Speaking at a EuroCham Bangladesh and BGMEA seminar, Urmi Group’s Head of Sustainability ABM Faqrul Alam says factories that prepare now will survive
At a seminar titled “The Competitive Edge: Decarbonising Bangladesh’s SME Garment Factories,” jointly organised by EuroCham Bangladesh and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), ABM Faqrul Alam, Head of Sustainability at Urmi Group, delivered a critical presentation on 30 June about the European Union’s new Corporate Sustainability Due Diligence Directive (CSDDD). The seminar, held at the BGMEA Multipurpose Hall in Uttara, Dhaka, brought together owners, managers, and industry stakeholders from across Bangladesh’s small and medium enterprise (SME) garment sector.
In his keynote, Alam stated that “the EU buys half of everything Bangladesh makes” — and that this relationship now faces three simultaneous challenges: Bangladesh’s graduation from Least Developed Country (LDC) status on 24 November 2026, a newly signed EU–India Free Trade Agreement, and the new CSDDD regulation.
CSDDD: A Major Shift in Plain Terms
Alam explained that CSDDD is an EU law that makes large European buying companies legally responsible for human rights and environmental standards across their entire supply chain. In force since 18 March 2026, the directive carries a maximum fine of up to 3 percent of a company’s global annual turnover.
Following the “Omnibus I” reform passed in February 2026, the number of companies directly in scope worldwide has narrowed from roughly 50,000 to approximately 2,907. However, Alam cautioned that Bangladesh’s major buyers — including H&M, Inditex, PVH, Varner, and Bestseller — remain fully within the directive’s scope, and their legal obligations will cascade down to Bangladeshi supplier factories through contract clauses and data requirements. “Your factory is not directly in scope of this law,” he said. “But your buyer is. And if they cannot show proof of compliance, they will find another supplier.”
A Widening Gap Between Large and Small Factories
The presentation painted a candid picture of Bangladesh’s apparel industry. The country currently has 287 LEED-certified green factories — the highest number in the world — with 53 of the world’s top 100 LEED-rated factories located in Bangladesh. Yet this achievement remains concentrated among large manufacturers: of the country’s roughly 4,500 registered factories, only 6.4 percent hold this certification.
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Citing recent research, Alam noted that large factories implement an average of five out of seven measured green practices, compared with just three out of seven among SME factories with fewer than 500 workers. He identified five structural barriers behind this gap: limited access to finance and capital, shortage of skilled staff, outdated technology, weak audit infrastructure, and the absence of board-level governance policies.
“It is not true that SME owners don’t care about sustainability. They are falling behind because the system was never built for them.” — ABM Faqrul Alam
The Economic Stakes
The presentation outlined specific economic risks. In FY2024-25, Bangladesh exported $19.71 billion worth of garments to the EU, accounting for 50.1 percent of total exports. In the current FY2025-26, exports to the EU between July and April fell by 4.38 percent to $15.54 billion, signalling growing pressure in the market.
Alam calculated that if just 10 percent of orders shift to more compliant competing countries, Bangladesh stands to lose approximately $2.1 billion annually, putting roughly 200,000 jobs at risk. Tariff costs following LDC graduation could add up to $2.4 billion per year.
Opportunity Exists: Preparation as Competitive Advantage
Alongside the risks, Alam offered a constructive message. He said factories that prepare early stand to gain preferred-supplier status with buyers, better pricing, and access to green finance at lower interest rates. He specifically highlighted the zero-capital OPEX model for rooftop solar — offered by event technical partners SOLshare and the Greener Garments Initiative (GGI) — which simultaneously reduces electricity costs and improves a factory’s environmental data for CSDDD reporting.
A Practical Five-Step Roadmap
Closing his presentation, Alam laid out a practical five-step roadmap for SME factories: conducting a gap analysis, passing a board resolution, establishing energy and data tracking systems, upgrading audit standards, and achieving full compliance readiness by 2029. He emphasised that the initial steps require no dedicated team or major investment — only a decision by the factory owner.
“CSDDD is not a threat to SMEs — it is a survival guide. Those who prepare will win orders. Those who wait will be replaced.” — ABM Faqrul Alam