On a humid afternoon in Gazipur, compliance officer Nusrat Jahan walks through a garment factory floor, tracking real-time data on energy use, wastewater treatment, and worker safety in a sector supplying European retailers. This reflects increasingly common practice across Bangladesh’s RMG supply chain. In 2024–2025, the sector generated USD 39.35 billion, accounting for over 80 per cent of national exports and supporting 4.4 to 5 million workers and nearly 20 million livelihoods, with women forming the majority of the workforce.

Over time, the industry has shifted from cost-driven production toward greater transparency, accountability, sustainability, and ethical production. The Rana Plaza tragedy remains a defining moment in this transformation, reinforcing the urgency of stronger compliance and reporting systems. ESG reporting has therefore become central to maintaining market access, meeting buyer expectations, and sustaining global credibility.

The key challenge now is whether Bangladesh’s apparel supply chain can move beyond compliance-led reporting and fully integrate ESG into core business strategy, turning sustainability into a source of long-term competitiveness rather than a regulatory burden.

Transformation of Bangladesh’s RMG Sector

Over the past decade, Bangladesh’s RMG sector has evolved from a narrow focus on cost and production volume to a broader framework that incorporates transparency, labour standards, environmental performance, and governance. Earlier compliance systems were largely audit-driven and focused on minimum standards, limiting their effectiveness in ensuring accountability and building trust among global buyers. In response, ESG reporting has become central, as it provides a standardized and data-driven framework for measuring, disclosing, and verifying sustainability performance, making it auditable and comparable across suppliers. This is important because it enables buyers to assess non-financial risks, ensure responsible sourcing, and align procurement decisions with sustainability commitments. Firms adopt ESG practices not only to meet these evolving requirements but also to secure market access, strengthen credibility, attract investment, and transition from reactive compliance to more proactive, performance-oriented management.

Earlier improvements in compliance and environmental practices were often reactive and uneven across factories. ESG reporting has changed this by requiring standardized data collection, third-party verification, and continuous disclosure. Sustainability performance is now monitored rather than assumed. Around 78% of global buyers now require ESG-related information, making disclosure a key condition for maintaining export relationships, as highlighted by BGMEA and ILO discussions on compliance expectations.

In practice, this shift has changed how factories operate internally. ESG reporting has introduced regular tracking of environmental indicators such as energy use, water consumption, emissions, and chemical compliance, alongside social indicators like labour conditions and workplace safety, as well as governance-related practices including compliance monitoring and internal accountability systems. This comprehensive tracking has enabled benchmarking across factories and revealed inefficiencies that were previously hidden. It has also improved management decisions and strengthened audit readiness. Many factories have subsequently invested in cleaner technologies such as energy-efficient machinery, wastewater treatment systems, and improved chemical management tools. As a result, sustainability is increasingly embedded in daily operations rather than treated as a separate function, and is now directly linked to buyer retention, export continuity, and long-term cost competitiveness.

Global and Local Drivers of ESG Adoption

This shift is driven by strong global and local factors shaping ESG practices in Bangladesh’s apparel sector. Globally, brands such as H&M, Inditex, Nike, Adidas, Primark, and Uniqlo are raising ESG expectations through supplier codes of conduct, audits (compliance checks), traceability (tracking supply chains), and sustainability reporting.

The necessity of ESG reporting has grown as global markets increasingly link trade, investment, and financing to transparency and accountability. International financial institutions such as the International Finance Corporation and the World Bank Group reinforce this shift by integrating ESG performance into financing decisions, risk assessments, and disclosure requirements. Global frameworks like the UN Global Compact and OECD guidelines further encourage responsible business conduct and standardized reporting practices. This evolving system is strengthened by the global move from voluntary to mandatory ESG disclosure, making ESG reporting essential for managing risk, securing investment, and maintaining access to international markets and supply chains.

At the local level, the Bangladesh Labour Act, Factories Act, and environmental laws ensure compliance. The RMG Sustainability Council supports implementation, while Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC), and the Dhaka Stock Exchange promote sustainable finance and stronger ESG disclosure.

ESG Reporting as a Driver of Sustainability and Supply Chain Survival

Against this backdrop, ESG reporting in Bangladesh’s RMG sector is no longer merely a compliance requirement but a critical driver of sustainability and supply chain survival. As one of the world’s leading apparel sourcing hubs, Bangladesh’s continued access to global markets increasingly depends on its ability to meet rising sustainability expectations. Global buyers now assess suppliers not only on cost and production capacity but also on ethical conduct, environmental performance, and social responsibility, making ESG performance an integral part of sourcing decisions and operational governance.

ESG reporting strengthens both sustainability outcomes and supply chain resilience by linking disclosure to measurable operational improvements. It supports more efficient resource use, improved risk management, and stronger compliance performance across factories. In many cases, it also contributes to cost optimization through reduced energy, water, and material consumption, while enhancing audit outcomes and reinforcing buyer confidence. As a result, sustainability performance has become a decisive factor in buyer retention and long-term supply chain continuity. Overall, ESG reporting enhances operational efficiency, strengthens reputational positioning, and ensures alignment with evolving global market expectations, thereby supporting the long-term survival of Bangladesh’s RMG supply chain.

Evolving Sustainability Reporting Frameworks

Transparency for tomorrow requires understanding the evolving sustainability reporting landscape. A key tre4nd is double materiality, which assesses both how environmental and social issues affect a company’s financial performance and how the company impacts society and the environment. This shapes how organisations assess climate risk, Scope 3 emissions (indirect emissions across the value chain), and value chain accountability.

Companies now use multiple reporting frameworks, including GRI, SASB, TCFD, ISSB (IFRS S1 and S2), ESRS, EU CSRD, EU CSDDD, CDP (Carbon Disclosure Project), and integrated reporting systems. GRI

Standards and TCFD remain among the most widely used. Mandatory reporting and external assurance (independent verification of disclosures) are strengthening credibility. According to the KPMG Survey 2024/2025, nearly 96% of G250 companies report sustainability data, making ESG transparency a global norm.

In parallel, companies are adopting climate targets through the Science Based Targets initiative (SBTi), which aligns greenhouse gas reduction goals with climate science and the Paris Agreement, including net-zero targets by 2050. This improves accountability, supports decarbonisation, and strengthens investor confidence.

Current ESG Reporting Practices in Bangladesh’s RMG Sector

ESG reporting in Bangladesh’s RMG sector has become critical for sustainable growth, driven by global buyers and standards and reinforced through monitoring, audits, and compliance mechanisms. In practice, firms strengthen compliance through third-party audits and certifications such as WRAP, Amfori BSCI, Sedex, Higg Index, SA8000, and ZDHC, which support oversight of labour rights, safety, environmental management, and chemical use. The sector includes over 200 LEED-certified green factories recognized by the U.S. Green Building Council, alongside growing adoption of energy-efficient technologies, recycled materials, improved water and waste management, reduced water use, and Environmental Treatment Plants (ETPs). At the operational level, ESG is embedded through Environmental Management Systems (EMS), digital monitoring platforms, internal audits, and tools like Higg FEM and the ZDHC Gateway, enabling real-time performance tracking. Leading factories monitor indicators such as energy intensity (kWh/kg), water use (m³/kg), wastewater quality (BOD and COD), and chemical compliance rates, although consistent quantitative disclosure remains uneven.

This practice-level progress is reflected in the current state of ESG reporting across the RMG sector. GRI standards, combined with social compliance frameworks, are the most widely used, supporting comparability, credibility, and alignment with buyer expectations on labour rights, supply chain transparency, human rights due diligence, and environmental impacts. Several leading firms—such as Team Group, Urmi Group, DBL Group, Pacific Jeans, Shin Shin Group, and Fakir Fashion—publish GRI-aligned or ESG-related disclosures.

Despite these advances in practice, reporting remains uneven. Formal sustainability reporting is still limited, even among LEED-certified factories. Many disclose only partial ESG information through websites or compliance documents rather than structured reports. The gap is wider among Tier 2 and Tier 3 suppliers, where limited technical capacity, weaker governance, and lack of standardization constrain effective ESG reporting. This results in uneven consistency, depth, and credibility across the supply chain.

Challenges in ESG reporting and disclosure

Key challenges include inconsistent regulatory enforcement, weak data reliability, limited independent assurance, and fragmented adoption of global frameworks. A major gap is the absence of robust baseline data systems, which makes it difficult for firms to establish starting points, set measurable targets, and track sustainability performance over time. As a result, ESG reporting often lacks a structured progression of baseline establishment, target setting, and continuous monitoring. Many firms still treat ESG reporting as a buyer-driven compliance requirement rather than integrating it with cost management and operational efficiency, limiting its role in enhancing competitiveness. In addition, weak digital infrastructure and skill gaps further constrain factories’ ability to systematically collect, verify, and analyse sustainability data, reducing the linkage between ESG performance, cost reduction, and long-term competitiveness.

Way Forward: Strengthening ESG Implementation

• The RMG sector in Bangladesh should adopt mandatory ESG reporting with independent third-party assurance, stronger regulatory enforcement, capacity building, harmonized regulations, and improved data systems. These measures are essential to ensure transparency, credibility, consistency, and comparability.
• Firms must ensure continuous stakeholder engagement through structured feedback and regular consultations. This should be supported by data-driven materiality assessments to prioritize the most significant environmental, social, and governance issues.
• They should develop clear ESG transition roadmaps aligned with global standards and integrate sustainability into core operations.
• HRDD and HREDD, systematic processes to identify, prevent, and mitigate human rights and environmental risks, must be embedded.
• Finally, sustainable business conduct should be institutionalized through ethical sourcing, fair labour practices, resource efficiency, strong compliance systems, and transparent ESG disclosure.

Sustainability reporting has become a defining force in reshaping Bangladesh’s RMG sector, shifting it from cost-driven production to a more transparent, accountable, and performance-oriented industry. While ESG adoption has improved compliance, efficiency, and global market access, its impact remains uneven due to weak baseline data systems, limited integration into core operations, and inconsistent disclosure quality. The sector’s future competitiveness will depend on moving from compliance-led reporting to fully integrated ESG management linked to cost, efficiency, and risk reduction. Strengthening data systems, governance, and operational integration will be essential to convert ESG reporting into sustained global competitiveness and long-term industrial resilience.