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The Ready-Made Garments sector is one of the key contributors to the economy of Bangladesh with the sector contributing almost 84.5% of the country’s export basket. The RMG sector which consists of over 3500 factories and employs over 4 million people, is heavily reliant on cotton-based export which requires more water usage and has more carbon footprint.
Man Made Fibre on the other hand is more environmentally sustainable as it requires less water usage and has lower greenhouse gas emissions. On top of this the global demand of MMF is expected to rise to 60% by the year 2030, whereas the current composition of Bangladesh in the MMF is only about 30%.
Apart from that there are sustainability measures which are being implemented and demanded to buy global brands which the country needs to adhere to remain competitive in the global market. With the country expecting to graduate from its LDC status by 2026, Bangladesh will lose out on a lot of preferential trade benefits with the only exception of EU continuing the duty-free access till 2029. To future proof the sector, the country must be eligible for the GSP+ scheme which requires the country to fulfil certain sustainability standards.
Additionally, as the world moves towards more technologically advanced machineries that are more efficient, Bangladesh needs to adapt as well. As the labor costs are increasing and adapting to renewable energy has become an imperative driven both by the escalating price of fossil fuels and their environmental impact, the country can no longer delay that transition.
The industry leading the export basket of the country needs to set an example by taking the lead not only to comply with evolving regulations but also to set a precedent for others.
The World Bank’s Country Private Sector Diagnostics (CPSD) 2.0 report included a dedicated section on greening the industry, to better understand the complex challenges holding back the growth potential of Bangladesh’s RMG sector. The International Finance Corporation (IFC) and the World Bank group develop the CPSD, that aims to identify and address barriers to private sector investment and growth.
It combines sector-specific and economy-wide analytics to direct policy discussions and support game-changing private investments. The latest update to the 2021-released CPSD 1.0 report is the Bangladesh CPSD 2.0.
The Deep Dive looked at ways to assist the RMG industry including its textile subsector make the transition to a greener industry. WB wants to increase the energy and resource efficiency of industrial processes by greening the RMG industry. In addition to creating job possibilities, this shift may offer doors to new market segments.
LightCastle Partners conducted this deep dive analysis on the RMG sector offering valuable and timely insights to transition to a more resource-efficient green RMG industry.
To conduct this comprehensive study report, LightCastle followed the 4-step methodology to collect and triangulate the findings of this study.
Figure 1: LightCastle methodology mapping
To initiate the project, the team conducted an extensive literature review to grasp the textile and RMG landscape. Additionally, the team did stakeholder mapping across the textile and RMG value chain to identify the relevant ecosystem actors, evaluating their roles, responsibilities, contributions, and influence, to be able to conduct key informant interviews (KIIs) for enabling the collection of valuable insights.
Following the stakeholder mapping, field visits were conducted in different RMG industries, including Knit Asia, Mbrella, and Plummy Fashions. These visits provided an in-depth overview of how the top-tier industries are advancing in ‘Greening’ the sectors with renewable energy systems, technological advancements for reducing carbon emissions, and safer work environments for the workers.
Figure 2: Snippets of the field-visit
The qualitative instruments for this study included around 15 Key KIIs with policymakers, industry leaders, global and local buyers, engineering, procurement, construction (EPC) experts, and development partners, among others. The insights helped to provide a holistic overview of the challenges and the way forward to greening the textile and RMG sector.
Prior to the report’s finalization, LightCastle Partners assisted the World Bank in organizing a workshop to discuss and confirm the key findings of this evaluation. This event brought together prominent figures, providing a platform to share their perspectives, articulate concerns, and propose potential solutions for the RMG sector in Bangladesh.
Figure 2: World Bank Organized Validation Workshop
The insights and recommendations gathered were subsequently shared in the validation workshop attended by industry leaders, circularity innovators, LEED factory designers, and representatives from the World Bank.
As the world’s second largest exporter in apparel, Bangladesh has a responsibility to go beyond compliance and emerge as a global example of sustainability and resource efficient manufacturing. The industry has already made some progress in terms of achieving sustainability but there’s still room for improvement.
To address the pressing issues and challenges, LightCastle Partners, together with Policy Exchange, undertook this technical assessment to analyze the current gaps hindering the sector’s progress towards decarbonization and sustainability.
The key takeaways from the study suggest that Bangladesh should focus on reforming policies on recycling and providing incentives for water conservation and solar energy adoption through financial incentives and regulatory adjustments.
Moreover, the country should expedite trade negotiations with key markets such as India, China, and Japan, and reform labor laws to meet GSP+ criteria, thus ensuring continued competitiveness in the EU market. Establishing a uniform import policy for all raw materials will facilitate the transition to MMF-based high-value products.
To future-proof the RMG industry and improve production efficiency and sustainability, a comprehensive sector-wide program introducing Industry 4.0 technologies, such as artificial intelligence, the Internet of Things, and 3D knitting, supported by capacity building and long-term financing, is also imperative.
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