Global fashion brands are key to green transition

Dhaka—How much does it cost to operate a sustainable, low-emissions garment factory—one with a reduced environmental impact that meets the increasingly stringent environmental, social, and governance (ESG) requirements of global apparel brands and retailers?

While factories clearly differ in terms of size, location, and type of production, it is not uncommon for factory upgrades to cost millions, if not tens of millions, of dollars.

In fact, across Bangladesh, factories have collectively spent hundreds of millions of dollars on industrial upgrading, retrofitting, and developing new, green factories in recent years to meet the requirements of the global fashion industry to achieve carbon-emissions reduction targets.

Ours has been a quiet revolution. When a garment supplier invests millions of dollars in new effluent-treatment technology, smart energy-saving technology, and solar power, there is no song and dance. As factory owners, we accept our place in supply chains. It is our customers in the fashion industry who tell the “green supply chain” story to fellow consumers.

A question I’ve been pondering, however, is this: Should the fashion industry support suppliers in the green transition? Should they support the industrial upgrading required to meet future emissions targets?

Are brands and suppliers partners in this process, or is the green transition a journey that suppliers must take on their own?

A couple of years ago, it became apparent that I needed to make an investment for my factory to reduce its environmental burden. It would cost me a seven-figure sum, and during the pandemic, I did not have the money at hand. So I approached a major global fashion brand for support, but they said no. I then asked if they would pay for the required upgrade and deduct the costs from monies owed on future orders. This idea was also rejected. Eventually, in 2023, I managed to fund the project out of my own pocket.

Based on this and from talking to other suppliers, it became apparent that fashion brands have no interest in financially supporting supply chains to be more sustainable. This is not a critique of the brands, just a simple statement of fact. But it represents a major problem when it comes to meeting climate targets and achieving net zero carbon emissions.

It is no great secret that garment supply chains have been reeling since the pandemic. A lack of orders is placing continued downward pressure on prices in an industry where manufacturers are already operating on tight margins. We are not like other industries where supply chains hold considerable power and are able to drive a hard bargain on prices with customers. Apparel makers are mainly price-takers. And fashion brands will, for the most part, squeeze suppliers on prices. As suppliers, we accept this. In the case of larger garment manufacturers, it is possible to absorb the downward pressure on prices via economies of scale and improved efficiencies.

The challenge, however, comes when manufacturers are faced with the pressure to operate more sustainably and hit climate targets. Many factory owners simply do not have the upfront capital to make investments in such initiatives. This means that such investments will be delayed or will not happen at all.

Is this really what the fashion industry wants? What about the urgency of the climate crisis?

It is my firm belief that sustainability teams in the fashion industry are earnest and genuine about their desire to reduce their environmental impacts. But do they truly understand the financial constraints faced by suppliers that could be thwarting progress on these issues? If brands and their suppliers were to collaborate on this issue, with the former supporting the latter on financing, we could address such concerns much more quickly.

Unlike others, I don’t begrudge the record profits made by global fashion brands or the fact that they’ve grown rich on the back of their Asian supply chains. This is capitalism and I accept it, warts and all.

What I would like to see, however, is some of this profit distributed among supply chains in the form of loans, grants, and other financial instruments. If left to suppliers alone, the green transition would take decades and would miss many targets along the way.Fashion brands, with their financial might and global reach, hold the key to pushing sustainability. They must start backing their green rhetoric with money to enable suppliers to make the changes required for a more eco-friendly and sustainable industry.

The Daily Star/Asia News Network

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Mostafiz Uddin is managing director of Denim Expert Limited, and founder/CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange.

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The Philippine Daily Inquirer is a member of the Asia News Network, an alliance of 22 media titles in the region.