Today 9 April 2025 H&M Group, in partnership with Pran Group and IFC, has signed a paramount MoU for enabling the next steps of the renewable electricity uptake for the RMG industry at the presence of the Hon Energy Secretary, Mr. Muhammad Fouzul Kabir Khan.
The MOU paves the way to pilot the first CPPA (Corporate Power Purchase Agreement) in Bangladesh, therefore creating the basis for advancing the legal framework that will enable a systematic reduction of the carbon emissions of this key industry for the country. Thanks to this project, with financing from the IFC (International Finance Corporation) and the leading role of Pran RFL Group, H&M Group will connect a number of selected suppliers to a new solar park. The innovative project will constitute the first off site solar park that will utilize the grid transmission, reaching several RMG factories, that will immediately reduce their emissions. Additionally, this project further facilitates the path of the industry towards electrification.
In order to reduce greenhouse gas emissions, and reach H&M goal to sourcing 100% renewable electricity in the supply chain by 2030, it is key that our suppliers have access to renewable electricity and solutions to shift from fossil-based fuels. And for this to be possible Corporate Power Purchase Agreements are a key reform. With CPPA the factories can selectively buy from the grid the renewable energy, through specific contracts. This will increase the options available today for suppliers. Indeed there are at the moment limitations to the possibility to procure renewable energy: on site solar projects are capped by the extent of the available rooftops and the portion of the grid that is renewable is at the moment still very low (below 5%). Additionally, legal developments towards enabling CPPA will ensure the next steps of the electrification, which is now proven to be the only possible systemic approach to reducing carbon emissions. Finally, in this way the industry can diversify its fuels usage, which today in Bangladesh is largely dependent on gas.
IFC has been involved globally to support the development of renewable energy aligned to IFC’s climate commitments, while Pran Group is a pioneer in the area of renewable energy. H&M Group will support its suppliers connection to the project, therefore immediately supporting its commercial viability. The participation of the Government at the signing ceremony will ensure that the learnings of this project can support the next steps of Bangladesh authorities to make CPPA a reality in the country.
The shift towards renewable energy will be key to maintain the competitiveness of the RMG industry of Bangladesh, against changing regulatory environment that will require a reduced environmental footprint for products imported into the European Union markets and beyond.
“One of the major obstacles in our decarbonization journey is access to renewable alternatives in our supply chain. That is where most of the greenhouse gas emissions take place, and also where we need to find partnerships and industry-wide solutions. This MoU paves the way in the context of Bangladesh to advance policy reforms and open up for future opportunities to connect the RMG industry with renewable energy generation,” says Ziaur Rahman, Regional Country Manager.
The fashion industry is one of the highest emitting industry, responsible for between 5 and 10% of global emissions, according to UNFCCC and other researches. More than 60% of a garment’s climate impact happens during manufacturing, the so called scope 3 emissions. The production of fibers, material processing, dyeing, and finishing necessitates a substantial amount of energy and relies heavily on various natural resources. H&M Group is committed to the reduction pf the scope 3 emissions and according to the recent published annual report has globally achieved a 24% reduction (baseline 2019).
Climate change remains one of the greatest challenges of our time. Its consequences will affect our entire planet and everyone living on it – making it a key challenge to all industries, including fashion. The consequences will be particularly dear in countries like Bangladesh, where the coastal areas are low and subject to inundation and where the raising temperature will make harder for everyone to go by their normal daily tasks.
