Why Moving to a Circular Economic Model Makes Sense for the Textile Industry

LightCastle Analytics Wing
July 15, 2021
Why Moving to a Circular Economic Model Makes Sense for the Textile Industry

With COVID-19 causing the biggest paradigm shift in the world order, more and more people are beginning to realize how we, humans, had taken the Earth and all its blessings for granted. Even before this pandemic had begun, environmental activists like 15-year-old Greta Thunberg constantly made noise about the importance of adopting a circular economic model in an attempt to save the Earth for generations to come. In an Environment Committee meeting held in April 2019, Thunberg urged environment Mechanical, Electrical, and Plumbing systems (MEPs) and leaders to elevate their policies and transform them to prevent making large-scale damages that may later become impossible to undo. Her speech emphasized the importance of an economic system that is backed by a cleaner, greener, and more circular processes. But what exactly is a circular process?

To understand the ideal state of being for the world economy, we first have to take a look at our current state of being which is largely linear. 

What are Linear and Circular Economic Models?

A linear economic model is a conventional paradigm based on the ‘take-make-consume-waste’ method of resource utilization. In such an economic model, the raw material is turned into a product, which is then discarded at the end of its useful life. A unanimous consensus among professionals and non-professionals is that unless the paradigm is altered, the world will approach a tipping point when it loses its ability to sustain itself. And here comes the notion of the move from a linear to a circular economy that is facilitated by a focus on reuse.

A circular economic model essentially strengthens a linear economy approach by introducing a new line of thought (or process) whereby raw materials are turned into a product that is recycled into a new product at the end of its life cycle instead of simply being discarded. The primary goal of moving into a circular economic model is to eliminate waste. 

With industrialization becoming the norm, it is no secret that manufacturers will consume at volumes larger than what the Earth can provide and/or pay the price for (from an environmental point of view). It is also true that lately, a series of manufacturers have made the effort to create reusable products. But the effort that has simply been regarded as novel and out of the ordinary, now must become a norm, and manufacturing industries must be mandated to act responsibly when procuring new products as required by their supply chain demand. The idea is that when raw materials enter the cycle, they must adhere to the production-use-recycling-production cycle.

However, the implementation of such a model depends heavily on the prevalence of collaborative efforts from entrepreneurs, researchers, industry users, government, civil society, and legislators, but most importantly, it will require technological and creative innovation. 

Want to learn more about Management Consulting?

See Our Service

The Bangladeshi Textile Industry Creating Scope for a Circular Economic Model

Bangladesh is now on track to achieve a developing country status by 2024 following a decade of progressive economic growth. This achievement will require the government to make concessions on its current duty-free and quota-free market access to selected markets. Without a doubt, exports future will be difficult if the country is not well prepared to deal with this shift; additionally, the onset of the COVID-19 pandemic adds another layer of complexity to unfold as it continues to define a new world economic order that is likely to become even more complicated, with innovation and transnational competition serving as a primary factor of growth and development. Keeping these shifts in mind, the transition to a circular economy is not only preferable but imperative as it may serve as an economic model that can be applied to close resource gaps and boost Bangladesh’s pursuit of achieving its Sustainable Development Goals (SDGs).

With Bangladesh now residing among the leading ready-made garments (RMG) manufacturers in the world, ranked as the 3rd largest global RMG exporter in 2020, the industry accounts for more than 10% of the country’s Gross Domestic Product (GDP) earning over $27.9 billion in exports as of the fiscal year 2019-20; before the onset of COVID-19, RMG exports contributed a hefty 84% to Export Earnings for Bangladesh. This development of course is not unforeseen, Bangladesh has gained tremendous attention in RMG in the last seven years by raising revenue from $19 billion to more than $30 billion and this extraordinary performance represents a 79% rise in revenue contributions in less than ten years. This industry has persevered through a plethora of testing times but has come out stronger on the other side, to some extent, by establishing a more secure and healthy working atmosphere for the large volume of the local labor market that it supports. But the question we explore in this article is where it stands in terms of environmental sustainability.

In terms of production leftovers, at the moment, an average Bangladeshi RMG factory generates between 250 and 300 kilograms of waste fabric every day and according to reports by Reverse Resources, the price of waste fabric varies according to its quality and size, starting at TK 10 and rising to TK 300 per kilogram. The break in the clouds is that any scrap of cloth can be recycled. In fact, large scraps of the wasted cloth are sold to local vendors for use in making children’s clothing and although the majority of these children’s garments are marketed within Bangladesh, some are shipped to India. Additionally, Dhaka’s bedding sector is reliant on these scraps as recycled fabric and processed cotton are used in products such as mattresses, pillows, cushions, seat filling, and cushioning in automobiles, public buses, and rickshaws.

Furthermore, very high demand for T-shirt waste is also observed within the Bangladeshi apparel market. Numerous clusters have been developed throughout the country in this regard with Pabna identified as a prominent one. To add to that, lots of local entrepreneurs in numerous villages have created jobs for between 25,000 and 30,000 people and annually make 18 – 20 crore units of apparel, predominantly T-shirts, valued between TK 1,200 crore and TK 1,500 crore. What this development tells us is that all wastage does not necessarily have to go to waste and upcycling may be a way to go in adapting to the new order of a circular economy within this industry.

The Circular Fashion Partnership

In an attempt to address the inefficiencies inherent in the one-way system of manufacturing that the country adheres to, experts have proposed an ambitious vision for a new circular economy in the textile industry that minimizes waste and pollution by reusing items. With the youth of the nation becoming more aware of global concerns and environmental difficulties, consumer behavior is also anticipated to progressively alter, with customers prepared to pay a premium for sustainable items. Thus, Bangladesh’s garment sector has already signaled to the rest of the world that it is prepared to embrace the circular economy concept in textile manufacture. 

An Overview of The Circular Economy and Bangladesh Textile Industry
An Overview of The Circular Economy and Bangladesh Textile Industry

The Global Fashion Agenda (GFA), Reverse Resources, P4G, and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) have formed the Circular Fashion Partnership to combat waste and resource depletion caused by textile manufacturing by fostering the growth of Bangladesh’s recycling industry. The Circular Fashion Partnership, which currently includes over 30 international brands such as H&M, Marks & Spencer, OVS, Bershka, C&A, and Kmart Australia, as well as garment manufacturing and recycling companies in Bangladesh, has the potential to serve as a model for other major garment-producing nations, such as Vietnam and Indonesia. The Global Fashion Agenda, a sustainability forum based in Denmark that is spearheading the new initiative, has identified two work streams for the initiative: The first workstream involves the production of new garments from recycled waste, while the second involves the establishment of a Circular Fashion Stock Marketplace for overstock garments that have accumulated as a result of canceled orders over time. This program will also be critical in assisting poor countries in pursuing successful methods for achieving SDG 12: responsible consumption and production. 

The partnership enables circular commercial collaborations between major fashion brands, textile and garment producers, and recyclers to develop and deploy novel technologies for capturing and repurposing post-production fashion waste. Additionally, the alliance attempts to address the COVID-19-related deadstock pile-up and to engage authorities and investors on the country’s existing economic hurdles and prospects.

According to Reverse Resources, a textile waste tracking and trade network promoting the circular economy concept, it is conceivable to replace 40% of waste materials from garment manufacturing with recycled fibers by 2030. The organization also reports that various bottlenecks in the industrial waste management system occur as a result of industries mixing garbage, lowering the value of trash. Additionally, waste is physically sorted and sold by a network of intermediaries, requiring recyclers to pay about 30% more than the market rate. Furthermore, this alliance also has the ability to reduce carbon emissions, water use, and waste in landfills by 15%. While the idea of such a transition towards a more sustainable future seems desirable, it comes with its own set of challenges, especially for a developing nation like Bangladesh, that just cannot be ignored.

Possible Downsides to this Alliance 

Firstly, it must be addressed that Bangladesh is a country that relies heavily on low-wage labor and so, it is particularly important to analyze the circular economy model’s labor market implications before coming through with such a paradigm shift. The shift to a more circular economy is contingent upon repositioning clothes as durable rather than a throwaway commodity and so, instead of launching numerous lines and collections each year, fashion businesses will now have to redirect their focus on designing and producing higher-quality garments in a circular economy. For Bangladesh, which is the lifeblood of fast fashion, this may mean reduced output and, consequently, reduced working hours or job losses in some industries. Additionally, in order for the successful implementation of policies pertaining to the circular economy, further digitization and technical advancements need to be introduced to the textile sector, complicating the total influence on labor market results. This underscores the need for Bangladesh’s garment industry to transition away from its comparative advantage in low-cost labor and toward a higher-value-added manufacturing method.

This change in dynamics will not only lead to the country losing out on its competitive price advantages (the one thing the country banks on) but will also result in the industry bearing new costs to reposition the brand image that they have upheld for all these decades as Bangladesh is known for its cheap labor and not for its opulence. New costs with respect to research and development will also have to be borne as neither product designers nor RMG factory owners boast the knowledge required to make this shift seamlessly without expert opinion or assistance and so, they will need to hire specialists which will lead to a possible uptick in short-term costs, adding to the loss of competitive advantage.

Circular Lifestyle – An Attempt to Initiate the Change by Pre-cycling 

Whilst a Circular Economy is heavily dependent on government policies, shifts in industrial practices, and market knowledge, one thing that is solely dependent on us, at an individual level, is consumer initiative and conscious consumption. In order to embed the idea of the potential success of such economic practices and nudge manufacturers to believe that their investment will yield success, it is on us, as consumers and customers, to lead the change. 

Pre-cycling is a process that aims to completely do away with the need to recycle or dispose of wastage by avoiding the production of waste in the first place. It is a personal consumption model that is based on the philosophy of prevention as opposed to cure and consists of actions that are to be performed prior to recycling. Some extremely simple ways in which an individual can adopt a pre-cycling habit is simply by using the material made to make their existing clothes, that would otherwise be discarded into the landfills, and whipping them up into a new outfit. 

As unfortunate as it is, the fact of the matter is that we live in a country with a massive economic divide where things such as tailored clothing are perceived as an everyday essential due to its low cost, as opposed to the once-in-a-while splurge as seen at the developed economies in the West. But this opens up the avenue for us to employ to this the environment’s advantage by re-using our clothes again and again instead of resorting to new purchases every season. Coupled with slow fashion is the reduced use of plastic and/or paper cups and carrying one’s own thermal cups/bottles to cafes, bringing one’s own grocery bags to stores, resorting to e-books and e-news as opposed to print, inter alia. The idea is to look at recycling as the last resort and pre-cycling as the norm as an attempt to hone a waste-free ecosystem within and beyond our own homes. 

Sharose Islam, Content Writer, and Farah H. Khan, Senior Business Consultant & Project Manager, at LightCastle Partners, have prepared the write-up. For further clarifications, contact here: [email protected]


  • 1. Climate activist Greta Thunberg Urges MEPs to put words into action – European Parliament
  • 2. The Difference Between Linear & Circular Economy – Entrepreneurship Campus
  • 3. Circular Economy – Het Groene Brein
  • 4. Bangladesh, UN Consider Expected LDC Graduation in 2024 – International Institute for Sustainable Development (IISD)
  • 5. Top 10 Garments Exporting Countries of the World in 2020 – Textile BD
  • 6. About Garment Industry of Bangladesh – Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
  • 7. Bangladesh’s apparel export trend of 2018 – Textile Today 
  • 8. Safety First: Bangladesh Garment Industry Rebounds – International Finance Corporation (IFC) 
  • 9. Production Leftovers: A New Market Opportunity in Bangladesh – Reverse Resources (RR)
  • 10. The story of waste fabric (Jhoot): Positioning Bangladesh – Textile Today
  • Bangladesh Textile Industry Moving Further into the Circular Economy – Textile Focus
If you are interested to learn more about the Electric Vehicle adaptation in Bangladesh Document download full report

WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.

For further clarifications, contact here: [email protected]

Want to collaborate with us?

Our experts can help you solve your unique challenges

Join Our Newsletter

Stay up-to-date with our Thought Leadership and Insights