Bangladesh is losing up to $5 billion in potential annual export revenue from recycled textile products annually due to the absence of a comprehensive policy framework on circular textile, according to a study.
Such a policy could incentivize the industry to upgrade the recycling of post-RMG Jhut (waste fabric), it said.
The recycling industry in Bangladesh faces several key challenges, including sorting Jhut, timely disposal, boosting productivity, and minimizing waste through improved design.
To harness its potential for innovation and industrial advancement through the circular economy, the textile sector must formalise the informal Jhut sector, the study report noted.
The study titled 'Regulatory Framework to Enable Recycling of Post-Industrial Waste (Jhut) for the RMG Industry in Bangladesh' was jointly conducted by the Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and H&M under the programme for Sustainability in the Textile and Leather Sector.
It outlined measures and regulatory reforms necessary to establish an effective management framework for Jhut recycling, aiming to maximise economic, social and environmental benefits within Bangladesh's Jhut supply chain.
Classified as post-industrial waste, Jhut encompasses fabric scraps, yarn, and additional residues emerging from production processes.
It recommended collaborative stakeholder engagement, protection of workers' rights and safety, promotion of circular textile economy practices and capacity building and technology adaptation to transform the Jhut sector.
The report also outlines a number of key policy solutions for the informal Jhut sector, including improving data availability, transparency, and traceability through a national Jhut database; introducing industry guidelines for Jhut management and recycling standards and revising VAT and tariff rules for Jhut transactions.
It also suggested providing economic incentives to formalize Jhut collection, handling, and sorting; establishing central depository systems and cluster-based sorting hubs to promote decent work and social inclusion; and enhancing the investment environment for advanced recycling technologies.
Bangladesh's current recycling capacity for apparel-grade recycled yarns ranged from 18,000 to 24,000 tonnes annually, according to the findings.
This only represents a modest 5.0 per cent to 7.0 per cent of the expansive 330,000-500,000 tonnes of 100 per cent cotton and cotton-elastane waste produced every year.
"Less than 5.0 per cent of this waste is up-cycled into products such as rag rugs, rag dolls, blankets etc," the report read.
A significant portion, over 55 per cent is exported to recycling companies globally, while the remaining waste is down-cycled into stuffing materials for cushions and mattresses, incinerated onsite for waste-to-energy purposes, and a negligible amount is landfilled, it said.
Current disposal methods result in severe environmental impacts, such as air pollution, resource depletion and harmful chemical leaching, which pose significant threats to ecosystems and public health.
Furthermore, due to lack of comprehensive policy framework on circular textile, Bangladesh has been missing out on a potential export business of recycled textile products worth US$4.0-5.0 billion per year.
The report identified potential threats if factory owners implement Jhut recycling strategies on their own premises while potential threats to Jhut recycling include political restrictions, general pressures, increased scrutiny, internal recycling disruptions and intimidation from those benefiting from the status quo.
In the global context, an evolving narrative around sustainability in the textile sector is shaping the operations and strategies of major brands, it said, adding that a pronounced push towards integrating circularity in value chains is evident, with entities such as H&M and GIZ at the forefront of these initiatives.
Regulatory bodies, particularly in the European Union, are moving towards stricter mandates and introducing extended producer responsibility requirements.
According to the study, this global shift presented Bangladesh with a multifaceted opportunity aligning with international sustainability goals.
This global shift offered Bangladesh a chance to boost trade through sustainability goals and create formal employment by formalizing the Jhut sector and adopting circular economy models.
Enhanced collaboration among government bodies, manufacturers, NGOs and recycling companies is essential for developing sustainable infrastructure, adopting innovative technologies and establishing efficient waste management systems, said the report.
It also recommended that enforcing existing labour laws and introducing new regulations are crucial for protecting workers' rights and safety in the Jhut recycling industry, including upholding health and safety standards, eliminating child labor, and addressing gender-based issues.
Brands and suppliers should adopt recycled materials in their products to set sustainability standards, reduce waste, boost consumer demand for eco-friendly goods and drive innovation and market growth for recycled textiles, the report suggested.
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