In a landmark move to accelerate the transition to renewable energy in Bangladesh’s readymade garment (RMG) sector, H&M Group, Pran Group and the International Finance Corporation (IFC) have signed a memorandum of understanding (MoU) to promote the uptake of renewable electricity in the industry.

The MoU was signed on Wednesday during a session of the Bangladesh Investment Summit 2025, held at a hotel in Dhaka. Energy ministry adviser Muhammad Fouzul Kabir Khan was present at the signing ceremony.

According to a joint statement, the agreement paved the way for piloting Bangladesh’s first Corporate Power Purchase Agreement (CPPA), a crucial step towards building the legal and regulatory foundation for decarbonising the country’s RMG industry.

Under the initiative, and with financing from IFC, a new solar park would be developed to supply electricity to a select group of H&M Group’s suppliers.

Pran RFL Group will take a leading role in the project, which is expected to significantly reduce carbon emissions across multiple garment factories.

This solar park will be the first off-site facility of its kind in Bangladesh to utilise grid transmission infrastructure to deliver renewable energy to industrial users.

The model aims to set a precedent for scalable and sustainable energy solutions for the broader manufacturing sector.

The statement further noted that the project is a key step towards electrification of the RMG industry and aligns with H&M Group’s goal of sourcing 100 per cent renewable electricity across its supply chain by 2030.

‘To reduce greenhouse gas emissions, it is essential that our suppliers have access to renewable electricity and viable alternatives to fossil-based fuels,’ said a spokesperson from H&M Group.

The RMG sector, a cornerstone of Bangladesh’s economy, is under increasing pressure to improve its environmental footprint. This initiative marks a significant advancement in aligning the industry with global sustainability standards.

H&M Regional Country Manager, Ziaur Rahman, was quoted as saying: ‘One of the major obstacles in our decarbonisation journey is access to renewable alternatives in our supply chain. That is where most of the greenhouse gas emissions occur—and where we must find partnerships and industry-wide solutions.’

‘This MoU paves the way for Bangladesh to pursue policy reforms and unlock opportunities to connect the RMG industry with renewable energy generation,’ he added.

Highlighting the urgency of the shift, the statement pointed out that the fashion industry is one of the highest-emitting sectors globally, responsible for between 5 and 10 per cent of total greenhouse gas emissions.

Over 60 per cent of a garment’s climate impact—classified as scope 3 emissions—takes place during manufacturing processes such as fibre production, material processing, dyeing and finishing, which require high energy inputs and extensive use of natural resources.

The partners noted that the transition to renewable energy is not just an environmental imperative, but also vital for maintaining the global competitiveness of Bangladesh’s RMG industry.

With tightening regulations in markets such as the European Union, low-carbon production is fast becoming a prerequisite for continued access to key export destinations.