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GREEN PROCUREMENT PRACTICES: A STUDY ON READY-MADE GARMENTS

INDUSTRY IN BANGLADESH by Rafiqul Islam

Experiment Findings · March 2015

DOI: 10.13140/RG.2.2.25394.02245

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 Department of International Business
University of Dhaka

GREEN PROCUREMENT PRACTICES: A STUDY ON

READY-MADE GARMENTS INDUSTRY IN BANGLADESH

Rafiqul Islam
BBA 4th Batch, ID: 68

A Thesis Submitted to Department of International Business,

University of Dhaka in Fulfillment of the Requirements for the degree of
Bachelor of Business Administration

March 25, 2015

GREEN PROCUREMENT PRACTICES: A STUDY ON
READY-MADE GARMENTS INDUSTRY IN
BANGLADESH

i
LETTER OF TRANSMITTAL

25th March, 2015

Mansura Akter
Assistant Professor
Department of International Business
University of Dhaka

Dear Ma’am,
It gives me immense pleasure to submit my thesis report on “Green Procurement
Practices: A Study on Ready-Made Garments Industry in Bangladesh” which had been a
great experience for me to work with such a practical issue. This thesis report was assigned
to me as a partial requirement for the completion of my Bachelor of Business
Administration (BBA) program.
I am pleased to provide you with all necessary information related to the report. I am
grateful to be a part of this report preparation program. I thank you for giving me this
opportunity and for showing an effective guideline in preparing the report. I have learned
many aspects in furnishing this particular requirement.

To prepare this report I have tried my best but there may have some limitations and errors in
this report. I hope you will see it with your own graciousness. I enjoyed this research work
again. I am ebullient to gladly attend any of your calls to clarify on my point, if necessary.

Sincerely Yours,

_____________
Rafiqul Islam
BBA 4th Batch
ID: 68
Department of International Business
Faculty of Business Studies
University of Dhaka
ii
APPROVAL OF SUPERVISOR

Rafiqul Islam, a student of B.B.A 4th Batch, bearing ID: 68 has completed thesis report on
“Green Procurement Practices: A Study on Ready-Made Garments Industry in
Bangladesh” as a partial requirement for obtaining the B.B.A degree. Rafiqul Islam has
completed the report by himself under my supervision. I have read and found that it meets
the standard of B.B.A thesis report.

He is permitted to submit the thesis report.

………………………………............

Mansura Akter
Assistant Professor
Department of International Business
Faculty of Business Studies
University of Dhaka

iii
ACKNOWLEDGEMENT

I am thankful and grateful to the Almighty who has given me the strength and ability to
complete the thesis report on “Green Procurement Practices: A Study on Ready-Made
Garments Industry in Bangladesh”. I am also grateful to my supervisor, Mansura Akter,
for her assistance in preparation of this very important report. She has given all sorts of help
required to complete this. I also thank her for assigning me such a practical report that has
boosted my knowledge from different aspects.
I also thank some of my open-hearted senior brothers who have helped me in preparing the
report and suggested about the formation of the report. It is worth mentioning to utter the
name of my all respectable teachers of my department from whom I have learned over the
years. I am also grateful to the firms’ Compliance Officers who have provided me the data,
special thanks to Procurement personnel of the respective organizations for sharing their
practical experiences.

The presentation of this report is of a great importance in completing my B.B.A. program and
I am quite happy to submit it duly applying that I think should have to be included.
Theoretical knowledge should be valued when it is successfully applied in practical field. So
lastly, I express special thanks from the bottom of my heart to all who helped me directly &
indirectly to complete this thesis report.

iv
LIST OF ABBREVIATIONS

BSCI: Business Social Compliance Initiative

CO: Compliance Officer

EIA: Environmental Impact Assessment

FTA: Foreign Trade Association

FY: Financial Year

GPP: Green Procurement Practice

NGO: Non Government Organization

RMG: Ready-Made Garments

WRAP: Worldwide Responsible Accredited Production

Green: Mandatory specification or fully implemented initiative

Yellow: Optional specification or partially implemented initiative

Red: Identified as a potential specification or initiative. Not yet incorporated into

procurement

v
ABSTRACT

Green Procurement is the purchase of environmentally preferable products and services.

This paper discusses the Green Procurement Practices (GPP), impacts of green procurement
practices, benefits and gaps of green procurement among ready-made garments firms in
Bangladesh. This research aimed to investigate the procuring, purchase and production of
recycled and environmentally preferred products in order to minimize environmental
impacts. Many of the garments firms are working to improve the environmental performance
of their operations and products and green procurement has been a logical extension of this
work. The paper presents where green procurement is used by them as a means towards
improving their products and operations from environmental perspective to reduce risks,
total cost of ownership and improve supply chain performance. The green procurement
practices in different functions like raw materials, machinery purchase, packaging and
distribution, operations, office components, disposals, suppliers engagement applied by
garments industry in this study are; 14% firms are committed to implement green
procurement, purchase of Eco Labeled machinery (7%), purchase of energy star machinery
(18%), repairing the equipment (12%), purchase of sustainable raw materials (68%),
recycled plastic products (16%), chemicals are not harmful to human health or environment
(92%), certification of Oeko-Tex-100 (92%), Environment Clearance from Ministry of
Environment (84%), use of bio based packaging (16%), purchase materials that are not
harmful to human health (100%), reduce consumption through reuse or recycling (16%),
reuse or recycle the used products (8%). There exit a gap between the green procurement
standards and the practices the garments industry practically do. GPP is largely linked to
the wider agenda of sustainable development although it has some barriers to implement.
The management of firms should educate their employees on the best green procurement
practices to be applied in their different operations. BGMEA should regulate law regarding
green procurement that all firms follow it.

Key Words: Green Procurement, Environmentally Preferable Product, Recycled

Product, Environmental Impact, Supply Chain Performance, Sustainable Development.

vi
TABLE OF CONTENTS

TITLE FLY………………………………………………………………….…………........I

LETTER OF TRANSMITTAL……………………………………….….………...….….II

APPROVAL OF SUPERVISOR...................................................................................…..III

ACKNOWLEDGEMENT…….……………..…………………………………………….IV

LIST OF ABBREVIATIONS………………………………………………………………V

ABSTRACT………………………………………………………………….………….....VI

CHAPTER ONE: INTRODUCTION………………………………………………………1

1.1 Problem Statement……………………………..……………………………………...2

1.2 Background of the Study…………………………..……………………………….....3
1.3 Justification of the Study……………..…………………………………………….....4
1.4 Research Objectives and Questions………..……………………………………….....4
1.5 Scope of the Study…………………………..………………………………………...5
1.6 Limitations of the Study…………………………………..…………………………..5

CHAPTER TWO: LITERATURE REVIEW………………………………………….......6

CHAPTER THREE: GREEN PROCUREMENT………….………………….…..………9

3.1 What is Green Procurement…..………………………………………………...10

3.2 Green Procurement Practices………..………………………………………….11
3.3 Benefits of Green Procurement Practices…………………..…….…………….12
3.4 Shortcomings of Green Procurement………..……………………………….....13

vii
CHAPTER FOUR: READY-MADE GARMENTS INDUSTRY IN BANGLADESH..15

4.1 Background of Ready-Made Garments……………………………..……………….16

4.2 Impacts of Ready-Made Garments on Country Economy………...………..………..16
4.3 Present Situation in Ready-Made Garments ………………..……………………….17
4.4 Scope of Green Procurement in Ready-Made Garments…………………………….18

CHAPTER FIVE: METHODOLOGY………………………..…………………………19

5.1 Sampling…………………..…………………………………………………………20
5.2 Sampling Techniques…………………..………………………………..…………...20
5.3 Interview…………………………..……..…………………………………………..21
5.4 Questionnaire………………...………………………………………………………21
5.5 Sources of Data………………………..……………………………………………..21

CHAPTER SIX: DATA ANALYSIS AND RESULTS………………………………..…22

6.1 Commitment to Green Procurement…………………………………………………23

6.2 Machinery Purchase………………………………………………………………….24
6.3 Raw Materials………………………………………………………………………..24
6.4 Packaging and Distribution…………………………………………………………..25
6.5 Operations………………………………………………………………………..…..26
6.6 Office Components…………………………………………………………………..26
6.7 Disposal…………………………………………………………………………..…..27
6.8 Supplier Engagement………………………………………………………………...27
6.9 Others……………………………………………………………………………..….28

CHAPTER SEVEN: FINDINGS, CONCLUSIONS AND RECOMMENDATIONS….30

7.1 Findings…………………………………………………..………………………….31
7.2 Conclusions…………………………………..………………………………………32
7.3 Recommendations………………………..…………………………………………..33

REFERENCES………………..……………….………………….……………………….34

APPENDIX………………………………………………………………………………....35

viii
CHAPTER ONE: INTRODUCTION

1
1.1 Problem Statement

Green procurement is an important practice that is done in various developed countries but in
our country this green procurement is not practiced well. Green procurement is absent in
garments industry. The firms pollute the environment that creates a strong barrier to be
sustainable the garments industry. Green procurement is a spending and investment process
typically associated with public policy although it is equally applicable to the private sector.
Green procurement practice among Garments industries is linked to the wider agenda of
sustainable development. Some researchers found out that green procurement practice among
private corporations is in the rise due to consumer demand awareness of “green products”,
the government dedication to climate change and environmental maintenance through
recycling, reduce and reuse as well as job creation benefits accrued from green procurement
practice. The aim of the plan was to encourage the RMG sector to purchase and produce
environmentally sound products and services. This research will therefore discuss the green
procurement practices, impacts of green procurement practices, benefits and gaps among
garments industry in Bangladesh. This research aimed to trigger support as well as
investigate the procuring, purchase and production of recycled and environmentally preferred
products in order to minimize environmental impacts.

Although green procurements have significant impacts on the environment, there are not
such studies that can identify the present status of green procurement implementation.
Particular concerns are how the relevant officials realize the benefits of the implementation
procedures. The information thus produce will bring insights for the people involved in
policy making. In this paper, I would like to hypothesize that garments industry has this
obligations to follow the green procurement procedures but the actual procedures that is
practiced by the officials are not up to the mark. Hence, I would argue that green
procurement implementation gaps underlie the lack of proper enforcement of the standards
set by the relevant parties. I would contend that the officials who are involved in the
procurement process needs to be trained enough to realize the benefits of the green
procurement. My paper would follow a literature review section. I would detail my method

2
applied and in the following sections, I would analyze my data which will follow the
concluding section.
Garments industry is realizing the benefits and importance of green procurement in
purchasing raw materials, substances and other elements that ensure a pure and healthy
environment. To implements this practise the firms must keep a good understanding with the
particulars suppliers to purchase the raw materials and motivate them that green selling
ensures sustainable developments through ensuring the firms benefits. Today, private firms
are taking initiatives in this regard.

1.2 Background of the Study

Green Procurement is the purchase of environmentally preferable products and services
which have a lower impact on the environment over their whole life cycle than the standard
equivalent. It involves the integration of environmental issues into purchasing decisions
based on price, performance and quality. Both public and private sectors are realizing the
significant impacts and benefits of adopting green procurement over their organizations.
While there are social and environmental benefits from the implementation of the green
procurement procedures, there are economic benefits too. The benefits include cost savings
from reduced energy consumption, resource use and material management. Thus, private
sectors have incentives to follow the green procurement procedure. Private firms purchase
raw materials, substances and chemicals in a way that reflects environmental, health and
safety concerns.

The tremendous success of garment exports from Bangladesh over the last two decades has
surpassed the most optimistic expectations. Today the apparel export sector is a multi-billion-
dollar manufacturing and export industry in the country. The overall impact of the ready-
made garment exports is certainly one of the most significant social and economic
developments in contemporary Bangladesh. With over one and a half million women
workers employed in semi-skilled and skilled jobs producing clothing for exports, the percent
share of the Bangladesh’s total exports exceeds 70 percent and thus, occupies a significant
place in Bangladesh economy. The application of green procurement in this sector offers
significant changes on the improvement of environmental concerns and safety issues.

3
1.3 Justification of the Study
Green Procurement Practice (GPP) is essential for the development of a country. It is related
to the firms’ long term sustainability. In Bangladesh no study on it is done yet. Some
developed and developing countries are implementing this practice. So in Bangladesh, RMG
sectors have started to practice green procurement. This study will be used for those who are
interested to work in this area. This study provides the opportunities to know about the GPP
in different countries, implications, advantages and impacts of the green procurement
standards in different public and private limited organizations, specially provides insights
into RMG sectors. The RMG firms also can take idea about green procurement discussed in
this paper. This paper also provides overview to public about the garments industry that is
working for green procurement to hold their long term sustainability.

1.4 Research Objectives and Questions

The general objective of preparing this report is to fulfill the requirement of BBA completion
through gaining the practical knowledge & experience and view the application of theoretical
knowledge in the real life. The main objectives include the following.
• To know about and analysis the ready-made garments industry in Bangladesh
• To know about the procurement systems in the factories
• To investigate the different green procurement practices in ready-made garments
industry
• To test whether the firms practise green procurement in purchasing raw materials,
substances and chemicals
• To gain practical knowledge about green procurement and its implications in private
sectors
• To identify the factors leading to green procurement

The questionnaire I used to complete the research has been attached to the APPENDIX
section.

4
1.5 Scope of the Study

I tried to analysis the green procurement and its practices and gaps in RMG industry. This
paper is essential to find out which firms are maintaining environmental issues (applying
green procurement) and in which sector the gap exists. Although some studies have been
carried out regarding green procurement of works and services within the public and private
sector, most of the green procurement literature discussed the purchase of products. This
paper, however, focuses on current practices and gaps concerning green procurement in the
area of commitment to green procurement, machinery purchase, raw materials, packaging
and distribution, operations, office components, disposal, supplier engagement in RMG
sector in Bangladesh.

1.6 Limitations of the Study

Some limitations were faced while during the preparation of this report. These are listed
below:

I. Inadequacy of time
II. Inadequacy of money
III. Lack of data sources
IV. Lack of experience
V. Inconsistency of data set.
VI. Complexities in data collection

5
CHAPTER TWO: LITERATURE
REVIEW

6
Green Procurement means to purchase products that are friendly with the environment.
Products that are produced in green way don’t hamper the environment. These products don’t
affect human body and have no detrimental effects on other issues like consumption and
human health. Green procurement is the purchase of environmentally friendly products that
include the selection of contractors and the setting of environmental requirements in a
contract. Green procurement is applicable to organizations regardless of their sizes.
Integration of environmental performance consideration into the procurement process is also
referred as green procurement. Goods and services that are produced in green way have
lesser impacts upon human health and environment.

Globalization is not only favorable to local environment but also for global environment.
Besides private firms governmental organizations are making consideration environmental
issues in purchasing and green procurement has been a logical concept for this reason. From
environmental perspective green procurement is used to reduce risk, total cost of ownership
and improve supply chain performance (Richard-Nicolas LACROIX). Green procurement
integrates the environmental issue into purchasing decision based on price, performance and
quality. It articulates that products and services that consume fewer natural resources are
given preference over the products or services that consume more natural resources because
these criteria meet the standard of green procurement. It also focuses on product life cycle.
Green procurement program has some important elements. According to Richard-Nicolas
LACROIX, the elements include recycled content products, energy efficient products,
alternative fuel vehicles, alternative fuel, fuel efficient vehicles and bio-based products.

Green purchasing or procurement can be defined as the integration of environmental

consideration into purchasing policies, programs and actions. The first green purchasing
initiatives appeared during the 1980s and 1990s (Annika Varnas, 2009). Many countries are
now implementing this policy. Another name of green procurement is sustainable
procurement. Private business organizations normally don’t want to make green purchasing
decision unless there are business benefits. Green procurement in private organizations
brings about some advantages for example, it reduces environmental risks, saves costs, saves
energy and decrease use of materials. But it is true that the firms that are larger are much

7
more willing to adopt green purchasing because of their large volume of production than the
firms that are small (Berit Balfors and Charlotta Faith-Ell, 2009). Whatever the sizes of the
firms they want to seek profits and green procurement ensures it. Although green
procurement has lots of advantage but it is tough to prove it. But is has some barriers too.
Some researchers suggested that collaboration and cooperation among companies, NGO and
government may be helpful because it is tougher to improve organization’s performance
through green purchasing than other environmental initiatives.

Consumers, suppliers, buyers are the main pressures for practicing green procurement but
consumer pressure is usually considered as one of the major drivers for more environmental
friendly products (Ottar Michelsen and Luitzen de Boer, 2009). The environmental demands
in GPP can be related to purchased products or services, their competences and their
environmental management system. Supplier can contribute to large extent in this area. The
indirect impacts in purchased products and services are major environmental impacts. The
development and implementation of green procurement practice to a large extent depends on
initiatives from enthusiasts. Collaboration between suppliers and customers is another
important factor for establishing green procurement practice.

Green procurement means purchasing green products from green suppliers (Suzuki Green
Procurement Guideline, 2013). Green products can be parts, supplies materials, office
materials, raw materials, packaging materials, machinery, equipment etc. Green suppliers are
the suppliers that are playing active roles in environmental protection. Here it is clear that
supplier is the main important part of green procurement because each product needs raw
different types of raw materials. If the raw materials are not made considering environmental
issues or the materials are harmful to human health or environment, the finished goods can’t
be green products. Suppliers supply these raw materials. So it is important to make
collaboration or build up a good understanding between the company and supplier. Supplier
can harm or can cause disadvantages for a firm. The competitive advantage that is why
depends on firms’ purchasing decision to a large extent and this competitive advantage
ensures the firms’ long term sustainability.

8
CHAPTER THREE: GREEN
PROCUREMENT

9
3.1 What is Green Procurement?
Green Procurement is the purchase of environmentally preferable products and services in
accordance with one or more of the established “green" procurement preference programs
(Richard-Nicolas LACROIX). Green procurement is the purchasing of products or services
which have a lower impact on the environment over their whole life cycle than the standard
equivalent. It involves the integration of environmental issues into purchasing decisions
based on price, performance and quality. This means that products or services that consume
fewer natural resources should be given preference over competing products or services
exerting a greater environmental impact. To prevent waste and pollution, these programs
require considering environmental impacts, along with price, performance, and other
traditional factors, when making purchasing decisions. Green procurement policy and
program can reduce expenditures and wastes, increase resource efficiency and influence
production, markets, prices, packaging, distribution, available services and organizational
behaviors. The Typical Green Procurement program elements are:
• Recycled products
• Bio-based products
• Eco-labeled machinery
• Alternative fuel
• Fuel efficient vehicles
• Fuel efficiency
• Sustainable raw materials
• Renewable energy

Green procurement depends on established products standard, labels and certifications that
ensure the performance of the products (Richard-Nicolas LACROIX). To ensure green
procurement practices both the government and noon government organization should come
forward to help the ready-made garment firms realizing the benefits of GPP in real term. The
country that practices green procurement is referred as the country has good citizens. So to
promote the development of environmentally friendly products and services we need to
collect and share information on global purchasing activities.

10
3.2 Green Procurement Practices

Green procurement also called purchasing of “Eco friendly” products and services has lesser
environmental impacts. As a consumer we have the power to benefit the environment by
buying products that have lesser environmental impacts. Individuals, governments,
companies, universities, hospitals and other institutions, garments, industries make
purchasing decisions daily. Large organizations like Niagra Textile Ltd, GMS Composite Ltd
and major companies mainly make a major contribution to improve human health and
environment when they put in place a green procurement policy, purchasing of more "eco-
friendly" products and services.

Both public and private institutions are identifying and measuring the benefits of their green
procurement programs. As green procurement brings about a lot of benefits governments and
companies are buying green. Government organizations find that green procurement policies
reduce overall costs, offer significant opportunity to use materials, resources and energy
more effectively, improve employee health and stimulate markets for innovative new
products and services. Private businesses that face continued severe competition, regulations
and market pressures-measure a financial payback from purchasing products and services
with lower environmental impacts and from selecting suppliers that are committed to
improving their own environmental, health and safety performance. A growing number of
businesses government agencies are discovering that the power of their reward can accelerate
the availability of greener, cleaner products. By specifying minimum recycled content,
improved energy efficiency and reduced toxicity in their tender specifications, demand from
buyers is beginning to dramatically increase the supply and quality of a broad range of
environmentally superior products. An expanding number of certification and labeling
organizations are available to evaluate supplier claims. Large organizations like the Niagra
Textile Ltd are also stimulating manufacturers to offer a variety of environmentally friendly
improved products. BGMEA is helping and giving guidelines to the firms so that the
particular firms can be conscious and take initiatives of adopting green procurement
practices.

11
3.3 Benefits of Green Procurement Practices
Green Procurement Practice (GPP) provides economical benefits for private companies. The
benefits includes risk management, cost reduction, revenue growth etc. The main advantages
of GPP are reduction of expenditures and waste, increase resource efficiency, influence
production, markets, prices, distributions and available services. GPPs assist countries in
meeting multilateral requirements. The commitment to buy/purchase green encourages
organizations to continuously improve the environmental sustainability of their purchasing
decisions. Given its business and environmental benefits, green procurement has many
benefits that are interesting to describe.

For governments, green procurement can help to reduce any negative and unintended impacts
on the environment like pollution and deterioration of local air quality, support companies
that provide products and services that have fewer environmental impacts and stimulate
"green," innovative product and business development, save the money that are spent on
cleaning up pollution (Compliance Officer, Niagra Textile Ltd). For private companies, green
procurement helps the organization in making the sustainable purchasing choices by
implementing and evaluating green procurement strategy, selecting suppliers and
environmental concerns for some key purchasing areas. Benefits of the practice of green
procurement by private companies include influencing the market. Organizations can
encourage the production of more sustainable and environmentally friendly products and
services by increasing the demand for it. Particularly larger firms such as government; for
financial benefits that is fewer resources are required to produce and use green products,
save money on energy, water, fuel etc. Savings can also be made on disposal through
recycling or using products that create less waste; for organizational benefits means setting a
standard for themselves. Private companies also avoid costs by eliminating or lowering fees
for waste management or hazardous material management like special training, handling and
reducing time and costs for reporting and receiving fewer fines. They save money by
conserving energy, water, fuel and other resources. It reduces risk of accidents, lowers health
and safety costs, improves image, brand and goodwill and improves health of employees and
communities through cleaner air and water.

12
3.4 Shortcomings of Green Procurement
I have discussed the importance and advantages of green procurement practices in previous
section. Although there are lots of advantages of green procurement practices there are some
shortcomings too that make implementation hard. The shortcomings occur under the
following sectors.

Price
There is a perception that green products are more expensive. This is true in some cases,
particularly where development costs are reflected in the price. The real problem may simply
be that products are being ordered in small quantities, or are not available locally. Sometimes
a green product may have a higher up-front purchase price, but will cost less over its lifetime.
For example, a non-toxic alternative to a toxic product will cost less to transport, store,
handle, and discard. It will require fewer permits, less training for staff, and the consequences
of an accident will be greatly reduced. Similarly, a product that uses less packaging and that
is easily recyclable or reusable will carry a lower disposal cost (CO, GMS textile Ltd).

Lack of corporate commitment

For any firm to implement a green procurement program, it must have commitment from all
levels including senior management and purchasing agent that ranges from purchasing raw
materials to finished goods and also to deliver the goods to target buyers. So it is tough to
manage the implementation and communication among these chains.

Insufficient knowledge
Many organizations are unknown to the concept of green procurement. For an organization to
participate, it must have an understanding of concepts, vocabulary and terms. Another barrier
is availability: Frequently, local distributors do not stock green products, or else they stock
only small quantities. Local customers always want to purchase the products at low cost. This
can lead to delays in obtaining the product. Increasing market demand will help to overcome
this obstacle.

13
Lack of Capital
Another barrier of GPP is lack of capital to purchase energy star machinery, eco labeled
machinery that is used to produce green products. These machines are costly. To operate the
production smoothly the advanced machines are needed. The firms that are small in
production volume are not capable of purchasing these machineries. As a result they cannot
come under GPP.

More Interest to Earn Profit

There are some firms that are greedy. They focuses on earning profit not quality production
that is why they are not interested to such activities.

No specifications
It is important that suppliers are asked to provide the environmental specifications of the
products they are offering. Purchasers, in the same way, must clearly define their needs and
requirements. Purchasing habits of people is also a major barrier in green procurement in that
persons have always done it their way when it comes to purchasing. Therefore this can be a
difficult mentality to overcome. There may also be existing relationships between purchasers
and suppliers that make it difficult to switch to alternatives.

Potential barrier to trade

Globalization and international trade issues show barriers to establish green procurement
program for the private firms. International trade barriers can be export and import quota. If
the importing country charges high tariffs on importing country, the exporting country will
make loss. That is a strong barrier of GPP because if the firms make losses it cannot gain
competitive advantages that will discourage the firm not to produce quality products.

14
CHAPTER FOUR: READY-MADE
GARMENTS INDUSTRY IN
BANGLADESH

15
4.1 Background of Ready-Made Garments

The RMG sector took first step on clothing export market in 1978. Now it is only 30 years
old. At present Bangladesh captures more than 4 percent share in the global clothing export
market and has become the third largest garments exporting country after China and Turkey.
RMG exports grew USD 21.5 billion in FY 2012-2013 (M M Shahnewaz Kabir Shawon,
2011). There are mainly two types of products in RMG. First one is knit garments and the
second one is woven garments. Although in the past Bangladesh focused on and produced
woven garments, at present the country is giving importance on production of knitwear
garments. Recently the country has been successful in knitwear production that has been
caused for gaining competitive advantages in global clothing export market. Recently the
country has captured the second position as knitwear exporter in term of volume in 2010. In
2013, Bangladesh exported textile and clothing products worth of 2696.4 million USD which
was 2538.8 million USD in same month of the previous year (M M Shahnewaz Kabir
Shawon, 2011). Supply of cheaper workforce, new technology, supply of cheaper energy and
policy support by the government has brought about this tremendous success in the garments
industry.

4.2 Impacts of Ready-Made Garments on Country Economy

Ready-made garments industry is contributing to Bangladesh economy to a large extent and

day by day the severity of contribution is going up. At present RMG has created working
opportunities for nearly 5 million workers. 50 percent of the total workers are women. As a
result women are entering into workforce outside their homes and contribute to family
income. They have become self sufficient and thus unemployment rate is decreasing. The
RMG sector also extends their supporting hands for banking and financial sector of the
country. Although there are some barriers like inefficiency of port and transport, low supply
of electricity and gas and rising cotton price, Bangladesh has continued to show strong
growth in the RMG export.

16
4.3 Present Situation in Ready-Made Garments

Bangladesh is the second largest ready-made garments exporter in the world. During July-
June 2012-2013 period Bangladesh’s garments exports climbed by about 12.7 percent to US$
21.515 billion over exports of US$ 19.089 billion made during the corresponding period of
2011-2012. In 2012-2013 FY, the top three export destinations for Bangladesh garments
were Europe, which accounted for US$12.56 billion followed by the USA and Canada,
which accounted for US$4.99 billion and US$980 million respectively (Ferdus Alam, 2013).
But recently Bangladesh has lost its industrial reputation because of two industrial accidents.
One is fire in the Tazreen Fashion Factory that killed 110 people in November, 2013 and the
second one is collapse of Rana plaza garments factory in April, 2013 that killed 1100 people.
It is the second industrial accident in the world. Later on the issue of these accidents US
government suspended GPS (Generalized System of Preferences) from Bangladesh. GPS was
profitable for Bangladesh because it permits duty free entry of goods from least developed
country. Due to suspension of GPS there will have export fall nearly $40 million. Every year
Bangladesh exports $5 billion garment products to USA market. 0.8 percent of export fall is
due to the suspension of GPS from Bangladesh. Watching this scenario European Union can
take same action like USA. Another important noticeable situation in RMG is workers’
clashes demanding Tk8000 minimum monthly wages. The workers clashed and some
factories were closed down. At last Tk 5300 monthly wages has been fixed for worker.

In December, 2013 European Union threatened to withdraw GSP from Bangladesh and if the
situation occurs, the price per unit of garments will rise and as a result the country will make
huge losses. Because of present political instability, RMG sector losses in billion of taka
every year. Buyers are canceling order due to political instability because the firms cannot
supply the garment products in time. If this situation continues, Bangladesh RMG industry
will make losses.

17
4.4 Scope of Green Procurement in Ready-Made Garments

There are many scopes of practicing green procurement in ready-made garments industry.
The scopes are

1. Commitment to green procurement

2. Machinery purchase
3. Raw materials
4. Packaging and distribution
5. Operations
6. Office components
7. Disposal
8. Supplier engagement
9. Reports and billing.
10. Reduction or reuse
11. Resources input
12. Products design
13. Manufacturing
14. Use and maintenance

18
CHAPTER FIVE: METHODOLOGY

19
5.1 Sampling

There are about 5000 firms in the garments industry (BGMEA, accessed on March 2, 2015).
My sampling covers 25 firms from two regions. This sample size may not be representative
of the total population of 5000 firms due to two reasons; locational and product variations.
Firms’ procurement varies depending on where the firms are located. For example, if the
firms are situated in the city areas, their procurement facilities are different from than the
firms in the rural areas. Similarly, procurement will be different when the final products are
different. In light of this variations, I am supposed to make my sampling in both urban and
rural areas and also, in the firms of different final products. From locational variations, I
visited firms of two regions. One is Ashulia, Dhaka and the other one is Gazipur- both sites
can be considered as situated in urban areas. As far as products variation goes, I visited firms
whose final products are mostly Jeans and shirts; thereby potentially excludes those firms
that produce kids’ dresses, pants, T shirts etc. The reason I could not make a representative
sampling is that first, I was having a very limited time frame. Second is the resource
available that did not allow me to expand the number of firms both in the urban and distant
rural areas and third, is that it is only me who has conducted the interviews, which is tiring
and often not enough to manage viable and effective communication with respondents.

5.2 Sampling Techniques

I have applied snow balling technique in which one respondent informed me about the other
respondents in the other garments. I have asked if he has any other familiar officials working
in other industries. In some occasion, the respondents phone the potential respondents and
introduced me with him and in other occasions, gave me their visiting cards. There are about
20 respondents I have been introduced through the phone call.

The main loophole in the snowballing is that I may end up getting similar officials who are
equally environmentally concerns. Thus the potential bias occurs where either I can get too
much good result or too much bad results as the familiar person most often have equal ranks
and positions. Due to time and resources constraints, I ignore such biases for this study.

20
5.3 Interview:

I have interviewed with a structured questionnaire that are close ended with three choices
(Green, Yellow and Red). There are nine segments of the questionnaire. The segments are
commitment to green procurement, machinery purchase, raw materials, packaging and
distribution, operations, office components, disposal, supplier engagement and others. I read
questionnaires to the respondents and waited to hear from his response and then I checked
the tick boxes. Most interviews lasted around 45 minutes. I have conducted five interviews
every day.

5.4 Questionnaire

I prepared the questionnaire based on the Canadian green procurement standard collected
from a website. Despite the socio economic differences between Canada and Bangladesh, I
have used their standard for two reasons. Following Canadian standard provides me an
opportunity to set a target for adopting environmentally sensitive issues and concerns.
Second, Bangladesh has export relations with developed countries like Canada and that
reaching to their standards will likely to have positive impacts on our export volumes.

5.5 Sources of Data

Data collection of this study includes primary source and secondary source. Direct
conversation with the respective officials of some of the garments industry I have chosen and
observation of various organizational procedures can be referred as primary source of data
collection. Secondary data are collected from the sources like magazine, journal, periodicals,
publications, internet browsing (various websites), and different published materials such as,
books and articles. The garments I visited provided information to me in a descriptive
manner. In this study, data analysis had been based on my purpose to find out the results I
wanted to get.

21
CHAPTER SIX: DATA ANALYSIS AND
RESULTS

22
Data have been analyzed under following segments.

6.1 Commitment to Green Procurement

Area Green Yellow Red

Firms are committed to integrating environmental 14% 70% 16%
considerations into procurement
Complete Guidelines of green procurement practice 0% 14% 86%
Voluntary initiatives for green procurement 0% 100% 0%
Considerations of environment rather than costs 0% 30% 70%

I have surveyed 25 firms. Among them only 14% of the surveyed firms said that they are
willing to design and implement green procurement practice. The Compliance Officer (CO)
of Niagra Textile Ltd said that “They have a “vision-2021”. By this period he wants to be in
the first position in the era of garments industry through the integration of environmental
consideration into procurement. These firms mostly consider environmental issues rather
than costs. Although most of the firms are committed to apply green procurement standard to
their chains including machinery purchase, raw materials, packaging and distribution, office
component, operations, disposals, supply engagement etc. these chains are not fully under of
green procurement standard. Only 14 percent firms follow green procurement guidelines but
not in fill. But 100 percent firms take voluntary initiatives for green procurement practice.

23
6.2 Machinery Purchase

Area Green Yellow Red

Purchase of Eco Labeled machinery 7% 77% 16%
Purchase Energy Star machinery 18% 70% 12%
Repairing the equipment rather than replacing 12% 40% 48%
Purchase machines made from recycled materials 0% 100% 0%
Use of renewable energy 0% 38% 62%
Certification of Okeo-Tex 1000 0% 26% 74%

Garments industry purchases Eco Labeled machinery that is the requirement of green
procurement. Energy Star machinery by USA given certification doesn’t emit smoke that
causes environment pollution. These two types of machines save energy. They are packed
with fonts, symbols, and exclusive features, Keep the environment neat and clean. Although
purchasing these machines is costly, they are efficient to work. Only 7 percent firms purchase
Eco-Labeled machines and 18 percent firms purchase energy star machines. The firms prefer
replacement if the machine doesn’t work well. No firms use renewable energy. 26 percent
firms have Okeo-Tex-1000 certificates but not in green way.

6.3 Raw Materials

Area Green Yellow Red

Purchase of sustainable raw materials (fabric, yarns etc.) 68% 32% 0%
Recycled plastic products (buttons and others) 16% 84% 0%
Metal parts contain recycled material (zippers, metal buttons etc.) 16% 84% 0%
Purchase of bio based materials 0% 88% 12%
Chemicals are not harmful to human health or environment 92% 8% 0%
Certification of Oeko-Tex 100 92% 8% 0%
Environment Clearance from Ministry of Environment 84% 16% 0%

24
Raw materials purchasing is needed for finished products. Green procurement also occurs in
raw materials. If the raw materials are not purchased in green way, the whole procurement
process or the whole chain can be defeat. Lifetime of a finished product depends on raw
materials used in production. 68 percent firms are attentive to this. They purchase raw
material from sustainable fabrics. Only 16 percent firms used plastic products that are
recycled. They use chemicals that are not harmful to human body. That is a big factor for
green procurement. Another important issue regarding raw materials is Oeko-Tex 100. The
Oeko-Tex 100 is an independent testing and certification system for textile raw materials,
intermediate and end products at all stages of production. Examples for items eligible for
certification: Raw and dyed/finished yarns, raw and dyed/finished fabrics and knits, ready-
made articles (all types of clothing, domestic and household textiles, bed linen, terry cloth
items, textile toys and more). 92 percent firms have this been certified. Another noticeable
fact is that 84 percent firms have been certified by Ministry of Environment that these firms
are careful to environment pollution.

6.4 Packaging and Distribution

Area Green Yellow Red

Use of bio based packaging 16% 84% 0%
Cartons are made from recycled cardboard 0% 100% 0%
Re-use cardboard cartons to ship products 0% 68% 32%

Packaging and distribution is another scope of green procurement implementation. 16 percent

firms use bio-based packaging. They use cartoons not made from recycling cardboard.
Product shipment is an important part of selling. No firms use reused cardboard. They
depend on the situation. 68 percent firms use new and reused cardboard.

25
6.5 Operations

Area Green Yellow Red

Purchase materials that are not harmful to human health 100% 0% 0%
Reduce consumption through Reuse or Recycle 16% 72% 12%

Every firm purchases materials that are not harmful to human health. This can be regarded as
green procurement is practiced well. Green procurement has another criterion of how much
materials and appliances are recycled and reused. Also, green procurement seeks to maintain
the trend of the rate of dematerialization through the use of equipments that are lighter and
constituted of available materials. 16 percent firms follow the guideline to reduce
consumption of paper and other utilities such as water and electricity. The 12 percent don’t
follow the guideline. As the main target of the firm is to maximize profit through firm’s
sustainability that depends on exports or sells the garments make to the target customers, the
particular firms for this purpose follow the rules and guides of the buyers. As most of the
buyers are foreigner, they are bothered about to environmental consideration into
procurement. The foreign buyers are more careful to reduce consumption at this respect and
the local firms mandatorily obey to attract customers.

6.6 Office Components

Area Green Yellow Red

Purchase of recycled paper 0% 100% 0%
Use of bio based materials (inks, carpets etc.) 0% 100% 0%

Paper use and paper consumption is another issue in garments industry. There are some firms
that use same paper for three times. CO of Niagra said “we firstly use a4 size paper for
printing. This one side printed paper is used for printing for opposite side. Then the both
sides printed paper is used for having breakfast to the workers”. 100 percents firms purchase
paper that can be recycled or not. Bio-based materials like ink, carpets are also used by the
firms.

26
6.7 Disposal

Area Green Yellow Red

Purchase of product that generate no or less waste 0% 84% 16%
Reuse or recycle the used products 8% 92% 0%

Green procurement articulates that firms purchase products that will not generate more
waste. It says the products emit less waste or no waste. 84 percents firms purchase products
that generate low waste. 8 percent firms recycle or reuse the used products. That is a prime
fact of green procurement because it promises to save cost. Recycling or reusing products
save cost. There is no firm that does not use recycled or reused products. It basically depends
on the products or situation.

6.8 Supplier Engagement

Area Green Yellow Red

Survey on suppliers to identify environmental features of products 0% 32% 68%
Helping them to increase green products 0% 0% 100%

Suppliers have much engagement to the green procurement requirement as suppliers are the
important parts of the total procurement process. There is a close link between suppliers and
manufacturers. Manufacturers purchase raw materials such as cotton, button etc from
suppliers and suppliers have greater involvement to the green procurement. Whether a firm
makes green procurement or not is a broad area. It starts from raw material to finished
product. I have worked in some particular areas mentioned above. Suppliers are
knowledgeable to manufactures that how much the firms are conscious to the environmental
facts. No firm is investigated by the suppliers that those firms produce the goods that have
environmental features. They also justify or communicate to the firms with a view to be sure
that the firms have some environmental objectives in future years. The suppliers are both
local and foreigners. Most of the firms don’t disclose information publicly.

27
The information that is external is disclosed to the public. 68 percent of the suppliers are not
care about to their manufacturers’ firms. Although most of the firms said that they do green
procurement, there are gaps between the green procurement standard and the firms actually
do. Keeping the statement of green procurement in mind most of the garments industry try to
follow green procurement.

I think there are some reasons behind why the gap exists. Some suppliers are not care about
to the buyers. They only want to earn profit supplying raw materials. Local suppliers are the
example of that category. But foreign suppliers are more conscious than local suppliers to the
environmental issues. They put importance on the environment that has a significant impact
on the green procurement. To ensure green procurement environment must be taken care off.
Polluting environment is the fact of green procurement. Another reason can be that the
suppliers are not conscious about the environment that is why they don’t know how to make
environmentally friendly product.

6.9 Others

Other certificates for green 1. OEKO-TEX STANDARD100

procurement 2. OEKO-TEX STANDARD1000
3. WRAP
4. BSCI
5. EIA
6. Certification from Environment Clearance

The Hohenstein institute was one of the founders of the International Association for
Research and Testing in the Field of Textile Ecology (OEKO-TEX). The OEKO-TEX
Standard 100 is an independent testing and certification system for textile raw materials,
intermediate and end products at all stages of production. As a supplement to product
certification according to OEKO-TEX Standard 100, The OEKO-TEX Standard 1000,
which was introduced in 1995, is a certification system for environmentally friendly
production sites in the textile and clothing industry. The aim is to test and certify the
28
production conditions at a certain textile production site. WRAP headquartered in USA with
offices in Hong Kong and Bangladesh and representatives in India and Southeast Asia. It an
independent, objective, non-profit team of global social compliance experts dedicated to
promoting safe, lawful, human and ethical manufacturing around the world through
certification and education. BSCI was launched in 2003 as an initiative for the FTA in
response to the increasing business demand for transparent and improved working condition
in the global supply chain. EIA is the process of assessing the likely environmental impacts
of a proposal and identifying options to minimize environmental damage. The main purpose
of EIA is to inform decision makers of the likely impacts of a proposal before decision made.
Most of the firms like 98 percents firms have these certificates. When a foreign buyer wishes
to purchase products from a particular firm he investigates the firms and make sure whether
this firm has these certificates or not. If the firm ahs these certificate they place order. So it is
clear that foreign buyers are more conscious to environmental consideration.

29
CHAPTER SEVEN: FINDINGS,
CONCLUSIONS AND
RECOMMENDATIONS

30
7.1 Findings

Green products are generally produced in a manner that consumes fewer natural resources.
They may involve less energy in their manufacture and may consume less energy when being
used and they generally contain fewer hazardous or toxic materials. The green procurement
practices in different functions like raw materials, machinery purchase, packaging and
distribution, operations, office components, disposals, suppliers engagement applied by
garments industry in this study were in; 14% firms are committed to implement green
procurement, purchase of Eco Labeled machinery (7%), purchase of energy star machinery
(18%), repairing the equipment (12%), purchase of sustainable raw materials (68%), recycled
plastic products (16%), chemicals are not harmful to human health or environment (92%),
certification of Oeko-Tex 100 (92%), Environment Clearance from Ministry of Environment
(84%), use of bio based packaging (16%), purchase materials that are not harmful to human
health (100%), reduce consumption through reuse or recycling (16%), reuse or recycle the
used products (8%). There exit a gap between the green procurement standards and the
practices the garments industry practically do.

The main barriers in green procurement practices are the perception held by some persons
that the price of green products is very high. This was true in some cases, however the long
term benefits of this products was not taken into consideration. The study also said that
government laws, regulations and requirements regarding production of green products
influence RMGs to abide by the green procurement practice. Therefore the law enforcement
by the government plays a major role towards the impact of green procurement practiced by
the RMGs. However, in some scenarios, the measures taken by government are not fully
implemented. The government should create awareness and educate the general public on the
adverse effects of climate change and how to deal with this menace in the different
industries. BGMEA should also promote growth of a green economy as a solution to address
problems. BGMEA will take steps to regulate law regarding green procurement that all firms
follow it.

31
7.2 Conclusions
Green procurement also called sustainable purchasing is a way of adding environmental
considerations to the price and performance criteria used by public and private sector
procurement officers to make purchasing decisions. Most importantly, green procurement
attempts to identify and reduce the environmental impacts of an organization’s activities and
maximize resource efficiency. Green products are generally produced in a manner that
consumes fewer natural resources. They may involve less energy in their manufacture and
may consume less energy when being used. My study showed that firms perform their
functions at average 42% in green way in the area of commitment to implement green
procurement, purchase of Eco labeled machinery (USA given certification), purchase of
energy star machinery, repairing the equipment, purchase of sustainable raw materials,
recycled plastic products, chemicals are not harmful to human health or environment,
certification of Oeko-Tex 100, Environment Clearance from Ministry of Environment, use of
bio based packaging, purchase materials that are not harmful to human health, reduction of
consumption through reuse or recycling, reuse or recycle the used products. There exit a gap
about 48% between the green procurement standard and the level the garments industry
maintain. However, new mechanism is to be initiated on green procurement practices. Some
firms suggested that, the government and other businesses need to be focused on trends that
will shape the markets of the future: the drive for renewable energy and materials, the
demand for greater safety and security. Both governments and companies in business should
also come up with agreed standards of what defines a green product. This is also in relation
to the international standards of green procurement practice. These measures are not only for
economical boost purposes but also for the general international and local standards of
production and the environmental preservation. Green procurement practices also offer cost
savings for the organization. Consequently, GPP has benefits for health and safety, both of
workplaces and of the wider community. The study also found out that the existing firms on
the other hand should educate their employees on the benefits of green procurement
practices. The management of the firms should also allocate adequate financial resources to
ensure the implementation of green procurement practices.

32
7.3 Recommendations

The recommendations made from these findings are that the government should take strong
steps to ensure that all the firms adhere to green procurement practices. This will not only
help the production standards of goods but also increase competitive advantage among the
firms and also help to preserve the environment. The management of firms should first
educate their employees on the best green procurement practices to be applied in their
different operations. Another recommendation can be that the management of the garments
industry should allocate adequate financial resources to ensure the implementation of green
procurement practices. An extensive background check of suppliers should be done so as to
make efficient decisions on which supplier is reliable for effective business operations.
BGMEA should regulate law regarding green procurement that all firms follow it.

33
References

Annika Varnas, Berit Balfors, Charlotta Faith-Ell (2009) Environmental consideration in

procurement of construction contracts: current practice, problems and opportunities in
green procurement in the Swedish construction industry. Journal of Cleaner Production,
17 (2009) 1214–1222

Debapriya Bhattacharya, Mustafizur Rahman, Ananya Raihan (2002) Contribution of the

RMG Sector to the Bangladesh Economy. Centre for Policy Dialogue (CPD).

Eva Sterner (2000) Green Procurement of buildings: a study of Swedish clients’

consideration. Construction Management and Economics (2002) 20, 21–30

Ferdus Alam (2013) Present Situation of RMG sector in Bangladesh: 2013. Textile Bulletin,
Posted in March 21st, 2015. available from: textilebulletin.com

List of Apparel Manufacturer in Bangladesh (2014) Bangladesh Garments Directory.

Bangladesh Trade (BT), page: 1-20. available from: www.bangladeshtrades.com or
www.bgmea.com

M M Shahnewaz Kabir Shawon (2011) Deeper look into RMG Sector of Bangladesh: Part-1.
BRAC EPL Research. Available from: www.bracepl.com

Ottar Michelsen, Luitzen de Boer (2009) Green procurement in Norway; a survey of

practices at the municipal and county level. Journal of Environmental Management, 91
(2009) 160–167

Richard-Nicolas LACROIX, IT Consultant, International Researcher. Green Procurement

and Entrepreneurship

Suzuki Motor Corporation (2013) Suzuki Green Procurement Guideline

34
Appendix

Questionnaire
Legend:

Green: Mandatory specification or fully implemented initiative.

Yellow: Optional specification or partially implemented initiative.

Red: Identified as a potential specification or initiative. Not yet incorporated into

procurement.

INITIATIVES Green Yellow Red REMARKS

Commitment to Green Procurement
Standard paragraph stating commitment to
01 integrating environmental considerations Green Yellow Red

into procurement
Complete Guidelines of green procurement
02 Green Yellow Red
practice
03 Voluntary initiatives for green procurement Green Yellow Red

Considerations of environment rather than

04 Green Yellow Red
costs
Machinery Purchase
05 Purchase of Eco Labeled machinery Green Yellow Red

06 Purchase Energy Star machinery Green Yellow Red

Repairing the equipment rather than

07 Green Yellow Red
replacing
Purchase machines made from recycled
08 Green Yellow Red
materials
09 Use of renewable energy Green Yellow Red

10 Certification of Oeko-Tex Standard 1000 Green Yellow Red

Raw Materials
Purchase of sustainable raw materials
11 Green Yellow Red
(fabric, yarns etc.)
Recycled plastic products (buttons and
12 Green Yellow Red
others)
Metal parts contain recycled material
13 Green Yellow Red
(zippers, metal buttons etc.)

35
 14 Purchase of bio based materials Green Yellow Red

Chemicals are not harmful to human health

15 Green Yellow Red
or environment
16 Certification of Oeko-Tex Standard 100 Green Yellow Red

Environment Clearance from Ministry of

17 Green Yellow Red
Environment
Packaging and Distribution
18 Use of bio based packaging Green Yellow Red

19 Cartons are made from recycled cardboard Green Yellow Red

20 Re-use cardboard cartons to ship products Green Yellow Red

Operations
Purchase materials that are not harmful to
21 Green Yellow Red
human health
Reduce consumption through Reuse or
22 Green Yellow Red
Recycle
Office Components
23 Purchase of recycled paper Green Yellow Red

Use of bio based materials (inks, carpets

24 Green Yellow Red
etc.)
Disposal
Purchase of product that generate no or less
25 Green Yellow Red
waste
26 Reuse or recycle the used products Green Yellow Red

Supplier Engagement
Survey on suppliers to identify
27 Green Yellow Red
environmental features of products
28 Helping them to increase green products Green Yellow Red

Others

29 Other certificates for green procurement

36

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