Clean energy could bestow major competitive advantage for suppliers

Mostafiz Uddin

By guest author Mostafiz Uddin. He is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).

Competitive advantage comes in many different shapes and forms. Product quality, speed, flexibility and, of course, price. All have their place in influencing whether a company should choose one supplier over another.

But what about the energy mix relating to how a product was produced? What if the customers of RMG factories were to begin choosing suppliers based on which ones used renewable energy instead of being, say, coal powered?

There has been a lot of talk about how “sustainability pays” in recent years, but not much of this talk has translated into action—or benefits to suppliers. Too often, price has been the key driver, with brands being unwilling to pay extra to fund sustainable garments or production techniques.

On the issue of renewable energy, however, I sense a real opportunity for Bangladesh—and it is one I believe our industry and government must grasp with both hands.

Look at the world’s leading apparel brands and all of them have commitments to reduce their carbon footprint. Many of these commitments relate to 2050 but some are more ambitious, with 2040 and even 2030 now being considered.

Meanwhile, the fashion industry itself acknowledges that the only way it can have a real impact on its carbon footprint is via its suppliers. Garment production represents up to 90 % of the fashion industry’s carbon emissions, according to most credible estimates. Moreover, the major fashion brands have already taken most of the “low hanging fruit” in terms of carbon emissions, which is in their own retail stores.

Yet, installing solar energy at stores and other initiatives are easy to implement for fashion brands. The real challenge comes when it comes to getting to grips with suppliers.

This past week, Swiss outdoor apparel company Mammut has pledged to switch to 100 % renewable energy at all of its suppliers by 2030. This is a hugely ambitious move and the industry should sit up and take notice. I expect other apparel retailers to take similar decisions moving forward.

Why is it so significant? Well, the main reason is that it sends a huge message to global apparel supply chains. Those which are not using renewable energy risk missing out as there is a risk that fashion brands and retailers will simply switch elsewhere in order to hit their carbon emissions targets (which many are now sharing publicly).

This risk has become heightened in the past month as the UN’s Intergovernmental Panel on Climate Change (IPCC) published its most sombre update yet. This landmark study claimed that human activity is changing the climate in unprecedented and sometimes irreversible ways.

The study warns of increasingly extreme heatwaves, droughts and flooding, and a key temperature limit being broken in just over a decade. It has been described as “a code red for humanity,” by a UN chief.

Be in no doubt—sustainability teams at the world’s leading fashion brands and retailers will have been taking notice of this report. And each of them, I truly believe, will have been thinking about their own projections as far as the climate is concerned. In short, can they rely on making projections for decades in the future when the IPCC is talking about key temperature “red flags” being hit this decade?

I expect many will be asking the question, can they be more ambitious? Can they bring 2050 forwards to 2040 or 2030? I expect they may have no choice as they will be placed under increasing pressure by their investors, regulators and NGOs. The IPCC report is a seminal moment where climate is concerned.

All of this comes back to us as RMG suppliers and how we can use the requirements of brands to slash their emissions to our competitive advantage.

I believe Bangladesh needs to move fast and move now on the issue of renewable energy. Such a move will require collaboration between government, industry, clean energy providers, tech solutions businesses and, of course, utilities businesses. How can we rapidly and cost effectively make our industry green? How can we put in place the right public-private partnerships and investment structures to ensure funding is channelled where it is needed along our RMG supply base?

We need a benchmarking exercise. Where is our industry now in terms of renewable energy, where do we need to be and what do to need to do to get there? Surely it is not beyond our industry to carry out a scoping exercise among the full supply chain to identify gaps and understand where investment is required.

To reiterate, all of this represents an opportunity rather than a threat for our industry. We have shown already that, when we work together, collaborate and put aside competitive differences, we can achieve great things. For example, look at how we improved safety across the industry in the wake of the Rana Plaza.

We need this sense of cooperation again in order to pivot our industry onto a greener path. Why not set a timeline to shift all our industry to renewable energy by 2030? And we could bring our customers along with us on this journey for it is in our mutual interests to get this right.

“Build it and they will come,” is a famous quote from Hollywood film, Field of Dreams. It is applicable now to the Bangladesh RMG industry. Get things right on this issue, and and we have cured a major headache for all our customers.

This feature was published firstly in the Daily Star of Bangladesh.