IFC: A MEMBER OF THE WORLD BANK GROUP IFC

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1 Resource Efficiency in the Wet, Dyeing and Finishing Sector of Bangladesh Textile Industry Implemented by: IFC: A MEMBER OF THE WORLD BANK GROUP IBRD IDA IFC MIGA ICSID International Bank for Reconstruction and Development International Development Association International Finance Corporation Multilateral Investment and Guarantee Agency International Centre for Settlement of Investment Disputes Loans to middleincome and credit-worthy low-income country governments Interest-free loans and grants to governments of poorest countries Solutions in private sector development Guarantees of foreign direct investment s noncommercial risks Conciliation and arbitration of investment disputes 2

2 Pact: A powerful partnership with MULTINATIONAL global Brands Partnership for Cleaner Textiles - A US$ 11 M Program funded jointly funded by the Netherlands Government and 15 international Brands and technology companies towards an integrated program, working for the long-term competitiveness and environmental sustainability of the Textile Wet Processing sector-washing, dyeing and finishing units. 3 Overview of the Bangladesh Textile Sector Groundwater level (m) The textile sector accounts for 80% of total export revenue: $26 billion in Target to become $50 billion by ,400 Garment factories. Bangladesh houses 789 washing, dyeing, and finishing units. 65% of 4.4 million employees are women. Textile sector consumes 1,500 billion liters of groundwater per year. Groundwater levels are decreasing by 2.5 m/yr. While Surface water is heavily polluted. Inefficient use of energy resources due to lack of awareness on the true cost. Severe gas shortages impacting the industry. Unreliable electricity supply and some RMG factories not having grid connections. Severe pollution due to untreated wastewater 4

3 What problems is PaCT trying to solve? High ground water abstraction Wastewater pollution High energy use Chemical management Information gaps in the sector Cost effective financing needs for the sector Policy gaps Brands design teams embracing environmentally sustainable processes PaCT is a holistic program trying to solve problems within and beyond the factory gates. 5 Program Achievements (to Date) Water Savings Energy Savings GHG Avoided 18.4 billion L/year 1.9 million MWh/year 275,000 tonnes CO 2 eq/year Investment Wastewater Avoided Factory Savings US$ 31 million 15.9 billion L/year US$ 12.4 million/year

4 PaCT Approach Brands Factory Sectorial Investment Facilitation $ De risking supply chain risk Doing more with less Improving the enabling environmen t Financing the pioneers Partnership for Cleaner Textile 7 Brand Engagement de-risking the supply chain Partnership for Cleaner Textile 8

5 Current Scenario of the Supply Chain Ensuring environmental sustainability is a key business risk for global brands Brands are conscious of their role in driving sustainability measures. In 2011, a group of major apparel and footwear brands and retailers made a shared commitment to help lead the industry towards zero discharge of hazardous chemicals by Partnership for Cleaner Textile 9 Adding value to Brand strategies Supporting leading global Brands to effectively incorporate sustainability performance within their business strategies. Guide Brands on the environmental impacts of their design decisions development of Decision Support Guidance manual. Strengthening capacity of Brand staff at local and HQ levels. Supporting ZDHC initiatives and chemical management For every $1 invested by Brands resource efficiency savings: *results are based on 35 PaCT partner factories that have implemented in-depth cleaner production measures Decision Support Guidance for Brands Partnership for Cleaner Textile 10

6 Factory Engagement doing more with less Partnership for Cleaner Textile 11 Identifying the True Cost of Water Even though groundwater is FREE there are hidden costs such as. Pumping cost Chemical costs Water/Wastewater treatment Product wastage Heating costs It costs $1 /m3 with new gas prices Partnership for Cleaner Textile 12

7 Cleaner Production (CP) Minimizes resource consumption (water, energy and chemicals), and reduces waste, while maintaining or increasing production as well as profitability. PaCT has reached out to more than 500 factories. By Embracing Cleaner Production = Increases profitability Cements buyer/supplier relationship Partnership for Cleaner Textile 13 Reduction in factory resource use from PaCT interventions Fakir Apparels Ltd. Liberty Knitwear Ltd. Partnership for Cleaner Textile 14

8 Textile Technology Business Center First ever knowledge hub for the textile industry in Bangladesh, established in partnership with BGMEA. It offers comprehensive range of services Workshops on specialized technologies Effluent Treatment Plant(ETP), Water Metering, Waste Heat Recovery and Financing B2B linkages between Brands, Factories and technology suppliers Total Members 167 members; (Factories 113 & Technology Vendors - 54) To date, TTBC has engaged business facilitation of $860,600 between technology suppliers and factories Partnership for Cleaner Textile 15 How does PaCT helps Financial Institutions? Facilitate Bangladesh Bank to develop a $200M Green Transformation Fund for the textile sector Assisting in business development by linking FIs to PaCT factories seeking finance for upgrades Water / Energy efficiency financing training / product development for financial institutions Link Manufacturers with PaCT partner factories and FIs Benchmarking of water and energy efficiency equipment suppliers so that banks can approve loans easily Awareness raising Carry out feasibility studies of innovative technologies 16

9 Sectoral Development Partnership for Cleaner Textile 17 Textile Sustainability Platform (TSP) The first ever multi-stakeholder dialogue platform, chaired by BGMEA that engages Brands, Factories, Industry associations, civil society, and government Collectively work towards lowering sectoral barriers, improving policy and regulatory framework. Through PaCT s advocacy, Bangladesh Central Bank has established a green fund of $200 million to support investments in resource efficient technologies Partnership for Cleaner Textile 18

10 PaCT is addressing sector challenges PaCT is addressing sector challenges through a range of innovative approaches: Identifying opportunities to cost effectively finance LED Lighting Identifying solar PV opportunities to replace fossil fuels Partnership for Cleaner Textile 19! For more information, please visit: mseneviratne@ifc.org nchowdhury2@ifc.org