Sustainability has become a cornerstone of global discourse, with frameworks like Corporate Social Responsibility, Social Responsibility, and Environmental, Social, and Governance shaping corporate expectations. The garment sector in Bangladesh has risen to meet these global priorities. However, while the industry is transforming, challenges remain in aligning these best practice efforts with equitable financial outcomes.

The cost of progress

Adopting sustainability comes with significant investments. For example, implementing water treatment systems or transitioning to green factories involves upfront costs that can strain resources. These investments promise long-term benefits but present immediate challenges for manufacturers balancing rising costs with competitive pricing.

In an industry marked by fierce competition, the price manufacturers receive often does not fully reflect the additional value they deliver through sustainable practices. Factories that prioritise compliance and innovation may face higher costs per unit than those that lag in adopting such measures. This imbalance highlights the need for a pricing model that accounts for shared responsibility across the supply chain.

Price stagnation amid rising costs

Garment pricing typically hinges on two components: raw material (RM) costs and cost of making (CM), which includes wages, utilities, and profit margins. While RM prices fluctuate, CM has remained largely stagnant, even as wages, utility costs, and interest rates have steadily increased, exacerbated by the Covid pandemic and economic ups and downs. This creates pressure on manufacturers striving to meet rising production costs while maintaining competitiveness.

Recent trends in apparel import prices highlight the industry's challenges.

This sustained price stagnation amid rising costs underscores the critical need for a pricing model that accounts for shared responsibility across the supply chain.

Building a resilient industry

The garment industry's evolution over the past decade, particularly after the transformative steps taken following incidents like the Rana Plaza garment factory collapse, demonstrates a clear commitment to progress. Investments in safety and sustainability have positioned Bangladesh as a leader in green factories and worker welfare.

While some pricing adjustments have been made, long-term consistency is crucial for sustaining these efforts. This is not merely about negotiating higher prices but about fostering collaboration across the value chain to ensure shared success.

Overcoming internal challenges

Overcoming internal challenges is vital for strengthening the industry, focusing on diversification, innovation, and specialisation. New products, optimised processes, market expansion, workforce development, and efficient capital management are essential for growth and resilience against market volatility.

A collaborative path forward

As Bangladesh continues to lead in sustainability efforts, fostering a collaborative mindset across the supply chain is vital. Buyers, manufacturers, and stakeholders must work together to align expectations and ensure that the value created through responsible practices is reflected in pricing structures.

The author is a former director of the Bangladesh Garment Manufacturers and Exporters Association