Trade Benefits of Green Industry Initiatives in Bangladesh

Bangladesh finds itself at crossroads as the world shifts towards sustainability. Embracing green industrialization offers not only environmental preservation but also numerous trade benefits. By adopting eco-friendly practices and technologies, Bangladesh may greatly improve its trade prospects, attract international investments, and gain a competitive advantage in the global market.

What is a green industry? 

Although the concept of sustainable industrialization is not new, the term “green industry” was first introduced by UNIDO in 2009 at the International Conference on Green Industry in Asia.   It refers to  "a sustainable pathway of  growth by undertaking green public investments and implementing public policy initiatives that encourage environmentally responsible private investments”[1] . A green industry integrates environmental and social considerations with economic factors, making it less harmful to the environment compared to traditional industries.[2] For example, green industries may feature a reduction in resource use and harmful waste emissions like chemical effluents and poisonous gases .[3]

Green Industrial Performance across the world

In a global ranking of the Green Industrial Performance (GIP) index by UNIDO which encompasses 116 countries , five European industrialized nations—Switzerland, Denmark, Germany, Czechia, and Austria—emerged at the top.[4] The index includes indicators like share of green manufactured exports in total manufactured exports, share of green manufacturing employment in total manufacturing employment, carbon-dioxide emissions per unit of manufacturing value added, etc.

Switzerland, which ranked no. 1, has maintained a strong focus on sustainable development and green economy. Central to Switzerland's Fourth Sustainable Development Strategy for 2012–2015 was the goal of increasing its output without a proportional increase in the consumption of natural resources and energy. Additionally, Switzerland's Green Economy Plan of 2013 and its subsequent extension for 2016–2019 feature tax policies which incentivize environmentally sustainable practices. It may be mentioned that Bangladesh secured the 88th spot, with India at 74th, Sri Lanka at 79th, Pakistan at 86th, and Nepal at 103rd out of 116 countries. China and Vietnam ranked 42nd and 58th respectively.

China has made significant strides in green industry initiatives. By late 2022, 77% of urban buses in China were "new energy vehicles” which ran on electricity, hydrogen, methanol or other alternate fuels. [5] China plans to implement a national standard for corporate sustainability reporting by 2030, as part of its broader efforts to enhance economic sustainability. In order to become a low-carbon economy, China has committed to peak its carbon-dioxide emissions before 2030 and attain carbon neutrality by 2060 in its 14th Five-Year Plan. [6]

In recent years, Vietnam has experienced rapid growth in solar energy development, emerging as a leading player in the Southeast Asian solar power market by 2023. [7] In its 2022 update to the Nationally Determined Contributions (NDC) under the Paris Agreement, Vietnam pledged to reduce greenhouse gas emissions by 9% by 2030, with the potential to increase this reduction to 27% with international assistance.[8] For context, the same parameters for Bangladesh are 6.73% and 15.12% respectively.[9]

Sustainable practices have significantly improved Vietnam's trade with the European Union (EU). The EU-Vietnam Free Trade Agreement (EVFTA), effective from August 1,2020, has given Vietnam duty-free access to the EU market, subject to compliance with environmental standards. These standards include minimizing the use of pesticides in agriculture, increasing power generation from renewable sources, reducing deforestation and promoting sustainable fishing. [10]

Since the implementation of the EVFTA, Vietnam’s exports to the EU have grown substantially. For instance, in the first eleven months of 2021, exports of rubber increased by 72.6%, rice by 21.6%, and pepper by 63.9% compared to the same period in 2020.[11] Moreover, an analysis of trade data from 2015 to 2021 indicates that exports of textiles and garments from Vietnam to the EU have risen by 13.84% since the agreement's entry into force. [12] Since Bangladesh is keen on establishing free trade agreements with its trade partners, the country needs to boost its compliance with environmental standards.