Bangladesh risks losing between $360 million and $1.20 billion in annual exports to the European Union unless it urgently develops a national product traceability strategy to meet new sustainability rules, policymakers and industry leaders said at a policy meeting in Dhaka on Thursday.
The warning emerged at the first meeting of the Policy Coordination Unit at the Ministry of Commerce, where officials reviewed a gap analysis on the European Union’s Ecodesign for Sustainable Products Regulation and Bangladesh’s readiness to comply with new traceability requirements.
The meeting was organised by the Ministry of Commerce in collaboration with Deutsche Gesellschaft für Internationale Zusammenarbeit under the STILE-II project.
Business Initiative Leading Development Research Director Wasel Bin Shadat said the regulation represents a structural shift in market access rules.
“Market access to the EU is moving from voluntary environmental standards to legally binding compliance requirements for nearly all physical goods,” he said.
Exporters under the system will have to provide verifiable sustainability data through a Digital Product Passport, which records carbon footprints, material composition and production details in machine-readable format for verification at European Union borders.
A study by Business Initiative Leading Development identified 62 readiness gaps across six compliance areas, including 15 critical gaps requiring immediate national intervention.
Key challenges include the absence of a unified national traceability platform, limited digital infrastructure for supply-chain data tracking, weak data standardisation across industries and low awareness among exporters about the regulatory framework.
Industry leaders also said many factories lack the technical capacity to collect, verify and transmit sustainability data required under the Digital Product Passport system.
Business Initiative Leading Development recommended a federated architecture for a national traceability platform integrating supply-chain data across sectors while allowing industries to maintain their own operational systems.
Ministry of Commerce Additional Secretary Export Md Abdur Rahim Khan, who chaired the meeting, said compliance with the regulation will be mandatory for exporters seeking access to the European Union market.
“ESPR is compulsory for market access and DPP will be the main compliance tool, so the private sector must start preparing immediately,” he said.
Business Initiative Leading Development Chief Executive Officer Ferdaus Ara Begum said businesses must closely examine the evolving regulatory landscape.
She suggested the Registered Exporter system managed by Export Promotion Bureau could serve as the foundation for building a national traceability platform capable of supporting future digital compliance requirements.
Bangladesh Garment Manufacturers and Exporters Association Vice President Vidiya Amrit Khan said the European Union increasingly demands verifiable proof of responsible and sustainable sourcing.
The regulation is designed to ensure exported products are free from child labour, unfair labour practices and environmental degradation, she said.
Bangladesh Bank Sustainable Finance Department Additional Director Md Towhidul Islam said a Tk2,500 crore fund is available to help industries adopt green and compliant production systems.
Deutsche Gesellschaft für Internationale Zusammenarbeit STILE-II Project Head Michael Klode said the collaboration focuses on developing a national strategy for traceability rather than building the Digital Product Passport system itself.
The roadmap aims to equip industries with practical tools and guidance to comply with digital traceability requirements, he said.
Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh Secretary General Rafiqul Islam said many businesses in the sector remain unaware of the regulation and called for nationwide awareness programmes.
Urmi Group Sustainability Lead A B M Fakhrul Alam warned that delaying the introduction of traceability systems could create severe compliance pressure for manufacturers.
“If the traceability system is not introduced soon, manufacturers will face an overwhelming compliance burden when the rules fully take effect,” he said.
Participants recommended forming a task team to engage with export sectors and assess readiness while designing the national traceability framework.
Officials from the Ministry of Commerce, Ministry of Industries, Ministry of Environment Forest and Climate Change, Ministry of Textiles and Jute, ICT Division, Ministry of Labour and Employment, Bangladesh Economic Zones Authority, Export Promotion Bureau and Dhaka Chamber of Commerce and Industry attended the meeting.
