A case for the green transition in our clothing sector
In today’s world, business is not just about profit, jobs, income and growth. Therefore, it is not only about economic sustainability, but also about social and environmental sustainability. As the 26th meeting of the Conference of the Parties (COP26) of the United Nations Framework Convention on Climate Change (UNFCCC) approaches, the green transition of all economic activities has accelerated. Several world leaders reiterated their commitment to reducing greenhouse gas (GHG) emissions and set ambitious targets to achieve net zero emission levels to keep global temperature rise below 1, 5 degree Celsius. The private sector, including large companies, is also committed to reducing carbon emissions and setting deadlines to become carbon neutral.
One can refer to the findings of a McKinsey report in 2018, which indicated that the global fashion industry emitted about 2.1 billion metric tonnes of GHGs, which is equivalent to about four percent of total global emissions of GES. The fashion industry must reduce its GHG emissions by 1.1 billion metric tonnes of carbon equivalent by 2030. Unfortunately, at the current trajectory of its GHG emissions, the 2030 targets will not be met.
Bangladesh is a small player in the global fashion industry. In fact, Bangladesh’s national contribution to global GHG emissions is 0.45 percent. However, despite its negligible GHG emissions, Bangladesh must play its role and make efforts for the green transition of its economy, including the ready-to-wear (RMG) sector. Producers, buyers and consumers around the world are more aware than ever of climate and environmental issues. Therefore, sustainability has become a central agenda among brands. Many high-end brands have also started using recycled fabrics. More than 40 brands have pledged to reduce their GHG emissions by 30% by 2030.
The RMG sector is not only intensive in human resources, but also in natural resources, at every stage of the life cycle. The sector generates large amounts of waste – it requires volumes of clean fresh water for washing, dyeing and finishing (WDF) textiles. The textile sector is also energy intensive. For WDF-related activities, hot water and steam must be generated, which contributes to GHG emissions. In addition, a number of harmful chemicals including nitrous oxides, sulfur dioxide, carbon monoxide and chlorine dioxide are also released from factories by various activities. Therefore, the environmentally friendly production process in RMG sector involves waste management, water conservation and energy efficiency.
The government of Bangladesh is committed to achieving higher economic growth in an environmentally friendly manner and will strive to reduce the impacts of climate change. Its medium and long term plans, such as the Eighth Five Year Plan and the Bangladesh Delta Plan 2100, have set out strategies and action plans in this direction. Among other things, pollution monitoring and control, increased investment in industrial effluent treatment plants and adoption of cleaner technologies for economic activities are among the few important promises of the government.
In the recent past, the RMG sector of Bangladesh has taken a number of initiatives in favor of a green and sustainable industry. The Bangladesh Garments Manufacturers and Exporters Association (BGMEA) signed the United Nations Fashion Industry Charter for Climate Action in 2019 with the UNFCCC to reduce GHG emissions by 30% by 2030. It has also partnered with a number of international organizations to promote environmental sustainability. . One of its commitments to be part of the German government’s “Green Button Initiative” is a state seal on environmental sustainability.
Bangladesh has 148 Leadership in Energy and Environmental Design (LEED) green clothing factories, certified by the US Green Building Council. Nine of RMG’s top 10 green factories in the world are located in Bangladesh. In addition, 40 of the top 100 green industrial projects in the world are located in Bangladesh. More than 500 factories are in preparation for green factory status. It should be noted that in a very competitive environment in terms of costs, it is difficult to be LEED certified companies which are designed and built in such a way as to use less energy and water, to have a good quality of the indoor air and improve the quality of life. . These standards are much higher than national requirements and are also expensive. In addition, RMG factories have joined the International Finance Corporation (IFC) Cleaner Textile Partnership (PaCT) program, which aims to reduce environmental impact and resource consumption in the sector. The PaCT factories have adopted cleaner production practices, which have helped to reduce their GHG emissions.
The RMG sector is one of the main engines of the Bangladesh economy. It is the source of employment and income for around four million workers, the majority of whom are women. It is a key source of foreign exchange income. Currently, about 81 percent of export earnings come from this sector. Bangladesh is the world’s second largest exporter of clothing, after China. During the ongoing Covid-19 pandemic, the industry faced challenges in reducing exports due to the nationwide lockdown aimed at containing the spread of the coronavirus, as well as the cancellation and postponement of orders by a certain number of international buyers. However, as soon as world markets started to open up, RMG’s exports also started to recover. In recent months, RMG’s export growth has been significant. In September 2021, RMG’s exports increased by 41.7% compared to the previous month.
Over the past decade, the industry has worked to improve various compliances in partnership with brands. As the country moves from least developed country (LDC) status by 2026, compliance requirements on Bangladeshi exports will become more stringent. With greater commitments from governments and private sectors and greater awareness among consumers around the world, social and environmental issues are taking center stage in production and consumption.
However, the green economic transition also involves costs. To remain competitive in the global market, improving productivity and minimizing costs are necessary. Some LEED factory owners are not happy because they haven’t seen a return on their green investments in terms of higher revenues. Buyers are asking higher prices for clothing to make supply chains climate neutral. In addition, it will be difficult for many factories to be climate positive through energy efficient technologies due to the additional costs involved.
Therefore, technology transfer and financing are two major requirements for the green transition of the RMG sector in Bangladesh. Higher productivity and less waste of resources through better technology can lower costs. However, technological upgrading must be combined with the development of workers’ capacities as it can lead to the displacement of unskilled workers, especially women. Indeed, environmental compliance must be coupled with social compliance. It must ensure a decent life for its workers.
Catalyzing green finance is crucial for the green transformation of the RMG industry through environmentally friendly technologies. Global sources such as the Green Climate Fund have been less effective because the disbursement process is slow. However, given the scale of the needs of a green lane, green funding will have to be mobilized from multiple sources. Public resources can never meet demand; private investment is more crucial. A blended finance package including grants, green loan guarantees, soft loans and also buyer support can reduce environmental investment risks and catalyze private funds. Increasing green investments in the RMG sector will not only make the RMG sector sustainable, but will also help achieve Bangladesh’s commitments towards the implementation of the Sustainable Development Goals (SDGs), including two important SDGs: SDG 12 on responsible consumption and production; and SDG 13 on climate action. Thus, the commitments for a green RMG sector are also commitments for intergenerational equity.
Dr Fahmida Khatun is Executive Director of the Center for Policy Dialogue (CPD).