CETP crisis chokes leather industry's growth

The world is more environmentally conscious than ever, as the threats of environmental degradation and water pollution become increasingly evident. Fashion, being one of the most polluting industries on the planet, can no longer evade its responsibility. There is a growing international pressure for the industry to acknowledge its effect on the environment and adopt environmentally preferred manufacturing methods and materials. And those unwilling or unprepared to innovate and adapt will inevitably be left behind, forced to bear the consequences of inaction and reflect on the opportunities they have lost.

In this context, Bangladesh's leather industry exemplifies a sector weighed down by such missed opportunities, primarily due to its failure to comply with international environmental standards. As the country's second-largest source of export earnings after ready-made garments (RMG), the leather industry holds immense potential. Unlike the RMG sector, which depends heavily on imported raw materials, the leather industry can boast of having a ready domestic supply of raw materials and competitively low labour costs. Despite these inherent advantages, the sector has struggled to reach its potential. The root causes lie in weak governance, environmental negligence, and an evident lack of political commitment to make the Central Effluent Treatment Plant (CETP) at the Savar Tannery Estate fully operational.

Leather processing is intrinsically harmful to the environment, with its heavy reliance on toxic chemicals and generation of substantial volumes of hazardous wastewater. To address these concerns and encourage cleaner practices, the Leather Working Group (LWG) was formed in 2005 by a coalition of global brands such as Nike, Adidas, and Timberland. LWG established a unified audit framework focusing on environmental management, chemical usage, waste treatment, and traceability of raw materials. It has since become the most recognised standard for environmentally responsible leather production worldwide. Without meeting the criteria set by LWG, manufacturers are effectively locked out of premium international supply chains.

LWG's database reveals a dismal compliance record for Bangladesh's leather industry. Italy leads with 952 certified factories, followed by 334 in India, 263 in China, 62 in Pakistan, 27 in Vietnam, and 24 in Taiwan. In contrast, Bangladesh has only eight LWG-certified leather goods manufacturers. This limited compliance has had significant repercussions. According to the Bangladesh Tanners Association, the industry loses an estimated $500 million annually in potential export revenue due to the absence of LWG certification. This is further reflected in export earnings, which fell from $1.13 billion in 2012 to $970 million in 2024-a decline largely attributed to non-compliance with international environmental standards.

Despite the relocation of tanneries from Hazaribagh to Savar more than eight years ago, the promised improvements have not materialised. The CETP at Savar, which was intended to address the environmental hazards of leather processing, remains incomplete and severely underperforming. It currently handles only about 14,000 cubic meters of waste per day, far short of the 35,000 cubic meters generated during peak periods such as Eid-ul-Azha. This shortfall means that significant amounts of untreated effluent continue to pollute the environment.

So, the question is how long will it take to establish a fully functional CETP? It is worth noting that the government invested approximately $53 million (Tk 565 crore) in the CETP facility, which was installed by a Chinese company. However, the plant was handed over to the Dhaka Tannery Industrial Estate Waste Treatment Plant Company (DTIEWTPC) in an incomplete state. Now, the facility requires extensive renovation and upgrade to meet operational standards. Instead of ensuring the CETP's functionality, the previous government tried to shift the responsibility to individual tanners, expecting them to establish their own Effluent Treatment Plants (ETPs).

While about six tanners have independently set up Effluent Treatment Plants (ETPs) to meet environmental requirements and maintain access to international markets, the majority of tanneries in Savar are small-scale operations. These smaller tanneries lack the financial capacity to install individual ETPs, making LWG certification unattainable for most. Consequently, Bangladesh's leather exporters are forced to sell around 65 per cent of their tanned leather to middlemen and importers in China, often at prices nearly 60 per cent lower than what could be secured through direct sales to high-end markets. This situation leaves many tanneries grappling with reduced orders, financial instability, unpaid suppliers, and defaulted bank loans, trapping the sector in a cycle of underperformance and stagnation.

The present interim government, which includes several well-known environmentalists in its advisory council, is expected to take the issue more seriously.  Beyond the financial losses caused by this non-compliance, the environmental and public health consequences are equally, if not more, alarming. The Dhaleshwari River, adjacent to the Savar leather estate, has become a toxic waterway, heavily contaminated by untreated effluents and solid waste. One of the most dangerous pollutants is chromium, a chemical used extensively in tanning. When mishandled, chromium poses serious environmental and health risks. Studies have shown that toxic chromium has entered the food chain, contaminating fish and poultry that consume feed made from affected by-products. It, therefore, poses a grave threat to public health.

Bangladesh has already proven its capacity to maintain environmental compliance in the RMG sector. So, why not the same be replicated in the leather sector? As Bangladesh approaches its graduation from Least Developed Country (LDC) status, the leather industry represents a crucial opportunity to diversify the country's export portfolio. Industry experts suggest that with the right mix of environmental compliance, incentives, and policy support-similar to those provided to the RMG sector-leather exports could reach $5 billion annually by 2030. However, continued inaction threatens to push the industry further into decline, deepening both economic losses and environmental damage.

aktuhin.fexpress@gmail.com