With rising global concerns for climate change, environment, and sustainability taking the lead in world of discourse, the top export-earning sector of Bangladesh -- the RMG sector -- has taken a step towards adapting with different approaches. Bangladesh had 191 leed-certified "Green'' factories as of June 2023, according to the USGBC database.
Mapped in Bangladesh (MiB) responded to multinational players' data requirements in the sector with its transparency effort. What remains to be seen is how much clout this transparency initiative will receive with the importance of environmental issues among global stakeholders. MiB aims to address the transparency gap and arouse stakeholders' interest in environmental issues by publishing industry data online. Giz’s Initiative for Global Solidarity (IGS) uses MiB’s production facilities and sustainability indicators to increase transparency in their supply chain data.
The fashion industry prioritizes environmental sustainability to meet sustainable development goals (SDGs) 6, 7, 9, 10, 12, 13, and 14. Each country follows its own governing policies when it comes to fulfilling the SDGs, and because of bilateral interactions, Bangladesh must adjust its own policies. Thus, in order to sustain in this competitive world, evidence-based, environmentally sustainable governance policies should be developed, aligned with international rules, and based on supply-side economic principles.
Under the EU Green Deal, which prioritizes net-zero carbon emissions, Bangladesh is compelled to pay a carbon price. International customers, on the other hand, are unwilling to pay this price premium since it is viewed as a sign of social compliance rather than a financial necessity.
The EU published a guideline on “Corporate Sustainability Due Diligence” in February 2022 to ensure moral and ethical production practices throughout their value chain. Despite being focused on EU countries, this act affects Bangladesh's RMG companies because the majority of Bangladesh’s export customers are European, thus placing us in their supply chain.
According to MCCI, buyers will now demand stronger compliance, resulting in strict audit requirements and a greater emphasis on accountability and transparency. This would raise our operational costs, which would be difficult to finance given our LDC graduation and the additional weight of recovering from the Covid outbreak.
Bangladesh ratified the Paris Agreement, the result of the UNFCCC’s Cop-21, which established an Enhanced Transparency Framework (ETF) and encouraged businesses to embrace carbon neutral methods. According to the UNFCCC, zero-carbon solutions are becoming more viable across economic sectors, representing 25% of emissions.
In 2012, Bangladesh Bank launched a new approach called “Environmental Due Diligence” to oversee banks’ green banking activities, which includes rigorous screening for environmental hazards before lending to SMEs or businesses. As a result of rising environmental discourse and surveillance, and the determination to restore the reputation of our RMG industry, industry stakeholders have shifted their focus to “greening the sector.”
BGMEA reports HYPERLINK "https://www.bgmea.com.bd/page/Bangladesh_is_a_front-runner_in_ethical_manufacturing" 500 RMG factories are in the pipeline for obtaining green certification which, according to industry stakeholders, may initially increase operational costs but will ultimately reduce them and ensure a safe working environment in the long-run.
The Better Work Bangladesh program by ILO and IFC and the German a HYPERLINK "https://mccibd.org/wp-content/uploads/2022/04/Chamber-News-April-2022.pdf"ct on HYPERLINK "https://mccibd.org/wp-content/uploads/2022/04/Chamber-News-April-2022.pdf"“ HYPERLINK "https://mccibd.org/wp-content/uploads/2022/04/Chamber-News-April-2022.pdf"Corpo HYPERLINK "https://mccibd.org/wp-content/uploads/2022/04/Chamber-News-April-2022.pdf"rate D HYPERLINK "https://mccibd.org/wp-content/uploads/2022/04/Chamber-News-April-2022.pdf"ue Diligence in Supply Chains,” which became effective in January 2023 for large corporations, aim to improve compliance with labour laws and international standards.
The RMG sector is a growing, transformative industry which is currently in a transitional phase. With international due diligence acts influencing workplace and business ethics and increasing global interest in ethical and environmental compliance in the RMG industry, CED-BRACU, in partnership with the Laudes Foundation, the Kingdom of the Netherlands, BRAC, BKMEA, and BGMEA, launched the MiB initiative in April 2017.
MiB is the first of its kind, as it is an inclusive platform that is accessible to all stakeholders within the industry and beyond. The industry stakeholders include brands, academicians, NGOs, and business organizations who need this data for evidence-based decision-making purposes.
The map provides information such as factory name, address, building structure, number of employees, male-female worker ratio, worker facilities, BGMEA/BKMEA membership information, list of certifications, countries they export to, existing communities, etc.
In 2022, MiB entered its second phase with funding from the Laudes Foundation and Giz, with the aim of expanding its horizons by going beyond industry stakeholders. Phase 2 focused on due diligence issues and added data points relevant to ESG indices, aligning with the European Commission’s directive on corporate sustainability and the mandatory human rights and environmental due diligence (mHREDD).
The USA has a law titled “The Fashion Sustainability and Social Accountability Act,” commonly known as “The Fashion Act” that aligns with the rules of HRDD. In accordance with this, the project updated its goal accordingly to collect, curate, and present up-to-date and actionable information to facilitate multi-stakeholder dialogues in order to enhance supply chain visibility and improve industry-wide ESG indices, which is appropriate with the operating contexts as well as contemporary global phenomena.
As the industry continues to grow, it is important to ensure that sustainability remains a priority and that efforts to reduce environmental impact are ongoing. The RMG business in Bangladesh can create a brighter future for both the environment and the people who work in it by learning from previous mistakes and adapting to changing conditions.
About the authors:
Muntaqa N B Hakim, Faizul Islam, and Sadril Shajahan work as Research Assistants and Associates at the Centre for Entrepreneurship Development (CED) at BRAC University, Bangladesh.