The Asian Development Bank announced on Thursday that it signed a $30 million sustainability-linked loan with Envoy Textiles Ltd., marking its first such facility in Bangladesh.
A sustainability-linked loan is a forward-looking, performance-based debt instrument with predefined key performance indicators that are assessed against green performance targets.
Financing Tied to Sustainability Goals
The performance-based loan links borrowing costs to Envoy’s sustainability achievements. Key performance indicators include rooftop solar power capacity and reductions in greenhouse gas emissions.
Funds will be used to build a new, automated spinning unit at Envoy’s Jamirdia plant, install 3.5 megawatts of rooftop solar panels, and refinance short-term working capital loans. The new unit will produce 4,550 tons of yarn annually, mainly for in-house denim production.
Strengthening Bangladesh’s Garment Sector
“The ready-made garment industry is a key driver of Bangladesh’s economy, accounting for over 80 percent of export earnings,” said ADB Country Director for Bangladesh Hoe Yun Jeong. “This partnership advances environmental sustainability and industrial modernization, setting a new standard for the garment sector.”
Envoy Chairman Kutubuddin Ahmed said the financing underscored the company’s commitment to innovation and sustainable growth. “This new sustainability-linked loan will enable us to expand our capacity, invest in renewable energy, and reduce our environmental footprint,” he said.
Building on Previous Partnership
The transaction follows ADB’s €10.8 million ($11.2 million) loan to Envoy in 2022 to support energy-efficient spinning equipment and job creation. That earlier project marked the ADB’s return to Bangladesh’s textile sector after a two-decade hiatus.
The proceeds of the loan were used to fund a second yarn spinning unit at Envoy’s manufacturing plant in Jamirdia, Bangladesh. The automated unit had then aimed for an annual yarn production capacity of 3,600 tons, mainly used for in-house production of denim fabrics.
ADB’s latest investment continues its focus on sustainable industrial growth. Envoy, which produces 54 million yards of denim fabric annually, about 10 percent of Bangladesh’s total capacity, operates the world’s first platinum Leadership in Energy and Environmental Design denim facility certified by the U.S. Green Building Council.
Boosting Clean Energy and Efficiency
The new spinning unit will enhance production efficiency while cutting energy use and emissions. ADB said the project aligns with its broader agenda of promoting low-carbon, inclusive growth in Asia and the Pacific.
Founded in 1966, ADB is owned by 69 members, including 50 from the region, and works to foster resilient and sustainable development through innovative financing and strategic partnerships.
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