a market value of close to $90 million, half of which is protected by derivative products used by the Fund to stabilize its return. The Fund will gradually dispose of theses shares at opportune times.

This divestment could potentially damage Gildan’s reputation among investors - particularly those with socially responsible investment guidelines - and socially aware institutional buyers such as unionized employees (buying work clothing) and students (through university purchases).

For more information, visit www.fondsftq.com.

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