green industry towards green economy in the rmg

Green Industry towards Green Economy in the RMG Sector in Bangladesh

BKMEABangladesh Knitwear Manufacturers and Exporters Association

Venue: BKMEA , Dhaka Office

Date: 12.07.2015

AYUB ALISenior Assistant Secretary (R&D)

Bangladesh economy has performed quite moderately against the backdrop of the global economic slowdown and various obstacles over the recent past.

The economy is flourishing as a rapidly developing one with a growth rate of over 6 percent over the last one and half decades.

RMG and Remittance inflows activities, on the other hand, also help to achieve the solid economic growth rate, in which RMG sector contributes 14.07% of the total national GDP.

The industry plays a key role in employment generation and in the provision of income to the poor. Nearly 4.5 million workers one directly, , of whom 85% are women and more than 20 million inhabitants are indirectly associated with the RMG industry.

In this RMG sector, total export earnings are $24.49 billion and average growth rate 6.15 in the last two decades. Total export contribution is 81.16% of the export in the RMG sector.

RMG sector contributes 81.16% of the total export and 14.07% of the total GDP.

Background

Bangladesh is one of the cheapest garments producer and supplier known their efficiency and quality. But this price is not representing the social and environmental cost.

In globally, social and environmental cost must be concerned for the climate change that must be responsible consumer and producer. So, consumers must be included with the adaptation and mitigation program.

The industry is now at a critical moment. For examples, Rana plaza of Saver collapsed in April, 2013 and killed 1129 workers. On the other hand, fire accident is one of the common phenomena for RMG sector from 2005 up to present time.

Other deficiencies, such as inefficient resource use (water and power) and poor environmental practices, have been highlighted prior to the tragedies.

Textiles is also major contributor to water pollution and scarcity, impacting health, food production, and other economic sectors.

Background

Indeed, given the damage to Bangladesh’s RMG sector following the factory disasters of Rana Plaza and Tazreen, an additional attraction for BGMEA, BKMEA and other key stakeholders is the potential positive branding of pursuing a “Green” or environmentally – friendly agenda for the sector.

Bangladesh is globally considered to be one of the most adversely affected countries due to climate change. The Third Assessment Report of the IPCC (IPCC, 2001) ranked Bangladesh high in the list of most vulnerability countries.

Indeed, Green Industry Development is the most innovative step for the industrial development that will reduce using the natural resources and recycles and reuse management policy are most effective to maintain towards green industry framework.

an introduction to Green industry Development will help to achieve sustainable development framework towards Green Economy in the RMG sector in Bangladesh.

Background

The green economy is an economy that results in reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus.

The 2011 UNEP Green Economy Report argues "that to be green, an economy must not only be efficient, but also fair. Fairness implies recognizing global and country level equity dimensions, particularly in assuring a just transition to an economy that is low- carbon, resource efficient, and socially inclusive."

In the industrial world, it is defined as resources efficient, technology driven activity that increases investments and growth while substantially reducing carbon footprints; thus fast and clean mass-transport systems and motor fuel hybridisation; cradle-to-cradle production and consumption patterns; advanced waste management on the 3Rs pattern; controls on chemicals use and management; careful mining practices and action plans to make these investments and activities sustainable, characterise one type of green economy.

Concepts for Green Economy

Green-Economy is essentially an inclusive concept comprising economic, social and the environmental pillars of growth.

Well-being; measured not merely on the Happiness Index but in the context of pursuing and achieving the development goals.

Equity; for diversified sustainable development.

A win-win economic-environmental model; Projects and programmes are co-beneficial, bringing in revenues from both environmental and economic investments.


The International Chamber of Commerce (ICC) representing global business defines green

economy as “an economy in which economic growth and environmental responsibility work

together in a mutually reinforcing fashion while supporting progress on social development”.

It sets out the following 10 conditions which relate to business/intra-industry and

collaborative action for a transition towards a green economy:


1 Open and competitive markets 6 Resource efficiency and decoupling

2 Metrics, accounting, and reporting 7 Employment

3 Finance and investment 8 Education and skills

4 Awareness 9 Governance and partnership

5 Life cycle approach 10 Integrated policy and decision-making

Green Econo

my

Renewable Energy

Green Buildings

Sustainable/ Clean

TransportationWater

ManagementWaste Management and

DisposalLand

Management

Green Economy Framework:Karl Burkart defines a green economy as based on six main sectors:

Green Industry is industrial production and development that does not come at the expense of the health of natural systems or lead to adverse human health outcomes. Green Industry is aimed at mainstreaming environmental, climate and social considerations into the operations of enterprises.

Concepts for green industry

Green Industry is therefore an important pathway to achieving sustainable industrial development. It involves a two-pronged strategy to create an industrial system that does not require the ever-growing use of natural resources and pollution for growth and expansion. As seen in Figure 1, these two components are (1) the greening of existing industry, and (2) the creation of new “Green industries”.

Concepts for green industry

Towards Sustainability Mechanism

Green Industry towards Sustainable Development

textile industries must establish ETP for their effluent treatment. Instead they do not directly discharge their waste water and solid wastes to nature and contribute to huge pollution and contamination.

The chemical and fertilizer usage is also significant for raw material production.

Organic cotton is suggested. Reuse and recycling of garment products can provide a better environment.

The economic aspect of garments industry has the tremendous contribution at the economic progress. The sustainable pillars are very important for the growth and development. An economic pillar is one of the most important pillars for the sustainability.

RMG and Remittance inflows activities, on the other hand, also help to achieve the stable economic growth rate in which RMG sector contributes 14.07% of the total national GDP.

Nearly 4.5 million workers one directly, of whom 85% are women and more than 20 million inhabitants are indirectly associated with the RMG sector, .


In the RMG sector, total export earnings are $ 24.49 out of $30.18 and average growth rate 6.15 in the last two decades. Total export contribution is 81.16% of the total export in Bangladesh.

The social aspect of garment industry has the worst situation. The living standards of the workers are very poor as they receive the lowest wage. Gender equality for a salary and job position is not maintained properly.

Most of them are 12 to 15 years old girls coming from village areas. There is no community of workers grown up. The workers live in most of the slum areas and are socially considered as lower class people.

The socio-environmental condition includes health and safety issues of the workers, which is the worst of the world. There are several hazards appeared including fire accidents, building collapses etc. Every year many workers are died and get injured due to the hazards. The safety levels in many factories are still very poor.

Unfavorable working condition often makes them sick. Crisis management is also bad. Many times workers are bound to join work during 'Hartal' a common phenomena of strike called by political parties. Working on Hartal put their life risky as very often violence and clashes occur during that time.


USGBC IndicatorGreen industry indicator

1997 RulesIndicator

Air Pollution

Water Pollution

Sound Pollution

Motor Vehicles Emission Pollution

Odor Pollution

Sewage Discharge

Waste from industry unit

Gaseous Emission

Effluent (liquid waste)

Boiler of Industrial Unit

“The continuous application of an integrated preventive environmental strategy applied to processes, products, and services to increase overall efficiency and reduce risks to humans and the environment.” (United Nations Environment Programme)

Production processes: conserving raw materials and energy, eliminating toxic materials, and reducing the quantity and toxicity of all emissions and wastes.

Products: reducing negative impacts along the life cycle of a product, from raw materials extraction to ultimate disposal.

Services: incorporating environmental concerns into designing and delivering services.

Four elements of the clean production: The precautionary principle The preventive principle The public participation principle The holistic principle

Cleaner Production

Cleaner production Hierarchy

Cleaner production techniques: Cleaner production techniques

Reduction

Good housekeeping

Process change

Process control

Process modification

Technology change

Raw

material change

Recycling

Off – site recycling

On – site recycling

Product modification

Technological capacity Training capacity Institutional capacity Government capacity

Cleaner production Stages:

Cleaner production practices and technologies:

Five areas of the cleaner production in the RMG sector:

Cleaner Production

Process Section

Thermal Mechanical

Section

Chemical Storage and

Chemical Handing

Occupation Health and

SafetyPower Generation and

Electrical Section

Implementing strategy of cleaner production in the RMG sector:

1. Continuous 2. Integrated3. Preventive

Environmental Strategy

1. Processes2. Products3. Services

Risk Reducti

on

1. Humans

2. Environments

Increased profitability Lower production costs Enhanced productivity A rapid return on any capital or operating investments required Increased product yield More efficient use of energy and raw materials Improved product quality Increased staff motivation Active worker participation in idea generation and implementation Reduced consumer risks Reduced the risk of environmental accidents Supported by employees, local communities, customers and the public Provided enhanced access to capital from financial institutions and lenders

Benefits of CP

Cost of the green industrial development (environmentally sustainable) is defined as the cost to the industry for keeping the quality of environmental resources at their nature regenerative capacity.

This cost could be measured by modeling producer behavior with environmental regulation. By using (a) cost function, (b) production function, and (c) distance function.

In the first model, a firm minimizing cost takes a decision about the pollution load such that the marginal cost of abatement is equal to the pollution tax.

In the second model, pollution loads could be considered as inputs along with the conventional inputs (marginal value productivity of pollutant is eq1ual to the tax).

In the third model, shadow prices for a vector of pollutants could not estimated using estimates of input or output distance functions.

The cost of Green Industry Development

Conventional pricing:

P = MC;

P = Price, MC = marginal cost of production;

Green Pricing:P = MC+MEC+MUC;

P = Price, MC = marginal costs of production, MEC = marginal external (Environmental & Social cost) cost of production, MUC = marginal user cost, i.e. the value of future benefits forgone by using a resource now, (David, 1992).

Green Economy Pricing Mechanism

Green Taxes should encourage social inclusion, social equity, economic efficiency and environmental sustainability.

Its should discourage the use of non – renewable resources, monopoly of common resources, pollution and waste.

Green tax : Reduce emissions until marginal abatement costs are equal to the charge on emissions.

Green tax = MAC = Charge on emission

Or

MAC = MD

MAC = marginal abatement cost, and MD = marginal damage.

Green Tax

Green Tax

Emissions(tons/

month)

Marginal Abatement

cost

Total Abatement

Cost

Total Tax Bill at

$120/ton

Total Costs

10 0 0 1200 1200

9 15 15 1080 1095

8 30 45 960 1005

7 50 95 840 935

6 70 165 720 885

5 95 260 600 860

4 120 375 480 855

3 150 525 360 885

2 185 710 240 950

1 230 940 120 1060

0 290 1230 0 1230

An Emission Charge:

Gross Domestic Product is defined as the market value of all the final goods and services produced within a country in given period of time.

The most common approach to measuring and understanding GDP is the expenditure method:

GDP = C+I+G+(X-M);

GDP = Gross Domestic Product, C = Consumption, I = Investment, G = Government Expenditure, X = Export and I = Import.

Green GDP as the regular GDP minus the cost of environmental and social damage.

Green GDP = GDP – (Environmental costs +Social costs).

Green GDP

green industry towards green economy in the rmg

Economy & Finance