Bangladesh, the world’s second largest garment exporter, is embracing a digital solution to address one of the industry’s biggest blind spots: textile waste. Each year, millions of tonnes of fabric scraps, yarn cuttings, and defective pieces pile up in factories, with much of it still slipping through informal channels or ending up in incinerators and landfills. But with European regulations tightening, global brands demanding transparency, and recycling markets offering new business opportunities, textile firms in Dhaka and beyond are betting on technology to bring order to this chaotic waste economy.
Cloud-based platforms now allow factories to segregate, label, and digitally register every kilo of waste they generate. Once entered, these scraps can be traced as they move through handlers, recyclers, and ultimately into new fabrics or products. Proponents argue this model does more than cut waste; it transforms the scraps into a traceable commodity that factories can sell at higher prices, while brands gain proof of compliance and recyclers secure steady feedstock.
A Market Ripe for Change
The scale of the challenge is daunting. Bangladesh produces an estimated 577,000 tonnes of textile waste each year, according to a 2022 study by GIZ and H&M. Only 5 to 7 per cent of pre-consumer cotton and cotton-elastane waste is recycled domestically, while less than 5 per cent is upcycled into rugs, dolls, or blankets. Over half—around 55 per cent—is exported to countries with advanced recycling hubs such as Vietnam, Finland, Sweden, India, and China.
The remainder has far less value. Scraps are often downcycled into mattress fillings, burnt for electricity, or dumped in landfills. This not only erodes economic potential but also poses environmental hazards, from greenhouse gas emissions to groundwater contamination.
“Digital tracking with verified data helps us not only streamline textile waste, but also capture more of its value,” explained Ayub Nabi Khan, pro vice chancellor of BGMEA University of Fashion and Technology.
The opportunity is significant. Recycling more textiles domestically could open export revenues worth as much as US$5 billion annually, according to the same GIZ report. With Europe introducing new extended producer responsibility (EPR) laws requiring companies to pay for collection and recycling, demand for traceable recycled fibres is only expected to grow.
Bridging Factories and Global Markets
Reverse Resources, a European-founded company with an office in Dhaka, is at the forefront of this digital shift. Its platform connects suppliers, handlers, recyclers, and brands in a transparent chain. “By comparing the waste recorded at factories with what formal recyclers receive, any leakage can be detected,” said Rizvan Hasan, the company’s country lead.
For factories, the model has a direct financial incentive. Scraps sorted by type, colour, and fibre content fetch higher prices than mixed waste. For brands, it provides reassurance that suppliers are meeting sustainability targets. For recyclers, it guarantees predictable volumes of consistent quality.
Recycle Raw, a leading Bangladeshi recycler, has partnered with Reverse Resources since 2019. “The greater visibility into the types and volumes of scraps we receive helps us operate more efficiently,” said managing director Abdur Razzaque. The company now builds direct relationships with factories, bypassing informal intermediaries who previously dominated the trade.
Challenging the “Muscle Men”
For decades, much of Bangladesh’s textile waste has been managed through informal networks controlled by local power brokers—sometimes referred to as “muscle men.” These operators collect scraps cheaply and funnel them into small workshops or export channels. While they provide livelihoods for thousands of workers, the system is opaque, unregulated, and resistant to reform.
Global brands, under pressure to meet recycling quotas, increasingly require transparent, verifiable data. Informal handlers cannot provide that. As a result, digital platforms represent a major disruption to entrenched networks. Yet this shift also raises questions about the livelihoods of those who rely on the informal sector.
Katrin Ley, managing director of Fashion for Good, a global coalition of fashion brands and NGOs, argues that scale will depend on aligning economic incentives across the supply chain. “By demonstrating efficiency gains, verified feedstock, and better reporting, digital tracing makes a strong business case. But integration into everyday business practices will need policy support and industry-wide adoption.”
The EU’s Push for Circularity
Europe’s new rules may prove the tipping point. In September 2025, the European Parliament passed a law requiring all textile producers selling in the EU to fund the collection, sorting, and recycling of their products. Brands like H&M and Inditex must now demonstrate use of recycled content and reduce virgin fibre dependency.
For Bangladesh, which exports nearly US$47 billion worth of garments annually—mostly to Europe and North America—this is both a challenge and an opportunity. Factories that can integrate recycled fibres and trace their waste will stay competitive. Those that cannot may find themselves locked out of lucrative markets.
Industry analysts say that if Bangladesh scales domestic recycling capacity and integrates digital waste management, it could shift from being a low-cost garment producer to a leader in sustainable fashion.
Scaling Up Adoption
At present, Reverse Resources covers 410 factories and more than 60 global brands—about 1 per cent of the market. The ambition is to scale to thousands of suppliers, but barriers remain. Many smaller factories lack the digital infrastructure or training to adopt tracking systems. Others fear increased scrutiny could expose inefficiencies or violations.
Policy support may prove decisive. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has begun pilot projects to encourage member factories to segregate waste and work with formal recyclers. The government is also considering incentives for recycling plants, which could accelerate local capacity.
“Scaling adoption will require collaboration across government, industry, and brands,” said Ley. “The business case is there; now it’s about speed and alignment.”
Technology Meets Tradition
Bangladesh’s textile sector employs over 4 million workers, mostly women, and accounts for more than 80 per cent of the country’s exports. Introducing digital systems into a sector still reliant on manual processes and informal networks is not easy. But industry leaders argue the cost of inaction is higher.
Global fashion generates an estimated 92 million tonnes of textile waste annually, according to the Ellen MacArthur Foundation. With demand for clothing projected to rise by 60 per cent by 2030, the waste crisis will only worsen. For Bangladesh, already battling environmental concerns from dyeing effluents and energy-intensive production, tackling waste is no longer optional.
Building a Circular Fashion Economy
A circular economy—where waste is repurposed into new products—remains the ultimate goal. For Bangladesh, that means scaling fibre-to-fibre recycling, ensuring scraps re-enter the garment supply chain rather than leaving the country.
Local recyclers stress the importance of building domestic processing hubs. “Exporting scraps means exporting opportunity,” said Razzaque of Recycle Raw. “If we build capacity here, we create jobs, reduce imports of virgin fibres, and capture more value locally.”
Global investors are beginning to take note. The Asian Development Bank has signalled interest in financing circular textile projects, while private equity funds are scouting opportunities in Bangladesh’s recycling sector.
The Road Ahead
Challenges remain, from integrating informal workers to financing large-scale recycling plants. But industry watchers believe momentum is on Bangladesh’s side.
“The sector has always been resilient,” said Khan. “It survived global price shocks, safety reforms after Rana Plaza, and the pandemic. Waste management is the next frontier, and digitalisation is the way forward.”
With Europe demanding more recycled fibres, brands under pressure to prove transparency, and billions of dollars on the table, Bangladesh’s textile firms have strong incentives to act. Whether digital tracing platforms can scale quickly enough remains to be seen, but the direction is clear: waste is no longer just a problem to be managed—it is an asset to be maximised.
If successful, Bangladesh could not only clean up its waste streams but also redefine its role in the global fashion industry—from a supplier of cheap garments to a pioneer of circular, sustainable textiles.
