Increased safety in Bangladesh’s textile factories

Textiles from Bangladesh are used in products all over the world, not least because they are particularly cheap. This has often come at the expense of occupational safety and the environment. But all that is about to change: On behalf of the German Federal Government, KfW is participating in a European financing consortium, which is providing over EUR 50 million for social and environmental investments in the country’s textile companies. The funds will be made available mainly in the form of loans.

“I can now take care of my child and get to work on time,” says Rashida Khatun. Twice a day, she takes an hour’s break from her work at the textile company Sparrow Apparels Limited in Gazipur to visit her child at the new company kindergarten. This is one of the improvements implemented with the help of loans from the “Program to Support Safety Retrofits and Environmental Upgrades in the Bangladeshi Ready-Made Garments Sector” (SREUP) project, which is jointly financed by the French development agency AFD (Agence Française de Développement), the European Union (EU) and KfW. A credit line of over EUR 50 million from AFD, EUR 6 million from the EU and another EUR 4 million from KfW has enabled 14 commercial banks from Bangladesh to issue loans to companies in the textile sector to implement environmental and social improvements. As an incentive, textile companies can receive a grant if they are successful in making positive changes. The textile industry is the country’s most important export sector and accounts for 80% of exports. Around four million people work in the country’s textile factories; about half of them are women. By participating in the project, KfW on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) is supporting sustainable textile production and the implementation of labour, social and environmental standards in Bangladesh.

The sector is facing several challenges, not least the growing competition from Vietnam, which is also building an effective textile industry. Buyers of international brands are pushing for compliance with ever higher standards.

“A fire in October 2022 destroyed large parts of our building,” recalls Khalid Hossain Khan, Managing Director of Euro Knitwear Limited in Gazipur. With the help of a loan from the SREUP project, important fire protection measures have now been implemented in the new premises. “It’s hugely reassuring to now have fire extinguishers all over the site,” says Mohammad Nurun Nobi, an employee at Euro Knitwear Limited. A pump house and tanks for extinguishing water were also installed on the roof. Fire-related accidents are not uncommon in Bangladesh’s textile industry, as building standards are not always adhered to. The collapse of the Rana Plaza building in 2013, with more than 1,100 victims, was reported in the media around the world. This increased awareness of occupational safety, and many export-oriented companies have made upgrades in this area.

The SREUP loans also often benefit the environment. They made it possible to install solar panels on factory roofs and to set up sewage treatment plants. The installed photovoltaic systems produce more than 28 MWh annually and save almost 18,000 tonnes of carbon dioxide emissions each year. Other companies invested in more energy-efficient machines. A total of around 51 companies used the project funds, benefiting 200,000 people directly and 800,000 people indirectly.

Sparrow Group of Industries, for example, has not only set up kindergartens for the employees’ families, but has also established its own healthcare facility. It also supports an ambulance service so that injured workers can be brought to the hospital by the fastest route.

The improvements implemented with the aid of the project are setting a benchmark for the entire textile sector in Bangladesh and promote compliance with social and environmental standards. The project is therefore making a significant contribution to achieving UN Development Goal 8 - decent work and economic growth.

BB SREUP Documentary

SREUP Project Highlights