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Re-thinking capacity for greening Bangladesh’s RMG

  • Published at 06:07 pm January 29th, 2019
Stitched to perfection

Our RMG industry has everything it needs to be more environmentally aware. This is the concluding part of a four-part op-ed series

Fostering the growth of green practices needs legal, institutional, and capacity-building measures. Increasing absorptive capacity of RMG companies that are in the earlier stages of being compliant should involve investing in education and awareness-building among RMG professionals. 

Dialogue with senior compliance managers, buyers, and green technology consultants point to the serious problem of compliance skill-building and skills maintenance to address changes in buyer requirements over time. 

RMG companies usually send their middle managers and floor supervisors for environmental compliance training, but for greening to be sustainable in an industry with high staff turnover, and for greening to be meaningful in companies with less collaborative buyer interactions on environmental compliance, green compliance training has to reach to top management.

As regulators from the DOE etc take a more active position on enabling greening, they will also need to be trained on cleaner production for RMG companies of all sizes, and for wet or dry processing. Capacity also needs to be built through inclusion of green compliance content in the training curriculum of the various training institutes focused on RMG professionals. University level courses should also include greening topics, which they currently do not. 

Training on the right technologies for the right fit

Many CP initiatives fall by the wayside due to use of technology that is inappropriate, or because the right skills were missing, or because no one was taking ownership within the company. The PACT project addressed this, and their continued emphasis underscores the need to build a relationship with technology providers/developers and users. 

CP tech is still somewhat new for the small and medium factories, and holistic tech assessment is needed that encompasses the host company capabilities with the tech that is being recommended. Tech assessment and requirements must be clear with tangible emissions goals that can be measured and translated into cost savings data. 

High quality training as a marketable service

To attract investors, high quality trainers, capacity building programs, and centres must be done as a commercial service. Many large buyers already provide compliance training, and there is a business scope for the private sector to provide CP compliance training to provide detailed training and technical support. 

Green business development

The PACT project in its second phase is looking at new business models where third parties are brought in who will ease the process of being compliant and saving resources for the RMG companies. For example, a company could install and run an ETP, or install and operate solar panels on behalf of the RMG firm. Such innovative solutions should be incubated and encouraged. 

Regional cleaner production hubs

The TTBC set up at BGMEA by PACT is a highly functional knowledge-sharing platform disseminating specialized information on resource efficiency technologies, technology suppliers, specialized publications, and operational tools. This approach could be replicated to RMG clusters, but with one important addition -- DOE could rely on these hubs to interact with the RMG companies to get resource saving updates (which they could then share on their own website as good practices, to encourage other performers). 

These hubs could be run as public private partnerships. A network of these hubs could also be set up using GCF funds, since this hub encourages adaptation (water savings) and mitigation (energy efficiency). 

Green marketing

The BGMEA and the BKMEA could enhance their efforts in reaching a larger international audience of apparel manufacturers about Bangladesh’s green achievements. This would enhance the industry’s image on compliance and would complement the achievements of the recent building safety initiatives. 

Associated to the point made above is the need for a media platform that will share the positive stories coming from the RMG on green compliance. The BGMEA, BKMEA, chambers of commerce, and the DOE could regularly hold information dissemination events on green compliance (it is to be noted that the DOE already does press coverage of the annual green awards for the private sector, which could be scaled up). 

The press regularly covers pollution problems and that should also continue along with some news coverage of how change-makers are operating in this business environment. Press coverage on the buyers’ perspective would also be an encouraging signal. 

Key proposed measures

Action and Actors

Barriers Addressed

Review of policies and institutional structures around environmental and water quality regulations.

Ministry of Environment, Forests and Climate Change, Ministry of Water Resources, Ministry of Local Government and Engineering, Ministry of Industries, etc.

Lack of clear analysis on what resource pricing would incentivize expense conscious RMG firms to reconsider resource used.

Compliance mapping along RMG clusters, regular monitoring (involving DOE and municipalities and local government), and capacity building for cleaner production monitoring.

Ministry of Environment, Forests and Climate Change, Ministry of Water Resources, Ministry of Local Government and Engineering, Ministry of Industries, BGMEA, BKMEA etc.

Lack of updated and transparent pollution data for regulatory use only; lack of monitoring capacity.

Review of economic incentives and duty structures.

Ministry of Industries, Ministry of Commerce, Bangladesh Bank, National Board of Revenue, BEZA, etc.

Lack of clarity on conflicting price signals to RMG companies on greening.

Review of Green Transformation Fund and the Green Refinancing Fund.

Bangladesh Bank, Commercial Banks, Non-banking Financial Institutions, BGMEA, BKMEA,     RMG representatives from medium and smaller companies etc.

Lack of clear understanding on what green financing products are available to medium and smaller RMG companies; lack of streamlined access to finance for locally procured green tech solutions.

Regional Cleaner Production Hubs (TTBC style “one stop solution centres” but with additional participation from the DOE on monitoring and compliance assistance).

Private Sector (trainers, auditors) and the DOE etc.

Lack of in-depth and “just in time” information/solution options to RMG compliance teams.

Knowledge Management and Network Building.

DOE, BGMEA, BKMEA, Buyers, Development Partners, Academia, international experts, etc.

Lack of sustained dialogue at the topmost level on the achievements of scaled-up greening, especially at the international level.

To achieve the goal of $50 billion in apparel exports by June 2021, Bangladesh must increase its RMG export by 16.9% (year on year), which will be very challenging given the growth rates in the recent past, and the continuing infrastructural and financial challenges that the industry faces. The industry is still beset with significant challenges impacting the ease of doing business, such as energy crisis, cumbersome export processes, transportation infrastructure weaknesses, image branding problems, and market uncertainties. 

Earlier, this paper argued that the greening incentive for Bangladeshi RMG firms must be re-defined as not being pegged to increased profits through higher prices. 

We would also argue that greening incentive must be thought as the “entry price” into certain higher paying segments of the value chain. A strategic entrepreneur can recoup the price of admission by investing smartly into cleaner production, which can yield cost savings. While there will always be a critical role for government regulations, compliance monitoring, and enforcement by the DOE, changing market conditions and pressures call for a more collaborative engagement with the industry to enhance their greening beyond the traditional environmental clearance.

A private-public sector engagement can help develop a more pragmatic roadmap to better support greening while keeping in mind the opportunity costs of compliance investments for different segments of the suppliers. Once these incentives are aligned -- ecological welfare from the government’s side, improved access to higher end buyers for the suppliers, and reduced supply chain compliance risks for the buyers -- strategic action can be taken in incremental and implementable ways.

Shahpar Selim has a doctorate on environmental policy, compliance, and regulations from the London School of Economics. She also specializes in climate change and disaster management. She is currently working as the Program Coordinator of the National Resilience Program, at the UNDP. The papers in this series are a part of a paper for the DFID supported Economic Dialogue on Green Growth (EDGG) project, implemented by Adam Smith International.