A massive 78 per cent of multinationals (MNCs) will remove suppliers that endanger their carbon transition plan by 2025 even as supply chain emissions account for an average of 73 per cent of MNCs’ total emissions and more than two thirds (67 per cent) of MNCs say tackling supply chains’ emissions is the first step in their net-zero transition, rather than focusing on their own carbon output while suppliers in 12 key emerging and fast-growing markets can share in around US $ 1.6 trillion worth of business if they can remain part of the MNC supply chains.
These are some of the findings of a study titled Carbon Dated, conducted by Standard Chartered, which maintained that suppliers in Bangladesh are at risk of losing US $ 18.7 billion worth of exports a year if they can’t reduce carbon emissions in line with the plans of their major clients even as it highlighted the risks and opportunities for suppliers in emerging and fast-growing markets as large corporates transition to net-zero emission.
It goes without saying that as things stand now, local suppliers stand to lose a significant amount in terms of exports if they fail to control and minimise carbon emissions as controlling carbon emissions has become even more important considering the impact of temperature rise on the environment and in light of what the Secretary-General of the United Nations, Antonio Guterres, stated at the Climate Change Ambition Summit, which underlined that if countries belonging to the G-20 are unable to drastically reduce their emissions, there are apprehensions that global temperature could rise by up to 3 degrees Celsius, which would be nothing short of hazardous, to say the least.
It may be mentioned here that many countries belonging to the Global North have already strengthened their climate response agenda to address climate change even as the United Kingdom, Canada and Japan have pledged to achieve carbon neutrality and net-zero emissions by the end of 2050 while US President Joe Biden has also signed an executive order to have the United States rejoin the Paris Agreement even if in Asia, India and China have vowed to cut down a significant portion of carbon emissions by 2030 while India is reportedly on track to reduce carbon emission to 37-39 per cent below its 2005 levels and China envisages bringing down its carbon emissions by at least 65 per cent by the end of 2030.
Bangladesh as a country and its garment industry, which is the lifeline to the country’s economy and employment generation, cannot afford to overlook the various global climate pledges and more so considering the country’s biggest apparel export destinations are in the West- Europe 60 per cent, USA 18 per cent and Canada 4 per cent while also to keep pace with the global buyers, it is essential that the climate targets in Bangladesh are aligned with those at the global levels.
In the meanwhile, the Standard Chartered study has further added that 64 per cent of MNCs believe emerging market suppliers would struggle more than their peers in the developed markets to meet the emission reduction targets even as a further 57 per cent is prepared to replace emerging market suppliers with developed market suppliers to aid the transition as the
MNCs are concerned that emerging-market suppliers are failing to keep pace with for two key reasons: insufficient knowledge and inadequate data.
“It’s no surprise that as multinational companies transition to net-zero, they will have to ask their suppliers to evidence their own transitions,” maintained Group Chief Executive of Standard Chartered Bill Winters, even as he said MNCs need to incentivise the suppliers to help them kick-start the transition journey while adding Governments and the financial sector have a role to play by creating the right infrastructure and offering the necessary funding even as he went on to add that suppliers, especially those in emerging and fast-growing markets, cannot do it alone.
As far as Bangladesh is concerned, stakeholders to a great extent are playing their roles in this direction even as the country’s National Board of Revenue (NBR) has recently proposed to allocate another US $ 200 million for the Green Transformation Fund (GTF) to help export-oriented textile and leather manufacturing industries set up environment-friendly facilities, a move that has been welcomed by the industry leaders
It may be mentioned here that earlier, in 2016, the Bangladesh Bank introduced a US $ 200 million refinance scheme namely the Green Transformation Fund for the export-oriented industries of the textile and leather sectors to set up environment-friendly infrastructure and, prior to that the country’s central bank (Bangladesh Bank) had also provided another similar fund only for financing green building.
The GTF is also intended to facilitate access to financing in foreign exchange by all manufacturers, exporters in export-oriented textiles and textile products, and leather manufacturing sectors to import capital machinery and accessories for implementing environment-friendly initiatives while the refinance fund is provided for water use efficiency in wet processing, water conservation and management, waste management, resource efficiency and recycling, renewable energy, energy efficiency, heat and temperature management, air ventilation and circulation efficiency and work environment improvement initiatives in the export-oriented textiles and leather industries.
Meanwhile, the Green Climate Fund, which is the main UN-backed climate finance channel for developing countries, has also approved a US $ 250-million loan programme for projects to make garment factories in Bangladesh more energy efficient last year even as buoyed by economic arguments and pressure from brands to reduce emissions along the fashion supply chain, an increasing number of Bangladeshi factories are taking steps to lower their energy usage, industry experts said.
The Partnership for Cleaner Textile, a programme led by the International Finance Corporation (IFC) to assist Bangladeshi factories in adopting cleaner production practices, said it has helped 338 factories cut their greenhouse gas emissions by more than half a million tonnes a year.
That’s equal to removing over 119,000 cars from the road, underlined Nishat Chowdhury, Programme Manager for PaCT, which was launched in 2013 and is supported by Denmark, Australia and the Netherlands, as well as major clothing brands, while adding that more and more factories are nominating themselves for the programme, because they know they must go green to remain competitive in the international market.
It may be mentioned here that the apparel industry produces around 4 per cent of the world’s planet-warming emissions, equal to the combined annual total of France, Germany and Britain, according to a 2020 study by the non-profit Global Fashion Agenda and consultants McKinsey and Company even as the UN Environment Programme in 2019 put the fashion industry’s share of global carbon emissions at 10 per cent – more than for all international flights and maritime shipping – and said it was the second-biggest consumer of water.
Keeping the same in perspective, climate activists say the global fashion industry, in line with the Paris Agreement goals of limiting average temperature rise to well below 2 degrees Celsius above preindustrial times, should intensify efforts to cut climate-heating emissions and Bangladesh garment industry, it appears, is more than ready to play its role in lowering the carbon emissions while also save water and electricity as well.
Recently, Youngone Corporation, has commissioned Bangladesh’s largest rooftop solar power project with a cumulative capacity of 40 megawatts (MW) at the Korean Export Processing Zone (KEPZ) in Chittagong, which it owns, apart from coming up with green buildings and planting 2.4 million trees in the KEPZ.
“We have one of the best solar power plants, as all the high-quality panels have been imported from Korea… It has taken around eight months to complete the first phase. KEPZ will not only harness the power of the sun to meet its increasing energy needs in a sustainable manner but also provide any surplus renewable energy to the national grid, demonstrating its commitment to social responsibilities,” underlined Colonel (Retd) Md Shahjahan, the Managing Director of KEPZ Corporation (BD) Limited.
With a view to making the best use of the power generated by the rooftop solar plants, Youngone Corporation (BD) has signed an agreement with the BPDB for supplying its additional power to the national grid under a back-to-back system.
It is not for nothing after all that the United States Green Building Council (USGBC) recently has awarded the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) with the prestigious ‘USGBC Leadership Award’ for its efforts at building a green garment sector, which, as one may put it, is a testament to what the industry is doing towards achieving all round sustainability goals.
“BGMEA is the first organisation in the world to receive such an award. It is a big international recognition for us,” underlined the proud BGMEA President Faruque Hassan while adding that currently, Bangladesh has 143 Leadership in Energy and Environmental Design (LEED) certified garment factories, the highest in the world and of the 143 factories, 41 are platinum rated and the rest are gold and silver rated ones certified by the USGBC.
In light of the above developments and the diverse efforts put in by the various industries and sectors as well as their associated stakeholders, it would be very sad, if suppliers in Bangladesh have to do away with US $ 18.7 billion worth of exports a year, as has been underlined in the Standard Chartered’s report.