Circular Economy Opportunities in Bangladesh

Bangladesh is a key player in global apparel and textile manufacturing, pivotal to its socio-economic growth. The country has committed to international legislation promoting social, economic and environmental development. Embracing the UN Sustainable Development Goals, Bangladesh adopted a 10-year Framework Programme on Sustainable Consumption and Production (SCP-SDG12) to enhance sustainable practices and resource efficiency. Recent efforts demonstrate Bangladesh’s strong commitment to SGD12, including the creation of programmes to address challenges and promoting sustainable initiatives like the Multi-sectoral Action Plan for Sustainable Plastic Management.

Bangladesh is looking to transition from a linear to a circular fashion model. The Netherlands Embassy is exploring opportunities to collaborate with Dutch and local partners to facilitate this transition. 

Interested in discovering more about circular business opportunities in Bangladesh? Below you will find an overview of the country’s policy landscape, circular economy strategies, and selected opportunity areas within the Ready Made Garment (RMG) sector.

An overview of the most important information for circular business in Bangladesh

Economic Indicators

  • Size: 147,630 square kilometres [3.6 times bigger than the NL]
  • Total Population: 172,954 million (2023) [∼10 times the population of the NL] 
  • GDP (nominal+ranking): 2,688 USD per capita, World Ranking: 34
  • Purchasing Power: €8,7 thousands (2023)
  • Import from the NL: 336 million USD (2021) 
  • Export to the NL : 1277,44 million USD (2021)
  • Economic Growth: 7.1% (2022) 
  • Corruption perception Index: 147/180 (2022) 
  • Unemployment rate: 4.7% (2022) 
  • Currency and exchange rate euro: 1€=117.81 Bangladeshi Takas (2023) 
  • Time difference with NL: +4/5 hours

Bangladesh’s Urban Population v Waste Generation. Source: World Future Council

Circular Economy Indicators

  • Global Innovation Index: 102/132 (2022) 
  • Recycling rate of municipal solid waste: between 37% and 77% (2021) 
  • Renewable Energy Production: 3% (2022)

The embassy wants to strengthen bi-lateral collaboration through Dutch circular solutions in the RMG sector to become more sustainable and competitive. The embassy will help facilitate knowledge transfer and foster partnerships to demonstrate NL technology and solutions

Tanzila Tajreen - Senior Policy Advisor at the Netherlands Embassy in Bangladesh

Policy Landscape

Since gaining independence in 1971, Bangladesh has made significant strides in reducing poverty, promoting economic growth, and achieving its UN Millenium Development Goals

The country is recognized internationally for its rapid economic development and aims to reach middle-income status by 2026. Bangladesh actively participates in global discussions and upholds international agreements related to aid, development effectiveness, partnerships, and the Sustainable Development Goals (SGDs). 

In 2016, Bangladesh ratified the Paris Agreement, committing to a 5% reduction in greenhouse gas emissions below the ‘business-as-usual’ level by 2030, utilising domestic resources independently of GDP. The country is also working on establishing a legal framework to address environmental concerns, formulating emission-reduction policies, and implementing a sustainable economic strategy for power generation. 

The national government has also initiated the Nationally Determined Contributions (NDC) Implementation Roadmap within the Seventh Five-Year Plan (7FYP). This plan includes activities like promoting low-carbon development, adopting a comprehensive government approach to climate readiness, enhancing institutional capacity and coordination, and fostering innovation and research.

Ready Made Garments (RMG)

Bangladesh’s successful textile sector is based on affordable energy and low labour costs, alongside liberal public policies that promote foreign investment, making it the second largest exporter in the world after China. The local Ready Made Garment (RMG) industry is the major economic sector, worth $47 billion and accounting for 84% of national exports and 10% of GDP. However, the industry is simultaneously responsible for 10% of the total emissions of Bangladesh. 

In recognition of the considerable socio-environmental footprint of RMG, Bangladesh has initiated several sustainability programs. Being awarded with LEED certificates already in 2001, the country is now a global leader in sustainable fashion, boasting the highest number of green garment buildings and having committed to implement circular across the entire value chain.

Improving labour conditions and advancing circularity is a key objective of the national government. These efforts are strongly supported by the Embassy of the Kingdom of the Netherlands, in the belief that improving working conditions and sustainability in the local fashion industry will ultimately lead to increased sector competitiveness. Several Netherlands’ programmes support the government, employers, and trade unions in Bangladesh to enhance occupational safety and health, community involvement and social and environmental compliance. In the upcoming years the Netherlands hopes to intensify collaborations with Bangladesh on circularity specifically in the RMG sector, by promoting Dutch technologies on waste, water and energy reduction and exchanging knowledge on best practices to foster circularity in the sector. 

Circular (designed) RMG

As the world’s second largest garment exporter, Bangladesh is strongly committed to decreasing its fashion industry emissions and integrating sustainability into the core of its operations. Following the COP26 in Glasgow, Prime Minister Sheikh Hasina announced that Bangladesh was aiming to reach 40% of renewable energy by 2041, as part of broader efforts to reduce the carbon footprint of the RMG sector. 

To specifically incentivise circularity, the national government introduced the National 3R (reduce, reuse, and recycle) Strategy as a comprehensive guideline for the local fashion industry on their path to circularity. By facilitating collaboration between major fashion brands, textile producers and recyclers, Bangladesh is looking to foster long-term sustainability. The Strategy has 3 main aims: 

  1. Reduce raw material use to reduce overproduction and textile waste – which currently generates an average of 250-300 kg of waste fabric per factory a day. 
  2. Reuse materials wherever possible to avoid extracting new resources and creating additional waste. Here, the on-going process of selling waste textile locally for the manufacturing of children’s clothes or to the bedding sector could represent a feasible solution to be incentivised. These scraps, once recycled and processed, can be used in products such as mattresses, pillows, cushions, seat filling for house furniture or means of transport (e.g car or bus seats). 
  3. Recycle to recover fibres and materials with the goal to eventually expand upcycling.

There are plenty of opportunities for collaboration with Dutch actors already active in circular fashion. In particular, innovators and entrepreneurs working on circular design and mechanical and chemical recycling for fibres and clothing will find a thriving ground for international cooperations.

Textile Waste Diversion and Management

RMG factories churn out half million tonnes of material waste, besides the 6,500 tons of daily waste which is projected to increase to 8,500 tons by 2032 due to the increase of population and demand. With only ∼5% of waste currently being recycled by some RMG units that use recycled fibres to produce yarn and fabrics, the potential for circular innovation in waste management is enormous.  

Currently landfills in Bangladesh pose a threat to the health of local communities and ecosystems. The waste spreads due to illegal and open air dumping into nearby neighbourhoods and farms, and toxic substances permeate into the ground, leading to severe leachate pollution.

It is thus ever more crucial to accelerate diversion and proper collection, sorting and management of local textile waste, fostering the local recovery and recycling industry. New partnerships or international initiatives, together with the National 3R Strategy, should aim at improving solid waste management through a circular approach.

Innovative solutions should focus on redirecting excess production textiles to other sub-sectors, for example to children clothing where the needed amount of fabric is less. Waste management solutions that also facilitate supply chain realignment offer vast opportunities for Dutch entrepreneurs who are developing solutions to repurpose waste and excess textiles via innovative technologies and systems.

Water and Energy Circularity during production

Given the severe air and water pollution affecting the local population and ecosystems, one of the objectives of the RMG circular strategies is to focus on regenerative practices. Circularity can minimise the use of pollutants and toxic substances, and the need for water and energy inputs during manufacturing. Ultimately, this would make the whole value chain – including dyeing and transport – nature-positive. 

A concrete example of actions in this direction is the national Renewable Energy Policy. Already implemented by the Bangladesh Garment Manufacturers and Exporter Association (BGMEA), its objective is creating green factories by leveraging Bangladesh’s geographical position and subsequent great potential to produce renewable energy (particularly solar and biomass). 

BGMEA RMG factories have started installing solar photovoltaic systems and water treatment plants. This enables carbon emissions reduction and a  lower energy, and groundwater usage, while increasing the use of sustainable raw materials. With the appropriate technological support from both local and international actors, the highly water intensive dyeing processes of these factories can be significantly reduced. Sustainable solutions to minimise sewerage water discharge are urgently needed. 

Another notable initiative is the Partnership for Cleaner Textile (PaCT). This features a textile business centre (TTBC) where training and workshops are regularly organised on cutting-edge technologies and resource efficiency solutions such as ‘Green Buildings’, ‘Solar PV and LED Lighting’, ‘Resource Recovery’ or ‘Waste Water Management’. Importantly, the TTBC supports factories to adopt resource efficiency technologies and has become a one-stop hub for knowledge exchange and business solutions.