Enhancing investments in safety retrofits and environmental upgrades: Business cases in the textile and garment sector in Bangladesh

Accounting for 80 per cent of Bangladesh's exports and employing over four million people, the fast growing textile and garment industry continues to be a key pillar in the country's economic development. But five years after Rana Plaza, sector-wide compliance with national and international safety and environmental standards in production processes still poses challenges. Deficient safety standards threaten the health of the workforce and fuel social conflict between employers and their employees. At the same time, non-compliance with environmental standards is causing overexploitation and pollution of water resources, further aggravating other environmental problems and energy scarcity in the country and jeopardizing long-term growth prospects of the sector.

Joint efforts by the government, industry associations, international buyers, development partners and the industry have already contributed to an increased awareness, the launch of sector initiatives to address the challenges, and enhanced capacities of national authorities to monitor compliance with safety and environmental standards. However, these efforts have so far largely failed to stimulate corresponding investments by garment and textile factories. The limited capacity of majority of companies in assessing the medium-term commercial returns of such investments, the lack of information about existing standards and feasible and cost-effective investments for improving safety and environmental standards, coupled with a low level of business knowledge needed to analyse and weigh up the relevant risks and benefits, have been identified as some key factors inhibiting investments. At the same time, limited access of many textile factories to adequate financial services and financial institutions reluctant to engage in business with textile are considered additional obstacles.

adelphi is assisting the Deutsche Gesellschaft  für Internationale Zusammenarbeit (GIZ) and its partners to bridge this knowledge gap and show ways to overcome investment barriers that textile factories face. To do so, adelphi and its partners select and compile business cases on how to use funding facilities offered by the commercial financial sector in Bangladesh to fund commonly required safety retrofits and environmental upgrades. In this context, these business cases will form a key input for awareness raising, training input and marketing efforts in the textiel/garment as well as in the private financial sector.