Global buyers must share the cost in RMG’s green transition

For years, Bangladesh’s export success was built on a simple promise to global buyers. We would deliver at scale, at speed, and at low cost. In return, the buyers invested, expanded, and hired millions of workers and helped turn the country into one of the world’s leading sourcing destinations.

The times, however, they are a-changin.

Across the global supply chain, decarbonisation is becoming a new commercial test. Buyers increasingly want suppliers to cut emissions, install renewable energy, upgrade machinery, improve energy efficiency, recycle effluent, track data more closely, and meet a growing list of environmental requirements. In principle, this is understandable. Climate change has posed many real challenges for us and the apparel sector, like many other industries, must reduce its environmental impact. However, I believe there is a serious problem in how this transition is unfolding.

Too often, decarbonisation and sustainability are being treated not as a shared responsibility but as a cost to be pushed down the supply chain. My personal observation is that, in Bangladesh, that means the burden is falling hardest on small and medium-sized enterprises. This is creating a dangerous divide especially when larger suppliers, with stronger balance sheets and easier access to finance, are better placed to respond to the pressing demand to go greener. They can invest in solar energy, efficient boilers, water recycling, modern machinery, energy audits, and compliance teams. Smaller factories, even if they are efficient, reliable, and vastly experienced, often cannot move at the same speed. They may lack access to affordable finance or not have the land, internal technical capacity, or margin room to fund major upgrades on their own. This means buyers are consolidating their sourcing base around bigger partners who can promise rapid progress on decarbonisation. Small and medium-sized enterprises (SMEs), including many that have served customers loyally for years, are being quietly edged aside. This should concern all of us.

Bangladesh’s SME manufacturers are the backbone of the economy. They create employment, support local communities, and often provide flexibility, specialised production, and entrepreneurial energy that larger groups alone cannot replace. If these businesses are slowly phased out because they cannot self-fund the green transition, then the country risks building a two-tier industrial model. One tier will consist of large suppliers able to keep pace with rising buyer demands while the other will be made up of smaller firms struggling to survive not because they are unwilling to improve, but because they are being asked to finance a global transition without any support.

For decades, international buyers benefited from Bangladesh’s low wages, competitive overheads (operating costs such as factory rent, utilities, staff salaries, and maintenance), and relentless pressure on prices. That cost advantage helped global brands, retailers and importers build profitable sourcing models. Now, when major investment is needed to decarbonise those same supply chains, many buyers appear to want the producing side to absorb the bill alone which is not entirely fair. If decarbonisation is genuinely a strategic priority, then it cannot be treated as a free add-on extracted from suppliers through tougher scorecards and shifting compliance demands. A factory cannot install new systems, reconfigure operations or invest in cleaner energy simply on goodwill. These are commercial decisions with real costs.

If the buyer still expects the lowest price, the fastest lead time and the highest compliance standard, while contributing nothing to the investment required, then decarbonisation becomes another mechanism for putting more pressure on the suppliers. And this will widen the existing gaps in the industry when it comes to being just and inclusive as many suppliers might fail to meet the goal, some might lose orders, while the rest may leave the industry altogether. This issue is not limited to ready-made garments. Similar pressures are emerging across other export-oriented sectors. Wherever global supply chains adopt stricter environmental standards, the same question arises: who pays? If the answer is always the supplier, then developing-country producers will once again carry a disproportionate burden. However, I believe there is a better way.

First, buyers should move towards genuine co-investment models. If a supplier is expected to make measurable decarbonisation upgrades, then the commercial relationship should reflect that. This could include longer-term sourcing commitments, preferred supplier agreements, shared financing structures or direct support for approved projects. A buyer that wants cleaner production should be prepared to help create the conditions for it.

Second, pricing must become more honest. For years, sustainability has been discussed as if it can be delivered without any serious cost implications, which is unrealistic. Cleaner production often requires capital expenditure and operational adjustment. Suppliers cannot be expected to deliver lower emissions while prices remain detached from the cost of achieving them.

Third, SME-focused green finance needs to expand. Bangladesh’s policymakers, financial institutions, and development partners should work together to design instruments that are practical for smaller manufacturers. Credit guarantees, concessional lending, pooled financing platforms, and technical assistance programmes can help here. Financial schemes should be easy for SMEs to access without requiring extensive technical or financial expertise, while also avoiding overly strict or impractical conditions.

Fourth, technical support must be widened beyond the largest players. Many SMEs need help with energy mapping, emissions data, equipment selection, project design and verification. Shared service platforms, industry associations and public-private partnerships could play a bigger role here.

Finally, buyers should adopt transition pathways that are realistic and inclusive. Not every supplier can transform overnight. But many can make meaningful progress if expectations are clear, timelines are sensible, and support exists. The right question is not which factories are already perfect; it is which factories are committed and capable of improvement if given a fair chance.

Bangladesh should not accept a future in which only the largest suppliers are allowed to remain in the game while smaller firms are left behind. That would weaken the diversity and resilience of our industrial base. It would also send the wrong message to the businesses that helped build this country’s export strength over decades. If global buyers want cleaner supply chains, they should not merely demand change from afar; they should contribute to the transition they say they want. They should support the suppliers, including SMEs, that have stood by them for years. They should also acknowledge that a truly sustainable global supply chain cannot be achieved if costs, risks, and responsibilities are distributed unfairly.

Mostafiz Uddin is the managing director of Denim Expert Limited. He is also the founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).

Views expressed in this article are the author's own. 

Follow The Daily Star Opinion on Facebook for the latest opinions, commentaries, and analyses by experts and professionals. To contribute your article or letter to The Daily Star Opinion, see our guidelines for submission.