ADB signs $30m sustainability-linked loan with Envoy Textiles

The Asian Development Bank (ADB) has signed a $30 million sustainability-linked loan facility with Envoy Textiles Limited, marking its first such financing in Bangladesh.

The agreement builds on ADB's earlier engagement with Envoy in 2022 and underscores the lender's push to align industrial growth with environmental targets, according to a press release.

Sustainability-linked loans are performance-based instruments tied to measurable indicators, in this case, rooftop solar capacity and greenhouse gas emissions reduction.

The proceeds of the loan will be used to fund the design and construction of a new spinning unit for Envoy to expand its annual yarn production capacity at Envoy's manufacturing plant in Jamirdia, Bangladesh, install 3.5 MWp of rooftop solar panels at the factory, and refinance short-term local working capital loans.

The new unit will be automated and more energy-efficient, and will have an annual yarn production capacity of 4,550 tonnes, mainly used for in-house production of denim fabrics, it said.

"The ready-made garment industry is a key driver of Bangladesh's economy, accounting for over 80 percent of total export earnings, and Envoy is the leading denim fabric manufacturer," said ADB Country Director for Bangladesh Hoe Yun Jeong.

"This first sustainability-linked loan advances environmental sustainability and industrial modernisation, setting a new standard for the garment sector."

Envoy Chairman Kutubuddin Ahmed said it would expand production capacity, accelerate renewable energy adoption, and reduce the company's environmental footprint.

"Envoy remains dedicated to upholding the highest standards in quality, inclusivity, and sustainability," he said.

Envoy is one of Bangladesh's leading denim fabric producers with an annual capacity of 54 million yards, representing about 10 percent of the country's total.

Founded in 1966, ADB is owned by 69 members, including 50 from Asia and the Pacific, and supports inclusive, resilient, and sustainable growth across the region.