Sustainable Solutions through Circular Fashion: Bangladesh’s Response to Global Demands

Bangladesh’s Ready-made Garments (RMG) sector has continued to demonstrate remarkable resilience, recording a 6.34% growth in export earnings during the January–March period of FY 2025-26.[1] This achievement comes despite the country navigating a web of domestic and global challenges since 2024. Through this steady progress, Bangladesh has not only retained its position as a global apparel leader but has also secured the RMG industry’s role as the nation’s true export powerhouse.

Even though the economic powerhouse has witnessed a notable increase from the last FY of 2023-24, the shifting dynamics of the global economy present new realities that the country’s apparel sector has to carefully navigate.

Evolving Landscape of the Apparel Sector

For decades, Europe has remained the biggest destination for Bangladesh’s RMG exports, securing the country’s place as a global apparel leader. But in recent years, the industry has begun to write a new chapter.

The European Union, alongside other key markets such as the US and UK, is reshaping its apparel sourcing requirements through ambitious sustainability and circular economy regulations. From stricter traceability standards to extended producer responsibility (EPR) and mandatory recycling targets, the EU is steering the future of global fashion towards greener, more circular models.

For Bangladesh, aligning with these evolving buyer expectations is no longer optional; it is crucial for sustaining export competitiveness. By embedding circular economy practices, such as waste segregation, textile recycling, and sustainable material innovation, Bangladesh’s RMG industry can not only meet the EU’s regulatory standards but also position itself as a trusted sourcing partner in a future where circularity will define market access.

The Role of the EU Green Deal and Digital Product Passport

This global transformation is defining the future in a circular fashion and sustainability-driven compliance. One of the most significant policy shifts comes from the EU’s Green Deal, which places stricter benchmarks on transparency, product traceability, and the overall circularity of supply chains.

At the heart of this transformation is the Digital Product Passport (DPP), set to require brands and manufacturers to disclose detailed information about a garment’s entire lifecycle. For Bangladesh, preparations to implement DPP began in early 2025, a move that could redefine how the RMG industry approaches accountability and competitiveness.

Compliance will no longer be optional; instead, it will depend on the ability of manufacturers to embrace circular practices, using more recycled materials, reducing dependence on virgin resources, and lowering the sector’s overall carbon footprint.

Beyond regulations, consumer behavior is rapidly evolving. A new generation of buyers, especially in Europe, is demanding durable clothing and circular design. Nearly 70% of consumers now believe that addressing climate change is more urgent than ever[4], and many openly admit that the guilt of buying fast fashion feels as heavy as the guilt once tied to eating fast food. This cultural shift is reshaping fashion consumption patterns worldwide.

Against this backdrop, the message for Bangladesh is clear: to stay competitive in the global apparel industry, the RMG sector must move beyond traditional growth models and embed circular fashion practices into its value proposition. The future of the industry will depend on its ability to transform from a cost-competitive hub into a leader in sustainable and circular apparel manufacturing.

Top Brands, Visions, and Aspirations in the Apparel Sector Towards Circularity

The shift toward circular fashion is not limited to buyers; it is already transforming global brands. Industry leaders like H&M, Zara, Levi’s, Primark, and C&A are rewriting their brand visions to center on sustainability, worker well-being, and environmental responsibility. These commitments are not just marketing strategies; they are survival tactics in an era of changing consumer values and tighter policy frameworks.

For Bangladesh, this evolution carries both opportunity and urgency. The European Union’s new policies, including the Carbon Border Adjustment Mechanism (CBAM) and Due Diligence Laws, are accelerating the sustainability agenda across supply chains.

If Bangladesh is to hold onto its position as the world’s second-largest apparel exporter, it must align with these global shifts, not only to remain competitive but also to redefine its role in the future of sustainable fashion.

Peer Nations’ Progress Toward Circularity in the Apparel Industry

While Bangladesh is beginning its transition toward circular fashion, peer nations are already making significant strides that highlight the urgency of adaptation.

Vietnam

Vietnam has been gradually transforming into a circular economy. The circular economy is based on a three-pillar system involving the “make-use-recycle” model, which promotes waste reduction and lowers resource extraction through recycling, reducing, and reusing.[6] As part of this agenda, Vietnam has been promoting innovative recycling technologies, such as converting cotton waste into new yarns and fabrics, ensuring value is retained within the production cycle.

Similarly, the government introduced the “Vietnam Textile and Garment Industry Development Strategy (2021-2030)” which emphasizes eco-design, eco-labeling, sustainable materials, green factories, and eco-markets across the entire value chain, positioning Vietnam as a forward-looking competitor in the global race for sustainable fashion.

Thailand

Thailand has been steadily integrating circular economy principles within its textile and apparel sector as a strategy to strengthen competitiveness and attract global buyers. A notable initiative is the government’s Policy Measures for Integrating Informal Waste Workers, which brings informal waste collectors into the formal system.

By enabling these workers to actively participate in waste reduction and recycling programs, the policy helps them gain access to structured markets and secure fairer prices for the recyclable materials they collect.

China

China remains the world’s leading apparel exporter, far ahead of other countries, including Bangladesh, due to its rapid advancements in textile upgradation and large-scale innovation. Yet, Bangladesh can draw important lessons from China’s circular fashion initiatives, particularly its increased utilization of recycled fibers.

Between 2010 and 2015, the proportion of recycled cotton fiber processing in China rose from 9.6% to 11.3%. By 2018,[7] the country was processing more than 7 million tons of recycled fibers, demonstrating its ability to scale sustainability practices. China has also pioneered the development of bio-based chemical fibers, with applications spanning apparel, home textiles, and healthcare products. In addition, the country has established a comprehensive industrial chain for textile waste management, covering collection, sorting, and reuse.

Initiatives such as the “Zero Discarding of Old Clothes” campaign and the Extended Producer Responsibility (EPR) system have further strengthened recycling efforts, with around 17% of textile waste recycled as material inputs in 2018.[8]

The Way Forward: Lessons for Bangladesh from Global Peers

While Bangladesh has been making steady progress by aligning with buyer requirements and drawing inspiration from peer economies, it now has an opportunity to leverage one of its most overlooked assets, its vast “jhute” market. The RMG industry produces an estimated 440,000 tonnes of jhute annually, primarily as pre-consumer fabric waste.[9] Left unmanaged, this enormous volume of textile waste poses a serious environmental challenge to the economy.

However, within the framework of a circular economy in apparel, this waste can be transformed into a resource. Industry leaders are increasingly focused on formalizing Bangladesh’s recycling ecosystem to ensure that jhute is retained within a closed-loop system rather than being exported or discarded.

By investing in structured waste collection, recycling infrastructure, and partnerships with global buyers, Bangladesh can convert its fabric waste into a competitive advantage.

Steps towards facilitating the circular economy in Bangladesh’s RMG sector:

1. Developing National Strategy and Roadmap for Circular Economy Transition: Bangladesh can design its own circular economy policy framework, drawing lessons from Vietnam’s Textile and Garment Industry Development Strategy 2021–2030 and Thailand’s Bio-Circular-Green model.

This roadmap can mandate waste segregation at source, establish treatment facilities, and build markets for recyclable materials. A National Circular Economy Vision can anchor recycling, waste reduction, and sustainable consumption practices across the RMG value chain.

2. Formalize the Jhute Market through Traceable Supply Chains: To unlock the potential of textile waste, Bangladesh has to formalize the fabric waste market by building a transparent, traceable supply chain. Establishing a centralized digital platform to connect factories, recyclers, and buyers will improve pricing, reduce unregulated exports, and integrate informal jhute collectors into the formal system with access to social protection.

3. Foster Technology & Innovation Partnerships: To scale up pilot projects in recycled yarn and fabric production, Bangladesh’s RMG sector leaders can collaborate with local innovators and global recyclers. Such partnerships can support R&D hubs focused on advanced recycling technologies such as chemical recycling of cotton-polyester blends, enabling the country to meet growing international buyer demand for sustainable materials.

4. Build Capacity & Awareness Among Workers: In addition, circularity begins at the grassroots. Hence, Bangladesh should provide training for both RMG workers and jhute collectors on waste segregation, recycling protocols, and sustainable practices. Empowering workers with knowledge ensures that circularity principles are embedded at every stage of the garment supply chain.

5. Invest in Recycling Infrastructure: Bangladesh, drawing inspiration from its neighboring country, such as China, which promotes the recirculation of waste materials through setting up eco-industrial parks, the country should invest in large-scale recycling infrastructure. This includes the collection centers, sorting facilities, and recycling plants. Such facilities would close the loop in textile waste management and strengthen the country’s circular supply chain.

6. Encourage Multi-Agency Collaboration: The government of Bangladesh (GoB), RMG manufacturers, global fashion brands, and recyclers can come together to drive systemic change. This strategy is similar to Thailand’s collaborative Sustainable Consumption and Production (SCP) initiatives, where government and industry align policies, investments, and innovation.

7. Introduce Financial Incentives for Circular Businesses: Lastly, Bangladesh can encourage private-sector investment in recycling by offering tax breaks, subsidies, concessional loans, and grants. Taking cues from China’s reduced VAT on recycled plastics, Bangladesh could also incentivize the use of recycled polyester from PET bottles, thereby diversifying its export basket with man-made fiber-based, high-value apparel.

If Bangladesh successfully integrates these steps into a clear and strategic roadmap, its RMG sector will be better positioned to comply with global traceability and sustainability rules. More importantly, the country can secure its competitiveness in key apparel export destinations while transitioning toward a greener, more resilient economy.

Sadia Karim, a Business Analyst, at LightCastle Partners, has prepared the write-up. For more information, please contact at [email protected]

[1] Bangladesh Bank. (2025). Quarterly review of readymade garments (RMG): January-March of FY25.

[2] Sustainability Reports of the European Commission, UNIDO, UN Environment Programme, WRAP, and industry groups in the EU, UK, and USA.

[3] Karim, S (2024). RMG sector’s move to man-made fiber for sustainable fashion. LightCastle Partners.

[4] GlobalData. (n.d.). Consumer archives.

[5] Source: Latest annual sustainability report of respective brands.

[6] Vietnam’s Circular Economy: Decision 687 Development Plan Ratified

[7] Office for Social Responsibility of the China National Textile and Apparel Council (CNTAC). (2020). Make fashion circular: Outlook for a new textiles economy in China

[8] Alam, H., Schröder, P., & Reaz, M. (2024). International circular economy policy trends: Implications for Bangladesh’s circular garment and textile policy development. Policy Exchange, Chatham House, UNIDO. [9] Rahman Tuhin, A. (2024). Towards circular fashion: A framework for jhut management. The Business Standard

This article was originally published on the Bunon 2030 website.