Greening the Export Processing Zones in Sri Lanka

Sri Lanka currently has 14 Export Processing Zones (EPZs), home to 270 companies. Together these account for 35% of Sri Lanka’s industrial exports and 22% of apparel exports. Therefore, greening the EPZs should be a critical component of the greening initiatives for Sri Lankan industries. This approach would deliver greater synergies as they can be coordinated by the Board of Investment (BOI) under which all zones operate. 

More sustainable EPZs would make Sri Lanka more attractive to sustainability conscious investors. The Government’s strong commitment towards a sustainable agriculture is clear. We need a similar, top driven, accelerated move towards greening our industrial sector. This would help further reinforce our environmentally-friendly-nation label.

Greening has begun 

For decades, larger apparel exporters have invested in greening their businesses to support globally recognised green initiatives. These investments have helped them attract and retain global clothing brands, reduce their cost bases and enhance profit potential. 

The 2019-2020 Sustainability Report of the Brandix Group and the MAS Holdings' goals for 2025 (See boxes) are evidence of the true potential and dynamism that these firms bring into sustainable garment manufacturing.

But they are a small minority with a long view and deep enough pockets. The majority of industrial firms still need to be convinced that green makes sense. Convincing them is easier at the EPZ level.

Providing catalysts to a greener future

To move towards a greener apparel sector, we must address two areas: sustainable financing and a bigger governmental focus on sustainability. ‘A Road Map Towards a Greener Apparel Sector’ for Sri Lanka proposes a mechanism for sustainable financing to help the apparel sector become more globally competitive by minimising environmental impacts. 

The BOI can become Sri Lanka’s catalyst for a greener industrial future, not for the feel-good factor, but with the pragmatic goal of enhancing our national competitiveness for attracting enlightened global investors. 

Path towards a greener industrial sector

Before everything, greening of EPZs must become a national priority and work on parallel goals: 

• Increasing the sustainable energy proportion with renewables 
• Handling of industrial effluents and emissions to the highest possible standards
• Minimising water and resource consumption
• Using energy and resource efficient processes and equipment
• A move towards reducing hazardous chemicals

The technologies and the expertise to move the industrial sector towards a more sustainable future are locally available. What is begun at the EPZ level can later be rolled out across the nation. ‘A Road Map Towards a Greener Apparel Sector’ recommends many tools that can be used for this purpose. 

Eco Industrial Parks

Making our own fabrics enables us control sustainability metrics of inputs to a greater degree. But fabric making and processing are extremely polluting and resource intensive. One suggestion is to make a concerted effort to move towards an Eco Industrial Park (EIP) model, away from the status quo. The report highlights the international success of EIPs and recommends that the upcoming Eravur Fabric Park and other future developments should adopt the EIP model.

BOI Chairman Sanjaya Mohottala agrees on the need for more sustainable measures. For now, the BOI’s focus is on augmenting the wastewater treatment plants (WWTPs). Rs 2 billion is to be invested through 2022 on augmenting WWTPs in two EPZs and building a new one at the Eravur Fabric Park scheduled to open in September 2021. 

According to Mohottala, the BOI plans to use unutilized EPZ lands for solar generation to reduce the overall carbon footprint of the EPZs. In particular, the WWTP are high energy intensive. Zone based solar generation would enhance the renewable energy proportion for all companies within the zones. 

Other Sri Lankan manufacturers and EPZ management can learn a lot about sustainable manufacturing from our top garment exporters like MAS and Brandix.

Their inputs can help move us towards a future in which sustainability metrics become part of the winning formula for all exporters, for our EPZs and for Sri Lanka as well.

(HSBC and IUCN have been working together to formulate a strategy to build a more resilient apparel industry through adoption of greener practices. ‘A Road Map Towards a Greener Apparel Sector’ report is the result of an extensive research conducted by the project team in partnership with the Joint Apparels Association Forum, Board of Investment Sri Lanka, National Cleaner Production Centre and Sri Lanka Bankers’ Association.)

(To access the full report, visit www.hsbc.lk/ApparelSectorResearch.)