LightCastle Analytics Wing
Landscape and Opportunities to Finance the Decarbonization of Bangladesh’s Apparel Manufacturing Sector
Bangladesh’s apparel manufacturing sector stands at a critical inflection point—caught between rising global demands for sustainable production and the urgent need to future-proof its economy. As one of the world’s largest apparel exporters, the sector contributes over 80% of the country’s export revenue and employs more than 4 million people.
However, it also consumes a disproportionate share of the country’s energy and relies heavily on fossil fuels, making decarbonization both an environmental imperative and an economic opportunity. This report explores how Bangladesh can reduce greenhouse gas (GHG) emissions in its apparel sector by 50% by 2030—aligning with global climate goals—while maintaining its competitive edge in global markets.
Achieving this target will require systemic interventions across the value chain and an estimated investment of US$6.6 billion. To date, US$1.6 billion in financing has been confirmed, with another US$175 million in the pipeline, leaving a significant funding gap of approximately US$4.8 billion.
Manufacturers face numerous challenges in accessing green finance, including high upfront costs, complex application processes, and a lack of standardized definitions for what qualifies as a “green” investment. Technical barriers—such as the limited availability of energy service companies (ESCOs), underdeveloped grid infrastructure, and a shortage of skilled professionals—further slow the pace of adoption.
Despite these challenges, the report outlines a clear path forward. By expanding access to concessional financing, revising key energy policies (such as net metering and import duties on renewable technologies), and investing in technical capacity-building, Bangladesh can unlock both environmental and economic value.
Brands, development partners, and financial institutions have a critical role to play in supporting manufacturers—particularly small and medium enterprises—with de-risking instruments, transaction support, and sustained engagement.
This report offers a blueprint for action: one that connects financial mechanisms, policy reform, and value chain-wide collaboration to drive measurable decarbonization. If implemented strategically, these efforts can help Bangladesh not only meet its climate commitments but also create a new generation of green jobs, enhance energy security, and position the country as a global leader in sustainable apparel manufacturing.
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