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The Asian Development Bank (ADB) signed a $30 million sustainability-linked loan agreement with Envoy Textiles.
The transaction with Envoy is the follow-on to a textile manufacturing project with the ADB in 2022, according to an ADB news release on Thursday.
This is ADB's first sustainability-linked loan for Bangladesh.
A sustainability-linked loan is a forward-looking, performance-based debt instrument with predefined key performance indicators and assessed against sustainability performance targets.
The selected sustainability performance targets reflect Envoy's sustainability objectives, including the total installed electricity generation capacity of rooftop solar and the amount of greenhouse gas emission reduction.
The loan will be used to fund the design and construction of a new spinning unit to expand the annual yarn production capacity of Envoy's manufacturing plant in Mymensingh's Jamirdia, install 3.5 megawatt peak (MWp) of rooftop solar panels at the factory, and refinance short-term local working capital loans.
The new unit is automated and more energy-efficient, and will have an annual capacity to produce 4,550 tonnes of yarn mainly used for in-house production of denim fabrics.
"The readymade garment industry is a key driver of Bangladesh's economy, accounting for over 80 per cent of the total export earnings, and Envoy is the leading denim fabric manufacturer," said ADB Country Director for Bangladesh Hoe Yun Jeong.
"ADB is pleased to support Envoy with its first sustainability-linked loan in Bangladesh. This partnership advances environmental sustainability and industrial modernisation, setting a new standard for the garment sector."
Envoy Chairman Kutubuddin Ahmed said, "We are honoured to receive continued support from the ADB, whose partnership affirms our commitment to sustainable growth and innovation. This new sustainability-linked loan will enable us to expand our production capacity, invest in renewable energy, and further reduce our environmental footprint."
"Envoy remains dedicated to upholding the highest standards in quality, inclusivity, and sustainability."
Envoy is the leading denim fabric manufacturer in Bangladesh with an annual production capacity of 54 million yards - about 10 per cent of the country's total denim fabric capacity.
It has the world's first platinum Leadership in Energy and Environmental Design (LEED) denim manufacturing facility certified by the United States Green Building Council.
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