Bangladesh’s textile industry is a cornerstone of the national economy and the backbone of the country’s ready-made garment (RMG) value chain. Covering processes from raw fiber production to fabric manufacturing and product development, the sector enhances supply chain resilience, increases domestic value addition, and strengthens the competitiveness of Bangladesh’s apparel exports. Its contribution is reflected in FY2024–25 export earnings, with knitwear and woven garment exports valued at US$21.15 billion and US$18.18 billion, respectively and home textiles US$871.57 million (RMG Bangladesh, 2025).
As the textile industry continues to grow, it also faces significant environmental challenges, including excessive water use, wastewater pollution, hazardous chemicals, fossil fuel dependence, and high greenhouse gas (GHG) emissions. These risks are under increasing scrutiny from global brands, regulators, and financial institutions, making stronger environmental management essential. As new European Union (EU) sustainability regulations, including the European Green Deal, Corporate Sustainability Due Diligence Directive (CSDDD), Digital Product Passport (DPP), and Extended Producer Responsibility (EPR), reshape global market requirements, adopting robust Environmental Due Diligence (EDD) is critical.
The following sections highlight key environmental challenges and the importance of strengthening EDD across the textile-RMG value chain to mitigate environmental risks, ensure regulatory compliance, enhance supply chain resilience, and maintain long-term competitiveness in global markets.
Environmental Risks, Sustainability Challenges, and Environmental Due Diligence
Due diligence is a systematic, risk-based process through which manufacturers identify, assess, prevent, mitigate, and address actual or potential risks across their operations and supply chains. Environmental due diligence focuses specifically on environmental risks, helping businesses ensure regulatory compliance, strengthen supply chain resilience, promote responsible production, and meet the growing sustainability expectations of global brands and regulators. Environmental due diligence is increasingly informed by international frameworks such as the United Nations Guiding Principles on Business and Human Rights (UNGPs) and the Organization for Economic Co-operation and Development (OECD) due diligence guideline, it also enhances transparency, accountability, and continuous environmental improvement throughout the value chain.
Environmental due diligence in the fashion and textile sector focuses on six key areas: water stewardship, chemical management, energy efficiency and decarbonization, wastewater treatment, traceability and supplier monitoring, and circularity and waste reduction. The importance of these focus areas is underscored by the fashion and textile sector’s significant environmental footprint. The industry consumes an estimated 215 trillion liters of water annually and contributes approximately 2–8% of global greenhouse gas emissions. Around 200,000–500,000 tonnes of textile microfibers enter marine environments each year, while textile dyeing and finishing are responsible for about 20% of industrial wastewater pollution globally.
In Bangladesh, wet processing operations, including dyeing and finishing, are among the most resource-intensive stages of textile production, requiring substantial volumes of water, chemicals, and energy. Inadequate environmental due diligence in these areas can expose businesses to regulatory penalties, higher operational costs, reputational risks, loss of brand confidence, reduced export opportunities, limited access to finance, and supply chain disruptions. Although Bangladesh’s textile sector has made notable progress through green factory initiatives, improved effluent treatment systems (ETPs), and cleaner production technologies, challenges such as high compliance costs, limited environmental monitoring and enforcement, weak supply chain traceability, and the transition toward renewable energy continue to hinder sustainable growth.
While circularity offers significant environmental benefits, the transition toward a circular textile economy can also introduce new environmental, social, and governance (ESG) risks, as textile recycling involves complex value chains with multiple actors, including waste collectors, sorters, recyclers, and informal workers who may face unsafe working conditions, inadequate wages, limited labour protection, and exposure to chemical and environmental hazards.
Also Read: ESG, Transparency and the Future of Bangladesh’s Garment Industry
To manage these emerging risks, manufacturers need to extend environmental and human rights due diligence across recycling value chains by mapping waste flows, identifying high-risk suppliers and recycling actors, strengthening oversight of recycling operations, and assessing how product design and purchasing practices influence recyclability and circularity. Effective due diligence throughout the textile value chain is essential to ensure that the transition to circular textiles delivers environmental sustainability, decent working conditions, and long-term business resilience.
Strengthening Environmental Due Diligence
Environmental due diligence is no longer just a compliance requirement but a key competitiveness factor in the global textile-RMG sector. Countries that continue to strengthen circularity, chemical management, climate action, and supply chain transparency will be better positioned to meet evolving brand expectations and sustainability regulations.
Assessing the EDD performance of competitor countries provides valuable insights into emerging sustainability trends and competitive benchmarks. A country-wise comparison shows that several key competitors have already advanced across important EDD indicators, highlighting the need for Bangladesh to strengthen its environmental performance through continuous improvement and proactive adoption of sustainable practices.
The Environmental Due Diligence (EDD) Readiness Score is an indicative benchmarking assessment developed using publicly available information across five key dimensions: regulatory framework, factory compliance, wastewater and chemical management, circularity/Extended Producer Responsibility (EPR), and traceability. Scores were weighted according to the relative importance of each dimension and are intended to illustrate comparative readiness trends rather than provide an official country ranking. The assessment should therefore be interpreted as a benchmarking tool to support discussion and analysis.
While the benchmark highlights areas for improvement, Bangladesh has already established a strong foundation for sustainable transformation in the textile sector. Significant progress has been made through the expansion of green factories, enhanced wastewater treatment and management, adoption of cleaner production practices, and growing investments in sustainable technologies. To accelerate sector-wide progress, however, several challenges must still be addressed, including limited capacity among Small and Medium-sized Enterprises (SMEs), high upfront investment requirements, gaps in environmental data and supply chain traceability, inconsistent monitoring and reporting systems, and the need for a faster transition to cleaner and renewable energy sources.
Moving forward, success will depend on collective action across the ecosystem. Government agencies, industry associations, manufacturers, brands, financial institutions, and development partners must work together to strengthen environmental governance, expand access to green finance, support technology adoption, and build industry capacity. Environmental responsibility should be viewed not as a cost, but as an investment in efficiency, innovation, resilience, and long-term growth.
In Bangladesh, initiatives such as Swisscontact’s PROGRESS, TRACE, and InSPIRE projects are working with industry partners and stakeholders to advance environmental due diligence and sustainable production practices across the sector. Through collaborative interventions, the projects strengthen environmental due diligence, resource efficiency, cleaner production, supply chain transparency, and stakeholder capacity, helping position Bangladesh’s textile and RMG industry for greater sustainability, competitiveness, and long-term growth.