From compliance to competitiveness: Bangladesh’s readiness for ESPR in EU market

EU’s Eco-design and Sustainable Products Regulation (ESPR) entered into force from July 2024, as a part of the package of measures for transition to circular economy. EU besets their environmental and climate goals, circularity and energy efficiency targets by 2030. For specific products, such as textiles and steel ESPR will be implementable from 2026. ESPR contains a number of new measures of which digital product passport (DPP), rules to address destruction of unsold consumer goods, green public procurement etc. For transformation process from compliance to competitiveness government ownership and private sector earnestness is imperative.

DPP will work as an important gear under the EU’s Eco-design for Sustainable Products Regulations (ESPR)- a tool which will track information of a product throughout its whole lifecycle in the areas of sustainability and legal compliance. Through this process, transparency of data management of each product will be guaranteed and safeguarded, increase the responsibility of the producers, suppliers, relevant stakeholders, supporting economic operators and even consumers. Interoperable data management, storage, machine readable, standard, legal obligations would be the primary prerequisites.

Textiles and apparel have been treated as significant users of resources such as water and energy -considered as an important candidate of CO2 emission, thus circular textiles policy is inevitable for sustainability. Significant implications for Bangladesh would be absorbing EU requirements with domestic supporting policies not only to ensure market competency but also for industry’s sustainable future.

Global textile values close to one trillion US Dollar in 2022, projected to reach USD 1.44 trillion by 2032, growing at 3.77% annually. Total apparel import of EU was USD 191.4 billion of which import from Bangladesh was about USD 21-23 billion yearly. Bangladesh exports footwear, frozen food, and agro-products, however 90% of the total export is textile and RMG.

Bangladesh contemplates EU as one of the most important bilateral trading partners, export of Bangladesh to EU was USD 21.38 billion in FY25 wherein RMG ($19.71 billion) contributing about 90%, remaining products are home textiles ($ 0.40 billion), footwear ($0.50 billion), Pharmaceuticals ($0.03 billion) and some Batteries. As per ITC Trade Map, Bangladesh’s export of batteries or accumulators to the EU worth $ 0.012 billion in 2024. EU imports of electronic and accumulators (battery) are about USD 146.75 billion, so it is a huge market.

Batteries are expected to be the first industry to implement DPPs by 2026, for which EU regulations have already been framed. Other sectors will follow as per EU rules, indicating their commitment towards sustainability. Bangladesh’s exports of Batteries are not too high now, however considering the potential of the sector and the demand in EU, compliance for DPP has become essential. Gradually the DPP deployment as an enabler to circular economy will be increased among all sectors such as electronics, constructions, textiles, batteries.

DPP deployment plan of EU have been divided into five specific areas, these are traceability and transparency in the textile value chain, consumers awareness for promoting responsible purchasing, information exchange to the stakeholders to boost reuse and closed-loop recycling, impact assessment so that sustainability is assured across sectors and finally promoting EU interests for betterment of the citizens, businesses and over and above maintaining competitiveness.

EU has announced its specific timelines, by 2027 minimal and simplified DPP will be established, by this time core data, basic traceability and early compliance with legal drivers will be implemented. The plan for implementing advanced DPP is up to 2030, by this time data sets will be expanded, stakeholders’ features will be exchanged, and they will go for circularity. Full circular DPP will come into force by 2033, during this time full lifecycle data integration will be required along with high reuse, recycling and policy alignment.

Bangladesh to bring transparency throughout the whole supply chain and the total products lifecycle, data sharing strategies need to be designed to support secured exchange systems. A significant presence of informal economy in the country with unclear life cycles will make the task difficult. In that respect Brands would need to bear some responsibilities to educate their suppliers.

Interoperability within the sectors and systems of the use of industrial data cloud, data marketplaces and Internet of Things (IoT) need to be used, learning in all supply chain actors will be inevitable. SMEs would need to strengthen their AI-based skills and interoperable and machine-readable data formats. Bangladesh needs to engage responsible economic operators and for these industry-academia collaboration is a must.

In a recent GIZ seminar, it was informed that the world produces 92 million tons of textile waste every year, and textiles currently make up at least 7% of the total amount of waste in global landfill space. On average, every single person in the world uses 11.4 KGs of clothing’s every year, producing 442 kg of CO2 emission per capita.

DPP will work as a framework to track information across a product’s lifecycle in the area of sustainability, circularity and legal compliance. It is a collection of product data that covers general information, labels and certification, carbon footprint, supply chain due diligence, materials and composition, circularity and resource efficiencies, performance and durability. DPP will solve the longstanding issue of transparency and traceability in the production industry helping decision making across value chain. However, Bangladesh will need time to have a clear understanding and learning in that respect.

The feature of providing data space needs to be trustworthy meaning ensuring integrity, privacy and security. Data governance, data standards, security protocols and other guidelines must be maintained. Total Data eco-system must have interconnected sources, concerned stakeholders must be within a specific domain or industry. There must be rights of individuals, organizations and governments to have control over their data including decisions about collection, storage, sharing and use. Data interoperability and common rules should be in place so that different end points are connected. It seems that for data space for DPP solution, a structured decentralized environment to support trusted data sharing and exchange will be required. Cloud computing and Internet of Things could be one of the bases for DPP solutions. Bangladesh needs a clear understanding in all these issues and government should come forward to extend all relevant supports through export and data management policies.

The initiative sets a clear timeline for adoption, with batteries expected to be the first industry to implement DPPs by 2026/7 as per battery regulation EU 2023/1542, and other sectors to follow (ESPR EU 2024/1781), demonstrating the EU’s commitment to enforcing sustainability practices.

For implementing the DPP those who will be responsible are the material supplier, manufacturers, distributor/importer, consumers, government and public authorities, repair/re-manufacturers and recyclers.

As per the EU policy, from 18 February 2027, each LMT battery, each industrial battery with a capacity greater than 2 kWh and each electric vehicle battery placed on the market or put into service shall have an electronic record (battery passport’). The information relating to the battery model and information specific to the individual battery, including resulting from the use of that battery and this information should be accessible to the general public comprising all related information. Some information should be accessible to the notified bodies such as market surveillance authorities. Special measures should be taken in case of dismantling of batteries, which include legal safety measures.

The battery passport shall be accessible through the QR code, RFID which links to a unique identifier that the economic operator placing the battery on the market shall attribute to it. The economic operator placing the battery on the market shall ensure that the information in the battery passport is accurate, complete and up to date.

For a battery that has been subject to preparation for re-use, preparation, repurposing or remanufacturing, the responsibility for the fulfilment of the obligations shall be transferred to the economic operator that has placed that battery on the market or has put it into service.

It seems that DPP is a new concern for the exporters however, some of the large corporate textile industries have capabilities to accommodate new issues, despite all these, different new types of support for export sectors will be binding. Deeper public private collaboration, more training, awareness and capacity building would be required for ceaseless export of Bangladesh to EU.

Ferdous Ara Begum: Economist and CEO, Business Initiative Leading Development (BUILD)