Bangladesh's ESG moment: an ESG whisperer's viewpoint

Once upon a time, in a galaxy far, far away was there a country where in any programme, people would wear a heavy complete suit with a flashy red or orange tie, despite being drenched in sweat like sauna in the hottest summer. Reason? It was a style statement, it oozed sophistication. Now people make decisions over zillions of dollars wearing t-shirts and shorts.

Similarly, in the boardrooms, sustainability was like the heavy complete suit and ESG was the flashy tie. All show, with little substance. A glossy green/white themed CSR Report, a "planting trees/clean water" photo op (with a dash of cringe selfies, with colours of ocean blue or plant green), some mug with the recycle or SDG logo, and voila you are done.

This was sustainability circa 2010-20. But now the party's over. But somewhere between the pandemic, the Paris Agreement's second wind, and the rise of climate-conscious investors, ESG went from being corporate decoration to corporate direction.

In 2025, sustainability is no longer a feel-good afterthought like paan masala after a heavy kacchi, rather it's the full-scale business model. ESG has become new gym membership. Everyone claims to have one, few work out, and those who actually do, look visibly stronger on their financials. The sequel is here, like Bangladesh 2.0, we have somewhat ESG 2.0: the Capabilities Edition.

ESG stands for Environmental, Social, and Governance, a framework used to evaluate a company's sustainability and ethical impact beyond traditional financial metrics. It assesses a company's environmental performance like emissions, social impact like labour practices, and governance structure like board composition and executive pay. Companies use ESG criteria to measure their impact, attract investors, build customer loyalty, and ensure long-term success.

But first, let me put things in perspective now. First, the ever clichéd, yes you guessed right, the Global Warming. Globally, the heat is literal. The world's 10 warmest years on record have all occurred since 2014. According to IFC's Global Progress Report 2025, private capital mobilised for sustainable and climate-friendly projects hit US $2.9 trillion, a 22-percent jump from the year before. Nearly half of this came from developing economies, proving that the Global South isn't just waiting for climate handouts from the Global North as the development pattern used to exist in the past, it's finally lifting its own "green" weights.

Asia-Pacific alone now accounts for the world's fastest-growing sustainable-investment pipeline. But the OECD's Global Corporate Sustainability Report 2025 poured a little cold water on the celebration. Yes, 83 per cent of listed firms worldwide publish sustainability reports. But only 27 per cent have their ESG data independently verified. And fewer than one-third embed measurable ESG indicators into core strategy.

Bangladesh, however, isn't simply following the global treadmill-- it's running out of necessity. A World Bank analysis in 2024 estimated that rising heat alone shaved off 0.4 per cent of national GDP, which roughly comes to US $1.78 billion, through productivity losses and health impacts. If that doesn't make sustainability an economic issue, nothing will. The paradox is quite poetic: whilst Dhaka debates net-zero targets, half the city melts under "feels-like" 45°C heat during summer and actually gets to experience the weird but welcoming "November Rain". Yet, Bangladesh has responded not with despair but with a kind of CR7 mentality- a willingness to try, fail, try again and win it. That's what makes it the perfect test case for ESG 2.0, the version that measures stamina, not slogans. But here is the catch: do we feel ready?

Now the cue is to blast the authority.

But newsflash, our central bank, Bangladesh Bank, was once mocked for its green banking initiatives when it started. After more than a decade on, it is now the country's quiet ESG enforcer.

Its Sustainable Finance Policy requires financial institutions to allocate at least 5.0 per cent of term loans to green projects and 20 per cent to broader sustainable finance. The result?

According to Quarterly Sustainable Finance Review of Bangladesh Bank, sustainable finance jumped to nearly 40 per cent of total disbursements by end of 2024, up from only 8.0 per cent in 2021. "Green finance" share alone rose from ~3.0 per cent to 13.29 per cent (TBS). In January-March 2025 or the first quarter of 2025, green finance hit Tk 87.63 billion (up ~21 per cent Y-o-Y) and sustainable finance soared to Tk 1.49 trillion, up ~69 per cent year on year (The Financial Express).

So banks are ACTUALLY lending for green and inclusive stuff, not just writing cheques for "miscellaneous CSR expense" as a charity. The flashy tie is getting replaced by comfy tee. We're not doing this because we're the most trend-setting cool kid in the room (we rarely are, globally).

We're doing it because the floor is lava, literally. We are extremely exposed to storms, sea-level rise, floods, supply -chain shocks. And the export economy? The global buyer isn't asking for "nice CSR report". They're asking: "Can your factory withstand a cyclone?"

Globally, the money's piling in. According to a recent insight from LightCastle Partners, by December 2024 the global ESG-investing market had reached roughly US $29.86 trillion. In other words, it's not just "nice to have" anymore, it's big money. But here's the plot twist: with great money comes great scrutiny, and the old flashy suit and tie (tick-box reports, CSR-lite version, disclosures on a Canva green theme) simply doesn't cut it anymore.

Hence, building "capabilities" in ESG is no longer an optional hobby rather it's a survival gear now. Remember the ESG 2.0? Here it is. As per McKinsey, it is broadly compartmentalised in 6 different categories: Governance and Strategy Integration, Capital Allocation and Incentives, Data a Measurement Systems, Supply Chain and Operations Resilience, Talent Organisational Culture, and lastly Stakeholder and Ecosystem Partnerships.

For starters, ESG itself is not a side gig rather it now should be a part of the executive strategy. You cannot just get away with it by only opening a sustainability wing and stranding them like Napoleon in the basement. The board of directors must feel it.

Say, for example, when a garment firm now plans a new factory, they must weigh in flood-proofing, ethical supply chains, energy audits. This is part of the game-- gone are the days when only the annual report counts. Decisions must be made with ESG lenses, where every expansion decision now includes environmental -and social-impact analysis. This makes sustainability a part of the corporate DNA. This is the governance and strategy integration.

Now, say, the said company has secured a green-financing facility from Bangladesh Bank, here the ESG goals are being linked with money. Managers now receive bonuses not just for production targets, but, say, for emission- reduction perhaps? And throw in some actual worker -safety goals? This aligns the finance and incentives with the sustainability targets. Thus, it becomes the capital -allocation capability.

But here is the thing-- in order to quantify these emission data as profit number, you need the facts and real -time data. So, you install monitoring systems to track your water, energy, or chemical usage in real time, that include proper sensors, dashboards and whatchamacallits. You have GRI and Higg Index for reporting and ensuring traceable and auditable ESG. This arms your data capability because what gets measured can be improved for real.

Then you have the ever-irritating mosquito-esque Scope 3 emission issues, which builds on top of your Scope 1 and 2 emissions. Ergo, you wanna identify which supplier of yours has the highest emissions or ,say, worker risks? You want to arm yourself with the operations capability where the supply chain shall be built in a way which is both sustainable and resilient to climate and social shocks. (Remember the Rana Plaza incident and its aftereffects?)

Remember the story of the janitor at NASA who said he helps to put the men in the friggin moon? That is kinda the people capability, the talent and organisational culture, where the company got to train all the supervisors, line managers on worker/employee wellbeing, proper gender inclusion and environmental awareness. You think this happens a lot? Recently, as per the inclusion of a clause in Corporate Governance Code for the listed companies on the capital market, it was imperative to appoint female independent directors on the board of directors of the companies. In this respect, most of the companies failed to do so within stipulated time, which led to the proper authority extending a lifeline and elongating the deadline at the end of this year.

This actually posed a real problem: for the past two decades, screaming about Women in Development (WID), Women and Development (WAD) and Gender and Development (GAD), when push comes to shove, suddenly there is a dearth of capable women to fit within the board of directors. Speaking from a firsthand experience, a lot of the companies were not actually happy; they failed to see the point of inclusion. To them, celebrating March 8th (Women's Day) and wearing purple whilst organising seminars was just it. This is the S of the ESG part, the social angle. Ergo, in the talent and organisational-culture capabilities development, the leadership programmes get installed for women in mid-management, thus breaking the glass ceiling. ESG literacy has become part of onboarding. The employees internalise sustainability--it becomes something deeply cultural, not just ornamental.

Lastly is the ecosystem buildup, where rather than the photo-ops, the company forms partnerships or sign MOUs with local municipalities and organisations who work on it to serve the community. Does it sound like CSR? You betcha, but this is with new enthusiasm and more effectiveness. Kinda like giving a man a fish vs teaching a man how to hunt a fish sorta situation. This creates a symbiosis, and eventually an ecosystem where learnings are shared and applied. No company can go green all alone (I mean they can but that is just to get the order from the buyers outside, which does not last when the said buyers send over their swarm of auditors to find out the skeletons in the closet).

I found the OECD's 2025 review like that friend who urges you not to pursue that toxic human, but you go anyways and get burnt and then your friend holds a placard stating "I told you so" rather than listening to your sob stories. This review warns that the global ESG boom masks credibility deficit. Around 24 per cent of global capital flows are now labelled "green," up from 18 per cent in 2021. Yet mislabelling remains widespread, and only a handful of emerging-market regulators enforce verification.

Bangladesh is bucking that trend. The central bank requires periodic reporting on sustainable-finance portfolios, but its counterpart on the capital market? Well, like Mourinho, "if I speak, I will be in trouble". That's miles ahead of many peers where sustainability is still voluntary virtue signalling. But we got to come under the same umbrella now. But OECD's caution is useful: transparency must grow as fast as enthusiasm. Otherwise, "green" risks becoming the new "organic"- everywhere on the label, nowhere in the ingredients.

Another part to be proud of is the social aspect of ESG. Whilst Europe obsesses over carbon accounting, Bangladesh quietly excels in the "S." More than 56 per cent of sustainable-finance borrowers are rural, and nearly half of new SME green-loan accounts are women-owned. Fintech platforms like bKash and ShopUp are mainstreaming inclusion faster than most development banks. That fusion of digital finance and social equity is ESG's underrated storyline. This is the part that changes lives rather than PowerPoints/your favourite AI -powered presentation tool.

Bangladesh's policy architecture is evolving from pilot projects to national playbook. The 2020 Sustainable Finance Policy and the upcoming Green Taxonomy update provide the scaffolding, and the upcoming LDC-graduation pressure provides the motivation. As we are surfing on the reform wave, the next reform wave must go deeper. We need standardised ESG disclosure, integrated climate-risk mapping, and sector-specific capacity-building. OECD's report notes that countries that invest early in ESG literacy, whether regulators, auditors, or supply-chain managers, capture investment twice as fast.

Whilst this storm is brewing, let us accept some truth bombs. There is pain in this progress, and the inherent inertia always hinders us from accepting any sort of change. Moreover, this green growth hurts. Data collection costs money, reporting drains time, and decarbonising a supply chain can feel like changing a Formula 1 engine mid-race. Bangladesh's mid-tier firms, already squeezed by power shortages and global buyer pressure, find ESG compliance exhausting.

Yet opting out is riskier.

Because the next wave of global procurement, from H&M to the EU Green Deal, won't negotiate ethics, it'll enforce them. If your factory, farm, or fintech can't show measurable ESG performance, you may soon be out of the conversation entirely.

As much as we are used to seeing the Global North stay in the high horse, it is our turn now. McKinsey, OECD, and IFC all converge on one single truth: ESG maturity depends on capabilities, not campaigns. That means internal systems, verified data, and leadership that sees sustainability as strategy, not decoration. And here's where Bangladesh, paradoxically, becomes instructive. Our imperfections, whether chaotic governance, volatile climate, resource constraints, make us the perfect test subjects for resilience.

If ESG can work here, it can work anywhere. Sustainability no longer smells of CSR perfume-- it smells of sweat, spreadsheets, and solar panels.

I admit, Bangladesh's ESG story is far from flawless, but it's real, measurable, and oddly hopeful. Greenwashing is out, green-working is in. So, the final question for corporates in Bangladesh is simple: Are you ready?

The writer is an engineer-turned-finance-expert-ESG-activist. galibnakibrahman@gmail.com