Frontier and Growth Markets | April 4, 2024

Aavsihakaar backs Midland Bank to boost ESG in Bangladesh’s textile industry

Lucy Ngige
Guest Author

Lucy Ngige

Textiles account for 20% of Bangladesh’s GDP and 80% of its exports. Poor working conditions, human rights abuses, and water and land pollution grab headlines and pose risks.

India-based impact investment firm Aavishkaar Capital invested $5 million in Bangladesh’s Midland Bank to finance mid-sized textile and other businesses and “enhance and elevate” borrowers’ environmental, social and governance practices, including gender inclusivity and climate-smart business practices.

Midland Bank’s ESG screening and compliance support will “serve as a beacon, showcasing the positive outcomes of ESG adherence,” said Markus Aschendorf of German development bank KfW, which helped Aavishkaar launch its $250 million ESG First Fund.

Aavishkaar, the $1 billion impact asset manager, set up its ESG First Fund to address capital gaps for mid-sized businesses in Asia and Africa and improve ESG practices “along the supply chains serving the global markets.” The fund targets debt investments of $2 million to $5 million in agriculture, fashion, personal care and manufacturing, like pomegranate exporter INI Farms, automotive parts manufacturer Jumps, and apparel makers Hela Apparel and Balaji Epz.

The fund aims to “help businesses capitalize on [the] global drive for ecologically conscious, gender equal and purpose-driven businesses,” Aavishkaar said.