Bangladesh's industrial sector stands at a defining crossroads

Bangladesh's industrial sector, led by its globally competitive ready-made garment (RMG) industry and a growing manufacturing base, stands today at a defining crossroads. As global focus intensifies on environmental responsibility, local industries face increasing pressure from international buyers, investors, and regulators to adopt greener practices throughout their supply chains.

This transition towards "greening the supply chain" is no longer a distant aspiration; it has become a strategic imperative that must be urgently addressed if Bangladesh is to sustain and strengthen its position in global markets.

A supply chain encompasses everything from sourcing raw materials to delivering finished goods. Historically, supply chains were optimised for cost efficiency and speed to market. Today, environmental impact — measured through carbon emissions, resource consumption, waste generation, and responsible sourcing — has become equally critical.

Several structural challenges continue to obstruct progress. Chief among these is cost sensitivity. Most suppliers, especially small and medium enterprises (SMEs), operate on razor-thin margins, making investments in cleaner technologies, energy-efficient machinery, or third-party certifications financially daunting without assured returns. The technical knowledge gap further complicates the problem, as many enterprises remain unfamiliar with best practices in environmental management or standards like ISO 14064.

Global brands, driven by evolving consumer expectations and tightening regulations, are now prioritising suppliers who can demonstrate tangible progress on environmental and social metrics. Frameworks such as the European Union's Corporate Sustainability Reporting Directive (CSRD) and the Science-Based Targets Initiative (SBTi) are fundamentally reshaping the rules of global trade.

For Bangladesh's export-oriented industries, particularly garments and manufacturing, failure to align with these expectations risks reputational damage, diminished market access, and economic stagnation.

Bangladesh has made commendable strides toward sustainability in selected sectors. The country now boasts more than 200 LEED-certified green garment factories, and several companies are adopting renewable energy, wastewater recycling, and low-impact dyes.

However, these developments are largely concentrated among a few large exporters. Across the broader industrial base, supply chain transparency remains limited. Few companies systematically track greenhouse gas emissions, material use, or waste beyond their direct operations. The challenge becomes even greater when considering upstream sourcing and downstream logistics, which often contribute most to a product's footprint.

Tier 2 and Tier 3 suppliers — including small and informal manufacturers, service providers, and commercial real estate companies — often lack the technical knowledge, financial resources, and strategic incentives necessary to embrace sustainability. Much of Bangladesh's industrial activity still operates outside formal environmental governance frameworks. While polished examples capture international attention, systemic change across the supply chain remains elusive.

Despite these hurdles, the opportunities for Bangladesh's industrial sector to lead in sustainable supply chain transformation are substantial. A critical starting point is deeper engagement with suppliers through sustained capacity-building initiatives. Large manufacturers and brands must treat suppliers as strategic partners, not transactional vendors.

Organising targeted training workshops on energy efficiency, water stewardship, and carbon management can equip suppliers with the tools needed for meaningful change. Case studies from countries like Australia, Germany, and the United Kingdom demonstrate that when suppliers receive knowledge and support, they are far more likely to embrace sustainable innovation.

Measurement and transparency form the foundation of any credible sustainability strategy. Yet, comprehensive greenhouse gas (GHG) emissions measurements across Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased electricity, heating, and cooling), and Scope 3 (upstream and downstream value chain emissions) have not been systematically undertaken across Bangladesh's industries.

This lack of robust data hinders credible target-setting and alignment with global expectations. Given that Scope 3 often constitutes over 70% of a company's carbon footprint, ignoring it leaves a critical blind spot.

Partnerships with local and international sustainability consultancies can address this challenge, streamlining emissions inventory processes and ensuring compliance with frameworks such as the GHG Protocol and ISO 14000 standards. Through such collaborations, SMEs and large organisations can produce credible, transparent emissions reports that meet the demands of the global market.

Greening the supply chain also requires a rethinking of procurement practices. Buyers must formally integrate environmental performance into supplier evaluation, treating it as non-negotiable alongside price and quality. Preferential sourcing from environmentally certified suppliers, offering longer-term contracts to those investing in sustainability, and recognising environmental leadership through awards can all create strong market incentives.

Major brands such as H&M, Unilever, and Nike have demonstrated that sustainable sourcing can enhance rather than diminish profitability. Financial solutions must accompany ambition. Bangladesh's banking sector has an important role in designing loan products for environmental upgrades such as solar systems, water treatment plants, and energy-efficient machinery.

Green bonds, backed by government guarantees where needed, could mobilise vital capital for SMEs. Microfinance institutions and venture capital funds can also explore innovative models to finance sustainable manufacturing projects across the value chain.

Life cycle thinking represents another critical paradigm shift. Companies can no longer focus only on operational efficiencies within their factories; they must rethink products