Why ESG Represents Framework for Sustainable Development

As Bangladesh prepares for graduation from Least Developed Country (LDC) status in 2026, the stakes are higher than ever. Graduation will mean the phasing out of preferential trade benefits and concessional financing that have long supported the country’s growth.

To compete on a level playing field with stronger economies, Bangladesh must demonstrate that its private sector can meet the highest global standards of transparency, accountability and sustainability. Environmental, Social, and Governance (ESG) integration is, therefore, not a luxury—it is a strategic necessity.

This year in late July, Dhaka hosted a pivotal event in the country’s corporate sustainability journey: the ESG Bootcamp 2025. Organized by ESG Institute Bangladesh in partnership with the Dhaka Stock Exchange, UN Global Compact Network Bangladesh and Swisscontact, the gathering brought together business leaders, policymakers, and sustainability professionals to reimagine how ESG principles can reshape Bangladesh’s corporate landscape.

The message that emerged was unambiguous: ESG is no longer about ticking compliance boxes. It is about competitiveness, resilience, and leadership in a rapidly changing global economy.

The global investment landscape is rapidly shifting, with ESG factors now central to mainstream finance. ESG-driven investments reached a significant milestone in 2023, surpassing $40 trillion, and their rapid growth is projected to continue at an annual rate of 15–20%. This momentum is accelerating as major institutional investors and corporations increasingly tie capital flows to credible ESG performance, making sustainability a prerequisite for market access.

Countries that have embraced ESG standards—such as India with its mandatory sustainability reporting—are already attracting higher volumes of foreign direct investment, while firms with weak ESG credentials face mounting scrutiny and potential exclusion from global supply chains. Bangladesh, however, is still lagging in integrating ESG into its corporate and financial systems. To remain competitive and attract global capital, the government must prioritise ESG adoption, starting with mandatory ESG reporting, which can enhance investor confidence and position the country as a sustainable and resilient market.

Bangladesh has made significant strides in embedding sustainability into its financial and regulatory framework, yet notable gaps remain. The Bangladesh Bank (BB) has been at the forefront of this effort, launching the Green Banking Initiative in 2011 and introducing the Sustainable Finance Policy in 2020, which mandates that banks and non-bank financial institutions allocate at least 5% of term loans to green finance and 20% to sustainable finance.By September 2024, green financing had increased from 4.0% (2020) to 15.2%, while sustainable financing surged from 8.0% (2021) to 39.2%, reflecting growing momentum. BB has also issued disclosure guidelines aligned with IFRS S1 and S2, though effective implementation requires significant investment in training, compliance systems, and incentives to reduce adoption costs.

On the corporate governance front, the Bangladesh Securities and Exchange Commission (BSEC) has updated its guidelines in 2006, 2012 and 2018, but these remain heavily governance-focused, with limited attention to environmental and social dimensions. The Dhaka Stock Exchange (DSE) continues to have one of the lowest sustainability disclosure rates in South Asia—only 49 Bangladeshi companies published sustainability reports in 2020, and just 11 aligned with GRI standards, compared with India’s 498 reports. This illustrates that while Bangladesh has established important policy foundations, the lack of uniform reporting standards, comprehensive ESG regulations, and skilled professionals leaves a significant gap between policy intent and actual practice.

Bangladesh is also highly vulnerable to climate risks, ranking 9th in the World Risk Report 2024 (climate disaster risk) and 7th in the Global Climate Risk Index 2021. Between 2000 and 2019, the country suffered average annual GDP losses of 0.41% due to climate-related events. Strong ESG adoption, in alignment with environmental regulations, could help Bangladesh meet Paris Agreement targets, enhance its global climate advocacy, and safeguard future generations.

Bangladesh’s private sector stands at an inflection point. Investors and global partners increasingly demand transparency, accountability, and sustainability.

For companies, integrating ESG into core business operations is not just about risk mitigation—it is a pathway to long-term value creation. Several leading firms including BSRM, APEX Footwear, Energypac, Chevron Bangladesh and Shanta Holdings are already showing the way, and their examples underscore a deeper truth: ESG is no longer confined to CSR departments or annual reports. It is shaping business strategy, influencing supply chains, and guiding investment decisions. Those who are becoming early adopters are also gaining business edge and making strides in future proofing their businesses.

Despite this progress, challenges remain. The absence of uniform reporting standards, limited access to ESG-specific financing, and low board-level awareness continue to slow adoption, particularly for mid-sized firms. Without significant capacity building and skilled ESG professionals, implementation risks being fragmented and inconsistent. Regulators like BB and DSE need to invest in training and capacity development initiatives with clear deadlines to develop professionals.

This is where policy and collaboration must step in. Regulators can catalyse adoption by offering incentives for ESG-compliant businesses, mandating credible disclosures, and curbing greenwashing. A multi-stakeholder ESG alliance—an idea floated during the bootcamp—could provide a platform for businesses to share standards, innovations, and lessons learned across sectors.

Equally critical is building a pipeline of ESG professionals. Universities and training institutes must create the next generation of sustainability leaders. Investors, both local and global, should reward companies that demonstrate measurable ESG progress rather than symbolic gestures. The bootcamp’s real significance lies in the shift in mindset it revealed: corporate leaders are beginning to see ESG not as an externally imposed obligation, but as a source of competitive advantage. That shift is perhaps the most powerful outcome of all.

The ESG Bootcamp 2025 was a milestone, but it must be followed by sustained action: sector-specific guidelines, stronger accountability frameworks, and continuous policy support. The private sector has shown readiness to lead. The challenge now is whether regulators, investors, and institutions will provide the tools and incentives needed to sustain momentum. If Bangladesh seizes this moment, it can not only catch up with global ESG trends but also set new standards for sustainable growth in South Asia. ESG adoption is no longer about compliance—it is about competitiveness, climate resilience, and long-term national prosperity.

The writers are ESG & Sustainable Development practitioners