When Jane Shepherdson quit as Topshop's design director last December after 20 years, there was much speculation as to where she would appear next. Lisa Grainger joined her in Bangladesh, where she is helping boost the profile of one of Britain's most ethical fashion companies, People Tree. Photographs by Franck Sauvaire

'Everyone ready?' Safia Minney says, scraping her wild black curly hair into a more businesslike ponytail. 'I'm not sure what this factory will be like – so be prepared. I've been into some horrors.'

t is October and I am in Dhaka, the capital of Bangladesh, with Minney, who runs Britain's most successful ethical fashion company, People Tree. With us is her new consultant, Jane Shepherdson, who is 'between jobs', having left Topshop last December after 20 years as design director.

Shepherdson, one of the most influential women in British fashion retailing, has kept the industry guessing about where she will work next. The offers have been flooding in, but while she considers her next move, she has – perhaps tellingly – agreed to work with Minney, as well as with Oxfam. On this trip, she is overseeing a fashion shoot for the company's spring catalogue. Already she has been of enormous help to Minney: employing Carole Robb, the former Boden designer, who understands the demands of catalogue shopping and nine-month lead times that People Tree's small producers require. She has found a new catalogue photographer, Franck Sauvaire. She has introduced Minney to potential investors. And she has already started thinking about changes to the autumn/winter 08 collection, to make the brand more commercial.

On the way up north to the location for the shoot – near the community project that supplies People Tree – Minney has suggested giving Shepherdson her first real glimpse into the conditions under which some of the clothes for the British high street are made. In a country that has been living under a State of Emergency since January, where NGOs are threatened with eviction for fomenting dissent in the garment industry, and where the lives of workers' leaders are regularly threatened, it is not going to be easy.

It is a difficult time to visit. For a start, figures have just been leaked by a local news agency that show garment industry exports dropped by 24 per cent in July, thanks to political turmoil and labour unrest. The week before we arrived 1,000 garment workers had taken to the streets in protest against their working conditions (which range from shockingly low pay – often below the monthly minimum wage of about £12 – and long hours to maltreatment and lack of union representation). In America, trade union movements are trying to block Bangladesh's preferential trading status to highlight the lack of workers' rights (if successful, this could destroy the country's economy, 75 per cent of whose GNP is from the garment industry). Labour representatives are so terrified of government reprisals that they refuse to talk to us on their mobile phones.

Not that the tiny, fine-boned Minney is put off. As a long-time activist, she has an assured sense of what is right – and her cause is very clear: to try to get consumers to buy fair trade and ethical fashion. As we drive past endless slums, with beggars knocking on our windows, she tells Shepherdson how, when she started working in Bangladesh 15 years ago, she was appalled by the terrible conditions of workers. 'Even 18 months ago, when I visited the workers in their slum homes, they were living six to a room in a bamboo and corrugated iron shack built over water into which their toilet waste fell. But no one does anything about it. Have UK retailers raised their prices so workers can earn a living wage? No.'

Even today, when consumers are so much more eco-aware, things have not improved as much as they should have done. In spite of retailers such as Marks & Spencer, Asda, H&M and Primark assuring customers that all the Bangladeshi factories they use adhere to ethical standards, many workers are still paid a minimum wage rather than a living wage (which a trade specialist at a recent London conference said was about three times the minimum wage). More than three-quarters of the 2.5 million garment workers are women, who often have to leave their children with relatives in rural areas because their salaries are too low to sustain a family in the city. In many cases they get only two days off each month. And with no union representation outside Export Trading Zones (government-run manufacturing areas in which exporters get preferential trading and tax perks) and few written contracts, in many factories, if the women are mistreated they have no formal recourse.

Getting access for Shepherdson and me to see the conditions for ourselves proves tricky. At one of the showroom factories run by the Nassa Group, the country's biggest exporter, responsible for turning out 3.6 million garments each month for cut-price retailers such as Wal-Mart (owners of Asda), Primark and H&M, we are introduced to the social compliance officer, who shows us the light, bright factory floor, and the company crèche: a small, dark concrete room containing two babies being attended to by an old woman.