Changes in global sourcing are reshaping Bangladesh’s ready-made garment (RMG) sector. Sustaining growth no longer depends solely on low costs and timely delivery; it also requires sustainability performance, including carbon reporting, renewable energy use, supply-chain traceability, worker welfare, ESG compliance, and due diligence.
Some exporters are reportedly losing orders despite competitive pricing because they failed to meet buyers’ sustainability expectations. Global buyers, regulators, and consumers increasingly demand transparency, ethical sourcing, and environmental performance.
As sustainability gains priority, critical questions remain: can Bangladesh maintain its leadership without transforming production systems? Can the sector adopt sustainability as a long-term strategy?
Overview of RMG Sector and Journey Towards sustainability
Bangladesh’s ready-made garment (RMG) sector is the backbone of the national economy, contributing around 10.35% to GDP and nearly 85% of export earnings. As the world’s second-largest apparel exporter, the industry is projected to reach almost $50 billion in exports by 2026.
Around 4.5 million workers, nearly 60% women, are directly employed, while about 30 million people depend on the sector directly or indirectly.
Supported by roughly 3,800 export-oriented factories, Bangladesh’s apparel success has been driven by cost-effective labour, competitive wages, trade advantages, and strong global supply-chain integration. Following the Rana Plaza collapse in 2013, major workplace safety reforms were introduced through the Accord and Alliance initiatives.
The sector has since expanded investments in green manufacturing, with 270 LEED-certified factories, including 114 platinum-rated facilities, though challenges related to labour rights, sustainability, traceability, and ESG expectations remain.
Global Sustainability Trends
Global sustainability mechanisms are increasingly shaping international trade and supply chains through ESG regulations, climate disclosure requirements, due diligence obligations, and responsible business conduct frameworks. S
tandards such as Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures, the United Nations SDGs, along with CSRD, CSDDD, ESPR, and CBAM, increasingly guide sourcing and investment decisions in the global fashion industry.
Production hubs such as Bangladesh are tightly linked to value chains serving Europe, the US, and Canada. Rising demands for carbon accountability, traceability, circularity, labour rights, renewable energy, and transparent reporting are reshaping manufacturing and export practices.
The five-step strategic sustainability roadmap reflects a gradual transition from assessment and governance to implementation and reporting, aligning Bangladesh’s RMG sector with evolving global ESG frameworks and market expectations.
Sustainability Practices in Bangladesh’s RMG Sector
Bangladesh’s ready-made garment (RMG) industry is at a defining crossroads. Once criticized for unsafe factories, labour exploitation, and environmental negligence after the Rana Plaza collapse, it has since undergone major reform. Bangladesh is now a global leader in green garment manufacturing, with over 270 LEED-certified factories and around 600 more in the pipeline, reflecting stronger focus on sustainable production and ESG standards.
Over the past two decades, social compliance and environmental auditing have become central to global apparel supply chains. International buyers now enforce strict standards on labour rights, safety, environmental management, and sourcing. Frameworks such as SMETA, Amfori BSCI, WRAP, GRI, Higg Index, and ZDHC are widely used, encouraging adoption of water recycling systems, effluent treatment plants (ETPs), improved infrastructure, and workplace monitoring.
Discussing the shift toward sustainability and value-added production, Monower Hossain of Team Group noted, “We cannot achieve this through volume alone. Reaching a 100 billion dollar target requires value addition, not just increased production. That value comes from ESG and sustainability.”
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The industry is increasingly adopting energy-efficient machinery, renewable energy systems, recycled materials, rainwater harvesting, and low-carbon technologies. Circularity, textile recycling, decarbonisation, and resource-efficient manufacturing are gaining momentum as brands push for greener supply chains.
Key indicators such as energy intensity (kWh/kg), water use (m³/kg), wastewater quality (BOD and COD), chemical compliance rates, and alignment with Science Based Targets initiative (SBTi) pathways are now widely used to measure ESG performance. In this context, Mashook Chowdhury, Sr. Sustainability Manager of DBL Group, stated, “Compliance helps us stay afloat—but without integrating sustainability, we risk falling behind.”
Governance reforms since 2013 have strengthened factory safety standards, inspection systems, and ESG structures, particularly in larger firms. However, implementation remains uneven, with smaller suppliers lagging behind and governance still largely buyer-driven.
Also Read : Bangladesh’s Apparel Exports Slip 1.64% in FY2025-26
Stakeholders are calling for stronger collaboration among manufacturers, global brands, financial institutions, and policymakers to advance green financing, climate resilience, energy transition, risk management, stakeholder engagement, and policy alignment. Many leading factories are also establishing ESG committees and integrating sustainability into procurement and enterprise risk management.
Bangladesh’s RMG sector has made visible sustainability progress through investment in green factories. LEED-certified facilities are adopting energy-efficient technologies, natural lighting, wastewater recycling systems, and improved building design. Circular economy practices, including textile recycling and waste recovery, are gradually emerging.
Industry discussions also highlight future priorities, with ABM Faqrul Alam, Head of Sustainability at Urmi Group, noting that “energy flexibility and microgrid initiatives could become game changers for the industry.” However, progress remains concentrated in large export-oriented factories, while smaller units lag because of limited technical capacity, weak waste management systems, and dependence on a carbon-intensive national energy grid.
Sustainability reporting is becoming more common, with factories increasingly using frameworks such as GRI, SASB, and TCFD. Leading companies, including Team Group, Urmi Group, DBL Group, Pacific Jeans, Shin Shin Group, and Fakir Fashion, now publish ESG reports. However, reporting practices remain uneven, raising concerns about data quality, credibility, and greenwashing.
Despite significant progress, Bangladesh’s RMG sector still faces major sustainability challenges. Smaller subcontracting factories lag in environmental compliance, labour rights, workplace safety, and ESG reporting. Limited green finance, weak infrastructure, reliance on fossil fuels, inadequate wastewater treatment, chemical management, textile recycling, and weak supply chain transparency continue to constrain ethical production, innovation, and climate resilience.
Key Challenges Facing the Sector
Despite progress in sustainability and green manufacturing, Bangladesh’s RMG sector still faces key challenges that affect its competitiveness, environmental performance, and ESG alignment.
First, dependence on fossil fuels, carbon-intensive production, and limited access to green finance remain major barriers. SMEs are most affected, as they struggle to invest in renewable energy, cleaner technologies, wastewater treatment, and sustainable infrastructure. Low unit prices and uneven buyer expectations further limit their investment capacity.
Second, environmental compliance gaps persist in wastewater treatment, chemical management, textile recycling, and circular economy practices, especially among smaller factories with limited skills and resources.
Third, labour rights issues, skill shortages, weak sustainability training, limited policy coordination, and inconsistent enforcement continue to slow sector transformation.
Finally, ESG reporting systems remain underdeveloped, with limited digital traceability and uneven adoption of standards such as GRI and TCFD. Audit fatigue, data inconsistencies, and weak data management reduce reporting quality, increase greenwashing risks, and hinder global compliance.
The Way Forward: A Strategic Sustainability Roadmap
To remain globally competitive, Bangladesh’s RMG sector needs a clear and practical sustainability roadmap built around five key areas.
Governance and ESG integration: The sector must move beyond compliance and fully integrate ESG into core business strategy. This includes mandatory ESG reporting with third-party assurance, stronger enforcement, harmonized standards, and improved data systems. Alignment with global frameworks such as GRI and TCFD can enhance transparency, improve comparability, and reduce inconsistencies and greenwashing risks.
Green transformation and environmental sustainability: The industry needs faster investment in renewable energy, cleaner production, wastewater treatment, safer chemical management, recycling, and circular economy practices. Improved access to green finance and targeted incentives, particularly for SMEs, is essential to address cost and technology barriers.
Workforce and labour sustainability: Human Rights Due Diligence (HRDD) and Human Rights and Environmental Due Diligence (HREDD) should be embedded in supply chain operations to identify and manage labour and environmental risks. This should be supported by skills development, fair labour practices, worker well-being, and stronger compliance systems.
Digitalization and ESG reporting: Digital traceability systems, integrated ESG platforms, and real-time monitoring can significantly improve transparency, data accuracy, and reporting reliability. These tools also help reduce disclosure gaps and strengthen supply chain accountability.
Collaboration and industry transition: Long-term progress will depend on stronger collaboration among manufacturers, global buyers, policymakers, financial institutions, development partners, and academic institutions. Joint action and data-driven materiality assessments can better align sustainability priorities with global expectations and support sustainable industrial transformation.
Conclusion
Bangladesh’s RMG sector stands at a decisive inflection point. Past success based on cost and scale is no longer enough for future competitiveness in a global market shaped by ESG compliance, sustainability, transparency, and traceability. The industry must translate its strong progress in green factories into system-wide transformation across governance, labour practices, environmental performance, digital traceability, and skills development.
Several challenges remain, including energy dependence, limited access to green finance, low unit prices, environmental compliance gaps, workforce skill shortages, and audit fatigue, along with a clear gap between buyer expectations and supplier realities. Without coordinated action from government, industry, financial institutions, and global buyers, incremental progress will not be sufficient. A bold and integrated sustainability roadmap is therefore not optional. It is essential for long-term resilience, credibility, competitiveness, and inclusive growth for Bangladesh.