‘Buyers need to raise apparel prices for supply chain to become climate-neutral’

Humans have always been messing up the natural balance, even more so since the industrial revolution, to eventually begin to face the wrath of nature in the form of climate catastrophe. 

The same intelligence that allowed humans to establish their dominion over the planet and bring the natural world to the brink of a proverbial precipice is now aiding to revise its course and correct some wrongdoings in industrial practices.

While the rest of the world has made significant progress in this regard, Bangladesh is only catching up. Now, it is reportedly home to the world's highest number of green factories. These factories use energy-efficient and environment-friendly technology and practices that save water and energy and minimise pollution.

So far, 157 apparel factories in Bangladesh have received recognition from the United States Green Building Council (USGBC) as environment-friendly establishments, and dozens more are in the process of getting the green certificate.

How are these factories faring with their green setup? Do they find it economically viable for replication?

The Business Standard spoke to Tanvir Ahmed, a director of ETL, to get answers.

Envoy Textiles Limited (ETL) is one of the platinum rated factories that received the Leadership in Energy and Environmental Design (LEED) certificate from the USGBC.

Can you please point out what measures ETL took, and what technologies and techniques ETL adopted to become a LEED Platinum Certified Denim Textile Factory?

We reduced overall water usage by 30%. Groundwater extraction was decreased by 25.7%, while Process Water Consumption was reduced by 35.1%. Also, we reuse 32% of water treated at the ETP.

For recovering Process Water, we use advanced technologies such as condensate recovery system, auto blowdown, cooling water recovery from finishing, etc. 

Water processing has an ultra-filtration process that removes 90-100% of pathogens without chemicals. It also has reverse osmosis technology to get drinking water at the end.

We stopped using diesel and managed to reduce carbon emissions by 10%, and overall energy consumption by 22.8%. Overall electricity consumption was reduced by 15.9%.

Additionally, we planted 15,000 trees to offset carbon emissions. We also reduced chemical usage and ensured chemical safety.  We took many more initiatives, mentioning all of which will require more time. 

It is obvious that when factories adopt climate-friendly policies, the environment, and the planet get benefitted. But does it cost the business an arm and a leg? Do the numbers make sense for the business in terms of profitability?

Earlier, many changes had taken place in our apparel industry in response to the demand of buyers. But the transition towards green factories was an entirely voluntary move undertaken by our entrepreneurs. 

Setting up a green factory costs a lot more than a conventional factory, but factory owners are not getting the necessary policy support. Green factories cost 15-20% more than traditional factories, and the entrepreneurs have to wait a while to reap the benefits. 

One may refer to the findings of a McKinsey report in 2018, which indicated that the global fashion industry emitted about 2.1 billion metric tonnes of GHG (greenhouse gas) — which is equivalent to about 4% of total global GHG emissions. Bangladesh is a small player in the global fashion industry. In fact, Bangladesh's national contribution to global GHG emissions is 0.45%. However, despite its negligible GHG emission, Bangladesh has to play its part and make efforts towards the green transition of its economy, including the ready-made garment (RMG) sector. 

So, for the sake of goodness towards the world, we all, i.e. entrepreneurs, buyers, and the government, have to come forward to make this green effort successful. This initiative shows the owners' willingness and commitment to a greener, sustainable world.

Tanvir Ahmed. Illustration: TBS

The external benefits offered by the green factories are eye-opening — from ensuring drastic improvements in clean water accessibility to reducing pollution levels in surrounding areas. Green production brings social benefits to people living around factories.

Green initiatives will help garment makers go for high-end products in building their confidence as LEED certification signifies the practice of good compliance and environmentally safe procedures.

The other direct benefits that green buildings bring are enhancement of the image of the factory, protection of health, workplace safety and higher productivity of the workers. With the special architectural design, a LEED-certified factory building ensures fewer industrial accidents, like fires, causing fewer casualties.

Environmentally-managed clothing factories give an edge to Bangladesh in the outsourcing market from its major regional rivals — Vietnam, Cambodia and Indonesia. 

Sector stakeholders say that green building initiatives undertaken for marketing reasons in Bangladesh influence the confidence of retailers. The retailers do not ask many questions if they find that the goods were produced in a factory housed in a green building.

At present, the RMG factories having green building certification enjoy a special tax rate of 10%, whereas RMG factories without such certification pay taxes at a rate of 12%. 

Green factories cut energy and water usage by a lot. Then what prevents factories from converting to green ones? What challenges do our businesses have in Bangladesh in adopting climate-smart techs?

The RMG sector is not only human resource-intensive but also natural resource-intensive at every stage of the life cycle. The industry generates large amounts of waste — it requires volumes of clean freshwater for washing, dyeing, and finishing (WDF) of textiles. 

The textile sector is also energy-intensive. For WDF- related activities, hot water and steam have to be generated, which contributes to GHG emissions. Besides, a number of harmful chemicals — including nitrous oxides, sulphur dioxides, carbon monoxide, and chlorine dioxide — are also released from factories through various activities. Therefore, the environmentally sustainable production process in the RMG sector involves waste management, water conservation and energy efficiency.

Some LEED certified factory owners are not happy since they have not seen returns on their green investments in terms of higher revenues. There is a demand on buyers [from our side] to raise apparel prices for the supply chain to be climate neutral. 

Also, it will be difficult for many factories to be climate-positive through energy-efficient technologies because of the additional costs involved. Green factory owners are given a 2% rebate on income tax, which is negligible compared to the cost of building a green factory. 

Catalysing green finance is crucial for the green transformation of the RMG industry through environment-friendly technologies. Global sources such as the Green Climate Fund have been less effective as the disbursement process is slow. Bangladesh Bank has a green fund with enough allocation, but the fund has remained untouchable due to so many conditions; these conditions need to be relaxed.

Bangladesh now has 157 LEED certified factories and counting. How do you evaluate the progress?

Of the 157 factories, 47 are platinum rated, 96 gold rated, 10 silver rated, and 4 have no rating. Some 500 more garment factories are waiting to be certified LEED by the US Green Building Council. 

Currently, nine of the top 10 green garment factories in the world and 40 of the top 100 are located in Bangladesh.

The progress is highly appreciable as it shows the commitment of Bangladeshi factories to operate at a world-class standard. To achieve such heights in a short period of time demonstrates the determination and perseverance needed to provide sustainably-produced apparel.