Buyers don't pay a penny extra to apparel exporters for being green
For Bangladesh’s garment manufacturers, the expectation was that these green investments would strengthen buyer confidence, improve market access and ultimately command better prices
Highlights:
- LEED-certified factory requires 20%-30% higher building cost
- Green factories don't earn more than conventional ones
- Country now has 284 LEED-certified garment factories
- RMG exports declined 1.64% in FY2025-26
- Accessibility to markets increased, financial expectation largely unfulfilled
- Buyers focus more on energy use, water consumption, waste generation, traceability
Over the past decade, Bangladesh has built the world's largest cluster of eco-friendly apparel factories, investing millions to rebuild its global image after the Rana Plaza disaster. Yet, despite hosting 52 of the world's top 100 LEED-certified facilities, Bangladeshi manufacturers are finding that green credentials rarely translate into higher price tags.
Building a Leadership in Energy and Environmental Design (LEED)-certified garment factory is a costly investment. Industry estimates suggest developing a new LEED-certified factory requires around $8 million to $15 million, depending on the scale and certification level, while construction costs are typically 20% to 30% higher than those of a conventional factory.
The additional spending goes into energy-efficient building designs, water recycling and waste management systems, improved ventilation, renewable energy solutions, and other sustainability features.
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For Bangladesh's garment manufacturers, the expectation was that these investments would strengthen buyer confidence, improve market access and ultimately command better prices.
That expectation has, however, largely remained unmet.
"LEED has become more of a marketing gimmick than a commercial advantage. Buyers don't pay a penny extra simply because a factory is LEED-certified," said Shovon Islam, managing director of Sparrow Group, arguing that Bangladesh has attached far greater commercial significance to LEED than international buyers actually do.
The country now has 284 LEED-certified garment factories, including 121 Platinum and 144 Gold-rated facilities.
The achievement helped restore confidence in Bangladesh's apparel industry after the Rana Plaza disaster and established the country as a global leader in sustainable manufacturing.
Image rebuilt, but the premium never came
For many entrepreneurs, going green was never primarily about earning immediate financial returns.
Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the industry's first objective after Rana Plaza was to rebuild Bangladesh's damaged image and prove its factories met world-class compliance standards.
That objective, he said, has largely been achieved.
Commercially, however, the picture is different.
According to Hoque, green factories have made it easier for manufacturers to approach international brands and expanded their access to buyers. But brands have generally not offered higher prices or incentives to offset the significantly higher investment required to build green factories.
"Our accessibility has increased, but the financial expectation has largely remained unfulfilled," he said.
He noted that buyers willingly pay premiums for products such as organic cotton, but similar recognition has not been extended to factories making voluntary investments in sustainability.
"This was a proactive initiative of entrepreneurs. Buyers never required us to build green factories," he said.
Looking beyond the price tag
Not everyone believes LEED's value should be judged solely by buyer premiums.
Mohiuddin Rubel, former BGMEA director and founder and chief executive officer of Bangladesh Apparel Voice, said manufacturers should evaluate return on investment by factoring in long-term savings in electricity, water and operating costs, alongside environmental and workplace benefits.
He said LEED-certified factories improve resource efficiency while incorporating features that reduce heat stress and create better working environments.
"LEED is a business decision. No buyer forces anyone to obtain it," Rubel said.
"If the long-term savings in energy, water and operational efficiency justify the investment, then the return on investment will determine whether it makes sense for a manufacturer."
Buyers looking beyond LEED
Some manufacturers argue the global sustainability conversation has already moved beyond green buildings.
Shovon Islam said international buyers increasingly evaluate suppliers through measurable sustainability performance rather than building certifications.
He pointed to the Higg Index, which independently verifies factories based on energy consumption, water use, waste generation and other environmental indicators, as the benchmark buyers increasingly rely on. He added that the European Union's emerging due diligence requirements are placing greater emphasis on supply-chain traceability and verified sustainability performance.
"LEED is not a buyer requirement," Islam said. "Today, buyers want verified sustainability data. They measure energy use, water consumption, waste generation and traceability. That's where the industry is heading."
He argued Bangladesh risks placing too much emphasis on LEED certification while global sourcing decisions increasingly depend on broader environmental, social and governance (ESG) performance.
Islam also pointed to manufacturers such as Youngone, which have built strong global reputations without relying on LEED certification, arguing that operational excellence ultimately matters more than certification itself.
While the number of LEED-certified factories in Bangladesh keeps rising, RMG exports from the country declined 1.64% to $38.70 billion in FY2025-26, underscoring the need for stronger competitiveness as the country prepares for LDC graduation.
