DHAKA - A briefing by the Bangladesh-based Research and Policy Integration for Development (RAPID), explores the implications of the EU Corporate Sustainability Due Diligence Directive (CSDDD) for Bangladesh, particularly in the context of the nation's garment industry. The briefing, titled "EU Corporate Sustainability Due Diligence Directive: Way Forward for Bangladesh", highlights both the challenges and opportunities presented by the directive and outlines strategic measures for navigating compliance.

Adopted by the European Parliament on April 24, 2024, the CSDDD mandates rigorous due diligence to prevent and mitigate adverse environmental and human rights impacts across company supply chains. This includes addressing issues such as child labour, fair wages, environmental sustainability, and deforestation. For Bangladesh, where over US$25bn in exports were destined for the EU in 2023, the directive poses significant ramifications for trade and competitiveness.

The policy brief emphasises the steep challenges the garment sector faces in complying with CSDDD requirements. Key hurdles include resource limitations, complex supply chain oversight, a lack of technical expertise, and the financial burden of compliance without corresponding price increases from buyers. The document notes that while Bangladesh boasts 213 LEED-certified factories, the highest in the world, achieving broad compliance across the sector remains an arduous task.

Adding to these challenges is the impending graduation of Bangladesh from its Least Developed Country (LDC) status in 2026, which will end its duty-free access to the EU market. This transition could impose average tariffs of 11.5 per cent on garment exports if the country fails to secure Generalised Scheme of Preferences (GSP+) benefits, further straining the industry.

Despite these obstacles, the briefing identifies potential advantages of improved compliance. It suggests that aligning with global sustainability standards can enhance Bangladesh's image as a reliable trading partner, fostering both export resilience and investment attractiveness. The authors advocate for a locally driven compliance strategy that prioritises national needs and systemic reforms, framing compliance as an investment in sustainable development rather than merely a cost.

The policy brief also calls for collaboration among the government, private sector, and development partners to strengthen enforcement mechanisms and provide technical support. It warns, however, against punitive measures such as order cancellations for non-compliance, which could disproportionately affect workers and exacerbate socio-economic inequalities.