When we hear the term ESG – Environment, Social, and Governance – it often sounds like a concept reserved for big companies and global investors. But in reality, ESG is closely linked to the lives of ordinary Bangladeshis. From the safety of workers in the Readymade Garment (RMG) industry, to how factories treat rivers, to whether banks invest in climate-friendly projects, ESG shapes the future of our jobs, communities, and environment. Understanding ESG means understanding how businesses can act responsibly while building a more sustainable and fair economy for Bangladesh.
Each component of ESG measures how responsibly a company or institution operates, going beyond short-term financial performance to focus on long-term value creation. The Environmental dimension looks at how businesses impact nature, including pollution, energy use, waste, and climate change. The Social dimension focuses on workers, communities, diversity, and customer well-being. Finally, the Governance dimension examines how organizations are run, covering transparency, ethics, and accountability. Together, these three pillars provide a holistic view of performance beyond immediate profits, showing whether a business is sustainable and trustworthy.
Globally, ESG has become a defining trend in finance and business. ESG-focused institutional investments are projected to reach US$33.9 trillion by 2026, accounting for around 21.5% of global assets under management. At the same time, nearly 90% of individual investors worldwide express interest in sustainable investing, and over 80% believe that financial returns can be achieved while supporting positive environmental and social outcomes (Morgan Stanley, 2025). This global shift means that companies failing to meet ESG standards risk losing access to international capital and markets.
For Bangladesh, ESG is not just a global trend but a survival necessity. Despite contributing only 0.3% of global greenhouse gas emissions, Bangladesh ranked ninth on the 2024 World Risk Index for climate vulnerability (Climate Reality Project, 2024). Between 2000 and 2019, the country endured 185 extreme weather events, causing billions in damages (Guardian, 2024; ICCCAD, 2024). The increased temperature as well as ocean warming and acidification is leaving lands barren and preventing fishermen from fishing during the peak seasons (Barua, 2025). These realities show that integrating ESG into businesses and investments is essential for resilience, competitiveness, and attracting global financing.
Climate and environmental risks are already costing the country dearly. Climate-related disasters such as cyclones impose annual losses of about US$1 billion, equivalent to 0.7% of GDP (World Bank, 2022). Sea levels are rising between 3.8 and 5.8 millimeters per year along Bangladesh’s coast which is faster than the global average (ICCCAD, 2024). Stronger environmental standards within ESG frameworks can can help mitigate these costs by reducing pollution, promoting renewable energy, and safeguarding natural ecosystems, which directly benefits citizens.
The Social pillar of ESG is equally important. As of 2018, around 90 million people in Bangladesh (56% of the population) were living in “high climate exposure areas,” while 53 million were in “very high” exposure zones (Climate Reality Project, 2024). Recent events highlight the risks: in 2024, a devastating heatwave drove temperatures up to 43.8°C, forcing school closures that affected 33 million children and put immense pressure on workers, reducing productivity. These statistics underscore the importance of addressing social resilience, workplace safety, and community protection through ESG practices.
Good governance underpins both environmental and social progress. Globally, sustainable finance is a rapidly growing market, with strong net inflows of US$10.4 billion in the third quarter of 2024. However, the market is highly concentrated: European countries control a massive 84% of global sustainable fund assets, while Asia (excluding Japan) holds only 2% (Financial Times, 2024). This uneven distribution highlights a key opportunity for nations like Bangladesh. For Bangladesh to attract a larger share of this growing investment, adopting stronger governance practices—particularly in transparency, anti-corruption, and board oversight—will be essential. This will build the trust necessary to attract international investors seeking to allocate capital in emerging markets that demonstrate a strong commitment to sustainable and ethical practices.
Bangladesh’s financial regulators are beginning to play an important role. The World Bank estimates that the country needs at least US$12.5 billion (about 3% of GDP) in the medium term for climate action (World Bank, 2022). Already, Bangladesh spends around 7% of its annual national budget on climate adaptation, though experts say this needs to be scaled up at least seven times to meet future challenges (Guardian, 2024). Initiatives from Bangladesh Bank, such as green refinancing schemes and sustainability reporting requirements, are critical to closing this funding gap.
Strong ESG practices bring direct benefits for ordinary citizens by improving public health, creating better job opportunities, and building more stable and prosperous communities. This is supported by a global shift toward sustainable finance. As stated earlier, globally, 90% of investors now see value in sustainable investing, believing it can provide returns while supporting social and environmental progress (Morgan Stanley, 2025). ESG assets already exceed US$18.4 trillion worldwide, growing by almost 13% annually. For Bangladesh, this presents a significant opportunity. Adopting and promoting stronger ESG standards can attract a share of this capital, leading to tangible benefits for its citizens. This includes the creation of more jobs in green industries, safer workplaces, and cleaner rivers through reduced pollution. It also opens up new opportunities for small businesses to access green loans and financing, which supports economic growth and community development.
Despite progress, Bangladesh faces major challenges in ESG adoption. While the country's economy has grown, it has often come at a high environmental and social cost, leaving it highly vulnerable to climate change. Between 2000 and 2019, the country experienced 185 extreme climate-related events (Guardian, 2024; ICCCAD, 2024). Experts warn that Bangladesh is approaching the limits of resilience, making urgent funding and stronger enforcement of ESG standards critical (Guardian, 2024). Challenges such as low awareness, limited auditing capacity, and risks of greenwashing remain barriers that must be overcome. In fact, a lack of trust in reported data and concerns about greenwashing are the top reasons almost 70% of investors hesitate to include sustainable investments in their portfolios (Morgan Stanley, 2025). Therefore, to attract the necessary capital, Bangladesh must prioritize clarity and consistent results, which will help investors feel fully confident in the country's commitment to sustainable development.
The scale of the challenge is immense. Climate-related losses already cost Bangladesh US$1 billion annually (World Bank, 2022). By 2050, the country could lose up to one-third of agricultural GDP, see 13.3 million internal climate migrants, and face up to 9% GDP loss during severe floods (World Bank, 2022). To prevent this, Bangladesh needs a proactive, business-friendly approach to ESG. This includes developing a robust national ESG framework, establishing more independent assurance bodies to build trust, and forging stronger partnerships with global investors. For ordinary citizens, the path forward involves engaging with businesses and policymakers to foster a culture of shared responsibility that ensures a cleaner, fairer, and more resilient Bangladesh for generations to come.