$5b export revenue missing from recycled textiles: Study

Bangladesh could be losing up to $5 billion annually in potential export revenue from recycled textile products, largely due to the absence of a comprehensive policy framework on circular textiles, according to a recent study. 

The report emphasizes the urgent need for policies that could incentivize the industry to enhance the recycling of post-garment manufacturing waste, known locally as "Jhut."

The study, titled "Regulatory Framework to Enable Recycling of Post-Industrial Waste (Jhut) for the RMG Industry in Bangladesh," was conducted by the Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in collaboration with H&M under the Sustainability in the Textile and Leather Sector program.

It identifies several key challenges facing the recycling industry in Bangladesh, including the sorting and timely disposal of Jhut, boosting productivity, and minimizing waste through better design practices.

A major recommendation of the study is the formalization of the currently informal Jhut sector to unlock its potential for innovation and industrial advancement through a circular economy. The report outlines necessary measures and regulatory reforms to establish an effective management framework for Jhut recycling, aiming to maximize the economic, social, and environmental benefits within Bangladesh's textile supply chain.

Jhut, classified as post-industrial waste, includes fabric scraps, yarn, and other residues generated during production processes. The report suggests that collaborative stakeholder engagement, protection of workers' rights and safety, and the promotion of circular textile economy practices are essential for transforming the Jhut sector.

Key policy recommendations include improving data availability, transparency, and traceability through the creation of a national Jhut database, establishing industry guidelines for Jhut management and recycling standards, and revising VAT and tariff rules for Jhut transactions. The report also suggests economic incentives to formalize Jhut collection, handling, and sorting, and the establishment of central depository systems and cluster-based sorting hubs to promote decent work and social inclusion.

Despite Bangladesh producing between 330,000 to 500,000 tonnes of 100% cotton and cotton-elastane waste annually, the country’s current recycling capacity for apparel-grade recycled yarns is only between 18,000 and 24,000 tonnes per year. This accounts for just 5% to 7% of the total waste produced. The majority of this waste—over 55%—is exported to global recycling companies, while the rest is either down-cycled into materials like stuffing for cushions and mattresses, incinerated for waste-to-energy, or in a small portion, landfilled.

The report warns that current waste disposal methods pose severe environmental risks, including air pollution, resource depletion, and harmful chemical leaching, all of which threaten ecosystems and public health.

Moreover, without a comprehensive policy framework for circular textiles, Bangladesh is missing out on a significant export opportunity, estimated to be worth $4-5 billion annually. The study also highlights potential risks if factory owners attempt to implement Jhut recycling strategies independently, including political interference, increased scrutiny, and disruption of internal recycling processes.

Globally, there is a growing emphasis on sustainability in the textile sector, with major brands like H&M and regulatory bodies, particularly in the European Union, pushing for more circularity in value chains. This global shift presents Bangladesh with an opportunity to align with international sustainability goals, enhance trade, and create formal employment by adopting circular economy models and formalizing the Jhut sector.

The study calls for enhanced collaboration among government bodies, manufacturers, NGOs, and recycling companies to develop sustainable infrastructure, adopt innovative technologies, and establish efficient waste management systems. Additionally, it stresses the importance of enforcing existing labor laws and introducing new regulations to protect workers' rights and safety in the Jhut recycling industry, including upholding health and safety standards, eliminating child labor, and addressing gender-based issues.

Finally, the report encourages brands and suppliers to adopt recycled materials in their products to set sustainability standards, reduce waste, and meet growing consumer demand for eco-friendly goods, thereby driving innovation and market growth for recycled textiles.