The financing agreement represents ADB’s first sustainability-linked loan in the South Asian country.
A sustainability-linked loan is an outcome-oriented financial instrument that is tied to predetermined key performance indicators. It is evaluated based on the achievement of specific sustainability goals.
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Envoy Textiles will use the fund to design and construct a new automated spinning unit at its factory in Jamirdia, Bangladesh. The company will also use the proceeds towards the installation of 3.5MWp rooftop solar panels at the factory.
The proceeds will also be used to refinance short-term local working capital loans.
Through the new spinning unit, Envoy Textiles is expected to increase its annual yarn production capacity by 4,550 tonnes (t). This expansion is intended primarily for in-house production of denim fabrics.
As part of the sustainability-linked structure, the company will work towards specific targets, including measures related to rooftop solar electricity generation and reductions in greenhouse gas emissions.
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By GlobalDataADB Bangladesh country director Hoe Yun Jeong said: “The ready-made garment industry is a key driver of Bangladesh’s economy, accounting for over 80% of the country’s total export earnings, and Envoy is the leading denim fabric manufacturer.
“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 Textiles manufactures approximately 54 million yards of denim annually, which accounts for around 10% of Bangladesh’s total denim fabric capacity.
The company also operates what it describes as the world’s first platinum Leadership in Energy and Environmental Design (LEED) certified denim manufacturing facility, as recognised by the United States Green Building Council.
The new financing is a follow-on to the textile manufacturing project between the company and ADB in 2022. The first financing facilitated the acquisition and installation of energy-efficient spinning machinery along with additional apparatus.
