STOCKHOLM - A newly released report, Just Climate Transitions in Bangladesh, highlights the need for a structured transition in two of the country’s most significant industries, textiles/apparel and construction, to ensure long-term economic resilience while mitigating environmental impact. Authored by FSG with support from the H&M Foundation and Laudes Foundation, the study outlines strategies for a just transition that balances economic imperatives with social and environmental considerations.

For Bangladesh, one of the world’s most climate-vulnerable nations, the stakes could not be higher. Rising sea levels, extreme heat, and increased flooding are already affecting productivity and economic stability. The report warns that without proactive adaptation, Bangladesh risks losing 4.8 per cent of its working hours due to heat stress by 2030, while rising sea levels threaten to submerge 17 per cent of the nation’s land, displacing millions. As the country navigates these challenges, the textile and apparel sector, which employs millions and contributes significantly to GDP, must undergo rapid transformation to remain competitive in an evolving global marketplace.

“Bangladesh has a unique opportunity to become a global leader in sustainable industrial practices, but it must act decisively,” the report states. It highlights six potential scenarios for the future of the textile and apparel industry, ranging from a ‘Green Forest’ (a best-case scenario where sustainable practices and worker protections drive competitiveness) to a ‘Scorched Earth’ scenario, where failure to adapt results in economic decline and widespread unemployment. The key to achieving a just transition lies in aligning Bangladesh’s industrial policies with global trends towards sustainability, the report argues.

International regulations and shifting consumer preferences are already reshaping the textile and apparel market. The European Union’s Eco-design for Sustainable Products Regulation (ESPR) and Corporate Sustainability Due Diligence Directive (CSDDD) are pushing brands towards decarbonisation and circularity. Similarly, consumer behaviour is shifting towards more sustainable fashion choices, with increased demand for transparency and ethical sourcing. In this landscape, Bangladesh must move beyond low-cost, high-volume production and focus on quality, innovation, and sustainability.

To maintain its competitiveness, the report recommends that Bangladesh invest in renewable energy, modernise its production processes, and improve working conditions. Already, some large-scale apparel manufacturers have begun transitioning to renewable energy sources such as solar and agricultural waste. Others are adopting waterless dyeing and digital printing techniques to reduce fossil fuel dependence. These changes, if scaled up, could cut emissions in the textile and apparel sector by 40 per cent by 2030.

However, the transition must be equitable. With 90 per cent of industrial workers employed informally and earning below living wage estimates, ensuring their inclusion and protection in this transition is paramount. The report stresses that industry shifts should not come at the expense of the workforce. “A just transition must prioritise agency and inclusion of workers,” the authors note, advocating for enhanced social protections, skills development, and alternative employment opportunities.

The construction sector faces a similarly urgent transformation. Currently accounting for a large portion of Bangladesh’s industrial emissions, the sector’s reliance on high-carbon materials such as clay bricks and cement must be addressed. The report outlines four potential scenarios for the future of construction, with the ‘Green City’ vision emerging as the most desirable outcome. In this scenario, the industry pivots towards low-carbon and climate-resilient materials, supported by government incentives and private investment.

The report argues that government, international buyers, financial institutions, and worker representatives must work together to implement policies that drive sustainability while safeguarding livelihoods. Trade agreements and financial incentives must be structured to support sustainable practices, ensuring that Bangladesh remains a competitive manufacturing hub while aligning with global climate commitments.

“The time to act is now,” the report concludes. “Bangladesh has the potential to lead by example in just climate transitions, securing economic growth while protecting its people and environment.”