Around a decade ago, there were two choices before the local leather industry: adopt the best environmental practices in tanning and get good prices in the global market, or skip the nature concern and be underpaid with the major foreign markets inaccessible.
Local tanneries could not grasp the first one thanks to a disregard for environmental safety by them and the authorities.
Now the non-compliance with international standards, set by the Leather Working Group (LWG) and endorsed by major global brands, makes the entire leather industry suffer.
Due to the lack of LWG certification, big European and American buyers are shying away from made in Bangladesh products. On the other hand, foreign buyers who are still coming are offering rock-bottom prices citing the non-compliance.
After readymade garments, leather is the second largest exporting sector of Bangladesh. The apparel sector has been able to attain international level compliance with the factory owners' effort and government intervention following the Rana Plaza garment factory collapse in 2013.
Foreign buyers, especially big brands, want to see LWG certification for sourcing leather and leather products from the international market. To get the certificate, factories must ensure they are not hurting the environment while manufacturing the products.
"We have no alternatives to selling leather and leather products at a low price now, though the prices in the global market are high," Md Shaheen Ahamed, chairman of the Bangladesh Tanners Association (BTA) told The Business Standard.
Leather entrepreneurs said big buyers from the USA, European Union and Japan used to buy leather and leather products from Bangladesh. But the country's export now has become China-centric due to the lack of LWG certification.
They said Chinese buyers are making a quick buck by buying leather from Bangladesh at low prices and selling it to branded buyers at premium rates.
The LWG was formed in 2005 and started issuing certificates in audited, bronze, silver and gold categories to tanners. At the beginning, local tanners did not pay much attention to LWG certification. But the compliance-related export adversities started to weigh on them in 2015 as more and more buyers endorsed the LWG certification.
BTA General Secretary Md Sakawat Ullah said rawhides and salt-processed hides after Eid-ul-Azha could get fair prices if they had the certificate to secure foreign orders regularly.
The association President Shaheen Ahamed said cowhides were at Tk3,000 per piece in Dhaka before 2016 as they had foreign buyers.
But cowhides reached a maximum Tk850 per piece in the capital this Eid.
"Even if 30-40 tanneries can get the LWG certificate, the rawhide market would turnaround. Then the annual leather export target would also double," commented Shaheen Ahamed.
According to the Leather Working Group's website, more than 1,000 companies involved in the processing, production and marketing of leather goods have received the certification worldwide as of July 2022.
According to the website, only three leather manufacturing companies from Bangladesh are LWG certified, as most of the tanneries are not able to achieve the marking in the certification process.
According to the assessment protocol, tanneries are evaluated on 17 topics with a total of 1,710 marks. The topics include environment, traceability, social responsibility, health and safety and chemical management.
According to the LWG, gold certificates are for marks 85% and above, silver for 75% and above, bronze 65% and above and audited certificates are awarded to factories for achieving 50% of the marks.
Bangladesh's Apex Footwear Limited got gold certification, ABC Leather got audited rating and Riff Leather Limited got bronze certificate.
The certification allocates 150 in waste management and another 150 in effluent treatment. In Savar tannery estate, these two issues are largely related to completion of the construction of the central effluent treatment plant (CETP).
But other topics such as operating permits, traceability (incoming and outgoing), energy consumption, water usage, air and noise emissions, emergency plans, chemical management and operations management solely rest on the tanners.
Bscic responsible too
Dhaka's Hazaribagh once was the tannery hub of the country. The government shifted the tanneries from there to Savar in a bid to save River Buriganga from toxic tannery pollution.
Prior to the shifting, the Bangladesh Small and Cottage Industries Corporation (Bscic) was tasked to ready the tannery estate. But it could not make the tannery estate 100% compliant even after 19 years of the project.
With around 150 tanneries at the industrial estate, still there is not adequate liquid and solid waste management. After destroying Buriganga, tannery sludge from Savar estate is now polluting River Dhaleshwari.
The central CETP of the estate has not yet received clearance from the environment department, due to which the tanneries are also not approved by the environment department. This leads the tanneries not being able to renew the bond licence.
Industry people said Savar tanneries use too much chemicals and water. Some of the tanners even installed deep tube wells on their own to handle the excess water usage.
Tanners' association General Secretary Md Sakawat Ullah said, "Tanneries alone are not responsible for LWG certification failure, rather a lack of cooperation from many regulatory bodies led to the collective failure."
Vietnam ahead of Bangladesh
With 17 LWG factories, Vietnam is ahead of Bangladesh in leather export. Of the 17 Vietnamese tanneries, 14 received gold certification while three got silver certificates.
Data from the Vietnam Institute of Strategy and Policy for Industry and Trade showed the country's leather and footwear export reached around $20 billion in 2020.
The export earning was 9.7% lower than the previous year and accounted for 7% of the total export turnover of the country in that year.
According to the Export Promotion Bureau of Bangladesh (EPB), the export of leather and leather products in FY2021-22 was $1.24 billion, which is the highest in the last three years.
This export earning is about 21% more than the export target and around 32% more than the previous fiscal year.
Hanoi is an apparel competitor of Dhaka, and once had a close contest in the footwear sector too.