Behind Bangladesh leather industry’s 'LWG certification gap'

It has been seven years since tanneries from Dhaka's Hazaribagh started to shift to Savar Tannery Industrial Estate.

The project to relocate some 160 tanneries to Hemayetpur in Savar from Hazaribagh was planned back in 2003 and was supposed to end in 2005. The project work actually began in 2013. 

The tanners were reluctant to move out of Hazaribagh. The project completion deadline was also deferred a dozen times.

Finally in 2016, when the tanneries started shifting to Hemayetpur, construction of the central effluent treatment plant (CETP) was not complete.

Today, the waste management system is still a mess, and the Tannery Estate is now polluting the Dhaleswari river along with Buriganga.

The greatest price that the leather industry – ranked second in terms of export earnings after RMG – pays for the failure of the CETP is that the factories located at the Estate cannot export leather goods to good international brands as they cannot get the required Leather Working Group (LWG) certification.

As a result, a large part of the exports in this sector consists of animal hide, and the irony is, that we eventually end up buying foreign-made leather goods made from that very hide. In addition, the lack of certification means the companies cannot get a good price for the hide.

Interestingly, despite this wholesale handicap to the industry, there are three leather goods manufacturing companies in the country that are LWG certified, and doing business with the global (alongside domestic) market just fine.

So what has contributed to creating this gap between the haves and have-nots in the leather industry, in terms of LWG certification?

According to industry insiders, the CEPT at the tannery estate in Hemayetpur, Savar, which is not fully functional, creates the gap. The LWG-certified companies are located outside the estate and thus not handicapped by the failing CETP.

Also, these compliant companies actively abide by the country's environmental laws and rules which is key in getting the certification.

Tannery owners and Estate officials have long been blaming each other for the CETP not being fully functional. Estate officials and experts say the water usage at the tanneries exceeds the standard level and the chromium used during leather processing is not separated before releasing the wastewater for the CETP, eventually overwhelming the treatment process. 

Also, the leachate from the solid waste dump is known to be polluting the river flowing by the side of the Estate.

LWG certification takes into consideration, among other factors, the amount of water used in the process, the properties of the wastewater discharged, energy usage and solid waste management. 

Now, the tanneries located inside the Estate hardly have any means to escape the situation, although there is no shortage of discussions on the topic among the factory owners, high-level government authorities and the company responsible for the maintenance of the CETP - Dhaka Tannery Industrial Estate Waste Treatment Plant Company Limited.

"We are reluctant," Afzal Hossain, an auditor from the Leather Working Group, told The Business Standard when asked why all the leather companies except three lack the LWG certification. 

LWG currently has 15 approved auditors worldwide, who carry out official audits using the LWG Audit Standards and issue LWG certificates. Afzal, a Bangladeshi national, has been with the Group since April 2022.

Who are "we?" We asked. 

"Everyone," Afzal replied.

When pushed for a little more detail, he explained that when a manufacturer is unable to control his water usage in the tannery, leading to the failure of the CETP, he is reluctant to comply. 

On the other hand, when the authorities do not take punitive actions against the violators, they show their reluctance to improve the situation.

"I have seen in India, and read reports about Pakistan, where there is no direct water pipeline to the tanneries. They have to buy water from tanks, and moreover, there is a limit to how much they can buy every month," said the LWG auditor. "When you can buy limited, you can drain limited."

"The compliant leather manufacturers are located outside the tannery estate. One is in Chattogram, one in Gazipur, and the other is in Ashulia. They do not have to use the CETP in question."

Asked if the tanners in the Estate are in fact a victim of the system, Afzal posed a counterquestion: "The relocation project started in 2003. Why haven't the tanners formed a technical team to figure out the problem and solve it with the help of the government?"

The expert also said many tanners do not want to spend extra money to go through auditing and are happy with whatever business they do from selling hides to foreign buyers.

"On the other hand, the owners of the three compliant companies had a long-term vision, they identified and solved their problems. They wished to grow," the auditor observed. He added that being compliant mainly means adhering to the country's environmental rules and regulations.

Afzal Hossain also opined that establishing the tannery estate in Savar has been a big mistake. Instead, we should have built it farther south, close to the estuaries, in case the saline water discharged from the tanneries wouldn't have to be treated to get certified. 

TBS also reached out to Atiqul Islam, Senior General Manager at Apex Footwear Ltd, one of the three LWG-certified companies.

He said, "LWG certification is an environmental audit: it takes into account various parameters like water usage, presence of harmful chemicals in the wastewater, environmental impact etc and then issues the certificate. Now, the CETP in the Tannery Estate is not up to the mark, so LWG doesn't come here to audit them." 

"Our factory is not in the Hemayetpur Estate. So we do not use that CETP. We have our own ETP. And we have this ETP since 1996," he added. "We purify water, reuse it and do whatever is necessary to ensure compliance. We also watch our energy consumption and waste management." 

LWG awards three medal certifications based on the scoring of the factory: gold, silver and bronze. Bangladesh has one gold (Apex Footwear) and two silver-rated companies (ABC Leather Ltd and Riff Leather Ltd).

Apex Footwear exports shoes to the developed world - countries like the United States, Italy, Japan, etc.

Atiqul Islam said he wants every company to acquire LWG certification because it is crucial in doing a leather product business with good brands. "This will help increase exports and will also be beneficial to the environment," the Apex GM said.

However, Afzal Hossain mentioned that only 26% to 28% of all leather worldwide is certified, with 72% to 74% still to come under certification. There is a market for those leathers too.

But certification gives products a comparative advantage. 

Ashraful Haque. Sketch: TBS

Recently, tannery owners, frustrated with the faulty central effluent treatment plant (CETP) at the Tannery Industrial Estate in Savar, have taken steps to set up ETPs on their own to raise their chances of getting compliance.

According to a TBS story, Bscic sources said out of about 160 tanneries, five have already taken the initiative to build their own ETPs. Of the five, two tanneries have received final approval from the Ministry of Industries and are currently building the treatment plants.  

Tanners receive a 10% cash incentive from the government against the export of leather goods and footwear. Afzal said if the tanners used half of that incentive, that would amount to Tk500-600 crore, which would be enough to fix the CETP.