Bangladesh’s circular economy: Budget blind spots and EU wake-up call
As the EU tightens its climate regulations and regional competitors ramp up sustainability, Bangladesh’s latest budget falls short of preparing its industries for a circular economy. Experts warn that without urgent investment and policy alignment, the country’s export future is at risk
"As the call for recycling grows and fast fashion goes out of fashion in the coming years, millions of jobs will be impacted, and Bangladesh needs to think ahead to step up its capacity to keep up with the changes." Dr Patrick Schröder, Senior Research Fellow, Chatham House, UK.
As the global economy pivots sharply toward sustainable production and climate accountability, Bangladesh is falling behind. Despite rising global concern over environmental impact and shifting regulations in major export markets, the national budget for FY 2025–26 offers only a cursory nod to the circular economy. While the finance advisor's proposed allocation of Tk100 crore "to take necessary actions considering the depth and seriousness of climate change risks" is a symbolic gesture of awareness, it represents less than 0.02% of GDP—woefully inadequate to catalyse systemic transformation in a country both climate-vulnerable and export-reliant.
The ready-made garments (RMG) sector, Bangladesh's economic mainstay, generates over 400,000 tonnes of textile waste annually. Less than 5% is recycled domestically, despite growing global demand for sustainable fibres.
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Ironically, Bangladesh exports jhut (textile scraps) only to re-import it as high-value yarn, leaking both environmental and economic value. Meanwhile, the European Union, our largest export destination, is introducing major sustainability-driven trade barriers. The upcoming Carbon Border Adjustment Mechanism (CBAM) will impose tariffs on carbon-intensive imports, and the Digital Product Passport (DPP), effective by 2027, will require full transparency, traceability, and lifecycle data, especially for textile goods.
Regional peers such as Vietnam, Cambodia, and India have already adopted national circular economy strategies to future-proof their exports. Bangladesh, by contrast, lacks a clear roadmap and financial muscle to match. Yet, promising examples within our borders show what's possible. Dr Patrick Schröder points to the Ella Pad initiative as a standout case of inclusive circularity—reusing garment waste to produce low-cost menstrual hygiene products while empowering women through employment and health awareness.
Another is Cyclo, a pioneering green fashion brand that upcycles discarded fabrics into stylish, sustainable apparel, proving that environmental stewardship and market innovation can go hand-in-hand.
Bangladesh has no shortage of ingenuity. What it lacks is a coherent policy framework, forward-looking investments, and an industrial strategy aligned with global trends. As Dr. Schröder rightly warns, "Bangladesh has the talent and industrial base to lead in circular textiles—but without vision and investment, it risks being left behind." Circularity is no longer a luxury—it is the price of entry into future markets. This budget may have missed a critical opportunity, but with urgent public-private collaboration, Bangladesh can still pivot toward a greener, more resilient economic future.
Mamunur Rahman is coordinating Ella Alliance. He is also a US Fulbright/Humphrey Fellow and British Chevening scholar.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
