EU due diligence key to sustainable RMG business

Bangladesh needs to follow the European Union Corporate Sustainability Due Diligence Directive (EU CSDDD) and other compliances strictly so that the country’s garment business does not get affected after Bangladesh’s least developed country club graduation in 2026, according to experts and industry professionals.
They also suggested that international clothing retailers and brands pay higher prices to the local suppliers as the implementation of these compliances needs additional investment.
The EU due diligence, which targets net zero carbon emissions by 2030, has already come into effect in July this year and EU members also started applying the new rules on sourcing companies.
The speakers said these at a roundtable, titled “Bangladesh’s Apparel Edge: Meeting EU’s New Sustainability Directive”, jointly organised by The Daily Star and Solidaridad at The Daily Star Centre yesterday.
Tanjim Ferdous, in-charge of NGOs and foreign missions at The Daily Star, moderated the discussion.
Selim Reza Hasan, country manager of Solidaridad, said the EU CSDDD is very significant for Bangladesh.
He said Bangladesh already has a good volume of annual trade with the EU. Now, it needs sustainability and further increase.
In this case, improving energy efficiency, resources and workforce productivity are important. As Bangladesh looks to be a sustainable production hub, capacity building is important too, he added.
In his keynote paper, Mohammad Yousuf Khan, programme manager of textile and apparel at Solidaridad, said the EU CSDDD came into force in July this year and member states are going to adopt it as national law in the next two years.
Now, compliance is at the core of every value chain, he said.
With the directive, the EU targets net zero carbon emissions by 2030. Due diligence failures may have legal and civil consequences like sanctions, penalties and market access restrictions, he said.
However, with appropriate steps, it could be an opportunity for Bangladesh as well, Khan said, mentioning that the implementation would bring additional burden, especially for the small and medium enterprises, but the buyers also have commitments.
Since Bangladesh is going to graduate to a developing nation, the country needs not only implementation of the EU due diligence, but also other compliances so that the nation’s external trade remains unaffected, he added.
Mohammad Abbas Uddin Shiyak, assistant professor at the Bangladesh University of Textile Engineering (BUTEX), said brands are looking for goods made from recycled materials.
The EU, UK and other countries are also looking for sustainable manmade fibre garments, he said adding that Germany and China had already discarded cheap labour and cheap products and elevated to value-added products.
Although buyers prefer products made in green garment factories, they are not paying enough for that, he also said.
Mohammed Zahidullah, chief sustainability officer of DBL Group, said local exporters have a lot of responsibility for the supply chain.
He said although local exporters have very transparent costing, it is not reflected in the price offered by international retailers and brands.
Buyers need to play a role here by paying fair prices. Cost of compliance is very high, so the prices also need to be increased, he also said.
Mohammad Monower Hossain, head of sustainability of Team Group, said all of the compliance issues require reliable data.
A data disclosure platform is required, he said, adding some of the companies are voluntarily disclosing the data. Suppliers are accountable for disclosing data to buyers under the due diligence, he added.
Willem Grimminck, director of One to Watch, said they offer financing for green projects and solar energy.
Fossil fuels largely cause carbon emissions, he said, adding sustainability is a combination of quality and prices, which makes differences in the competition.
We do things for the next generation as sustainability is the key. Brands need to have minds on how to play a role in sustainability efforts, he added.
Carla Dohmwirth, implementation lead at the IGS and GIZ, said this is a journey shared by stakeholders, communities and beneficiaries of the law. The implementation of the law should be through participatory engagements.
She said fear of retaliation is a challenge to the implementation.
In the law, there are options allowing companies to file complaints. As a result, Germany has already witnessed many cases filed against the country as it came into effect in Germany in 2023.
Ashfike Khaleque, programme coordinator of Fair Wear Foundation, said risk identification is important in the supply chain. If the risks are identified, these can be addressed.
Cost is an important issue in the adaptation of due diligence. Adaptation of new technology is also important. For sustainability, more efficient machines are required. Obviously, buyers will have to pay more as cost is involved here, he said.
Tanzila Tajreen, senior policy advisor, the Embassy of the Kingdom of the Netherlands in Bangladesh, said proactiveness is very important.
Lead time is also important. Yes, price is an important issue as it is discussed as the producing countries spend money for more compliances. Also, safety of the workers and their rights and the working environment are important.
“The due diligence is almost here and it needs a little tickling,” Tajreen said.
Ole Rosenborg Justesen, sector counsellor of the Embassy of Denmark in Bangladesh, said they definitely agree that the EU due diligence is highly transparent not only in Europe, but also in the supplying countries.
They are working closely with the government, supporters and unions in this connection. They support not only manufacturers but also look at the logistics as well.
They also work for investment in renewable energy, policy and occupational safety and standards as well. They want to make it clear that Bangladesh is a sustainable hub of garment items.
Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the EU CSDDDs are almost in place here over the last three years.
He said that it is not something new to them. German and the EU guidelines are almost the same.
“We are more or less ready for it,” he said, adding that they are now working on it and help desks have been established at the apparel trade association to help the members.
“We always talk about the manufacturing part but we also need to work with the buying part,” Ehsan said.
“Is it possible to include lawyers in this process so issues could be resolved in cases of breaching the law?” he questioned.
Ehsan said big buyers of the EU are fine, but there are also other small and medium enterprises who source from Bangladesh.
These small sourcing companies, who employ less than 1000 employees, will not come under the due diligence law. “We also need to include them. We are ready as we are working on it over the last few years,” he added.
Shuly Akter, senior assistant secretary of the Department of Inspection for Factories and Establishments (DIFE), said after the Rana Plaza collapse in 2013, Bangladesh significantly improved the factory standards, including labour standards and grievance mechanism.
Sara van Hoeve, first secretary, economic affairs and private sector development at the Embassy of the Kingdom of the Netherlands in Bangladesh, said: “We also need to hear the voice of a producing country like Bangladesh. It makes sure that we are doing business in the right way.”
Small and medium-sized enterprises (SMEs) are also very important. There is a huge opportunity for Bangladesh, according to Hoeve.
Kazy Mohammad Iqbal Hossain, South Asia sustainability manager of Lindex Bangladesh Liaison Office, said the due diligence would be challenging for small and medium enterprises. They need financial support.
It is a competitive advantage for Bangladesh as it is not even discussed in other countries, he added.
Ashraf Wares, senior assistant secretary of the Skill Development Programme of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said after Covid-19, they have conducted some basic training for the factory management about the EU due diligence.
Aleya Aktar, advisor at the Desh Group of Companies, said they really understand the importance of EU due diligence. But it needs to be implemented at the factory level to eliminate the fear about due diligence.
Mousumi Margaret Chiran, advisor at German development cooperation agency GIZ, said the EU due diligence is important when it comes to data and transparency. Sometimes the brands forget about their responsibility. Trust about data is important among brands, buyers and factories for compliance improvement, she also said.
Ashikur Rahman, consultant at Solidaridad, said almost all factories have planned in detail and targeted the implementation of the EU due diligence.
Between 80 percent and 90 percent will comply with the due diligence while only 10 percent of the small factories may face challenges, he said.
But it needs to include all the factories, he added.