Collaboration, access to finance required for RMG's green transition: Experts

The apparel industry needs collaboration among buyers, manufacturers, development partners, and the government to get access to finance for its green transition, said experts, including representatives of local entrepreneurs and international fashion brands, at a Dhaka event on Wednesday (4 October).

At various plenary sessions at the first-ever Bangladesh Climate Action Forum 2023, organised by the Bangladesh Apparel Exchange (BAE), they also said collaboration involves more than just sharing ideas; funding is essential to completing the full cycle of green transition projects.

"As a brand, we say our designers, once they have designed a product, always think about recycling and organic material. In 2021, we reduced the use of plastic in packaging by thickening them," said Shafiur Rahman, South Asian Operation Head of G-Star Raw, at the plenary session, titled "Decarbonisation: The Opportunity and Challenges of the Bangladesh RMG Industry". 

Their vendors are already producing solar energy and have been using natural light since then, he added.

"We are ensuring good purchasing techniques to create fundamental financial freedom for the manufacturers so that they can conduct something beyond business," he further said.

In the plenary session, "Policy Landscape and Improvements to Facilitate Change", Nafis Ud Doula, director of Impress-Newtex Composite Textile, highlighted the need for funding in the processes of decarbonisation, solar implementation, rainwater harvesting, and greening the industry.

"There are so many institutions that provide funds, but the main challenge is accessing the funding. The case is much tougher for SMEs."

Nafis Ud Doula said buyers and the government, moreover, should provide support in this area. For example, the government should give a waiver of around 2%–5% in the income tax of green RMG units, and buyers can ensure ethical practice by providing fair prices.

"Bangladesh is one of the most climate-vulnerable countries but is doing amazing work in terms of green building and sustainable industry. Now retail consumers should perform good purchasing practices," he added.

Gihan Palihena, director (Asia Product Supply – South Asia) of Kontoor Brands Inc, said Bangladesh is doing very well in the green transition.

"Bangladesh needs definite policies and frameworks to accelerate the green transition. Though Bangladesh has the highest number of LEED green factories, the large number is yet to go green," he added.

So the term 'green factories' should be initiated as a policy in the country, he also said.

Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association, said the RMG industry, which has already made unparalleled advancements in the green transition, is considered a global model of a green manufacturing hub.

"In Bangladesh, 400,000 tonnes of pre-consumed textile waste are produced every year. We are urging all buyers, manufacturers, and the government to work together to make Bangladesh a recycling hub," he added.

Buddhi Paranamana of PDS Limited called for maximising transparency and incentivising the green transition process.

Ambreen Tabassum of Decathlon Bangladesh stressed the need to educate all parties regarding decarbonisation and green transition.

Azizur Rahim Chowdhury, managing director of JM Fabrics, sought to introduce OSS for all licences they need, as they have to fall into the red trap of licencing or renewing any licences, roughly having to go through 23 separate departments for 23 licences.

State-owned non-banking financial institute IDCOL Executive Director and CEO Alamgir Morshed said the institute is financing for the long term; in some cases, payback time is not less than six to seven years. "Considering its risks, we sought a guarantee from some development partners on the back of our investment."

"We face challenges today in the overall financial sector of the country because of interest rates in long-term local currency financing," the CEO said, adding that considering climate vulnerability, it requires $200 billion in the next 10 years, of which about $15 billion is needed every year as per the ambition of the government.

It is not possible to raise the fund alone by the government, a development partner, or only domestic resources. It requires collaboration among all stakeholders, including the private sector. "The role of the bond and capital markets is most important to mobilise such kinds of funds; a lot of work is going on to revive the market."

Shin Shin Group Managing Director Sadat Sohel said the group has not got access to the green fund two years after beginning production in the factory.

He also mentioned that in some cases of financing for solar panel installation, they get it within six months of the loan application, while the documentation process also takes another six months.

Speaking as chief guest at the opening session, State Minister of Foreign Affairs Shahriar Alam said in FY22, Bangladesh incurred losses worth $11 billion, or 2.4% of GDP, due to the natural disasters, which might be increased to 2% of GDP by 2050.

"To mitigate the impact of the disasters, the government raised the first climate change funds through its own resources under the Climate Change Action Plan. In addition, development partners' financial support is needed for the country," he added.