STRM Document

Brand-Supplier Shared Responsibility

A detailed proposal for co-investment and shared responsibility in Pakistan's textile renewable energy transition.

Summary

This report, prepared by Alternate Development Services (ADS) in May 2026 under Editorial Direction of Amjad Nazeer and Lead Researcher Ashfa Ashraf, examines the renewable energy transition challenges facing Pakistan's textile and sports/apparel export sectors and argues that the green transition cannot be supplier-led alone. It documents the sector's economic weight and mounting exposure to EU climate-linked trade rules such as CBAM and CSRD, and the "green paradox" in which global brands demand costly decarbonization from suppliers while resisting price premiums. Drawing on global case studies from Bangladesh and Vietnam, it proposes a Brand-Supplier Shared Responsibility Model in which international brands co-invest in renewable energy, offer long-term sourcing commitments, and share compliance costs and risks with Pakistani manufacturers. The report closes with a set of intervention strategies covering brand engagement, climate finance mobilization, procurement reform, and policy alignment with Pakistani regulatory bodies.

Key Points

1The textile sector contributes approximately 8.5% to Pakistan's GDP, employs 40% of the industrial labor force, and accounts for around 60% of total export earnings; textile exports grew from about $8 billion in 2004 to a peak of $29 billion in 2024, before dipping slightly in 2025 due to rising energy costs, unreliable supply, and intensifying competition from Bangladesh, India, and Turkey.
2Pakistan's sports and apparel cluster, centred in Sialkot, hosts over 290 registered sportswear factories and more than 1,200 sports goods exporters, employs an estimated 150,000 workers (about 48,000 formally registered with PESSI), and generates $0.9 to 1.3 billion annually within a broader $1.6 billion sports and surgical goods export base, contributing around $472 million to the national exchequer; nearly 11,000 SMEs in the sector operate at only 60% capacity due to unreliable grid supply, relying on diesel generators for 40% of their energy mix versus just 2% solar.
3The EU absorbs about 24% of Pakistan's total exports, with nearly 80% of that being textile and clothing products; in 2024 Pakistan's EU textile exports reached €1.42 billion, up 12.4% year-on-year (the fastest growth rate among major competitors), though still far behind China (€22.9 billion, 28.1% share) and Bangladesh (€17.4 billion, 21.4% share). Pakistan's GSP+ status is contingent on environmental compliance, and a potential expansion of the EU's Carbon Border Adjustment Mechanism (CBAM) to textiles beyond 2028 could impose compliance costs exceeding 350 million Euros annually on Pakistani exporters.
4The report's proposed Brand-Supplier Shared Responsibility Model asks international brands to co-invest in renewable energy and decarbonization projects, offer five-to-ten-year sourcing commitments so suppliers can secure green loans, make advance payments for transition-related capital expenditure, incorporate decarbonization costs into pricing structures, and replace punitive delisting practices with technical assistance and phased compliance pathways, while collaborating with suppliers on Scope 2 and Scope 3 emissions measurement and verification.
5Global case studies cited include the Future Supplier Initiative, a collective financing effort by H&M Group, Gap Inc., Mango, and Bestseller (facilitated by The Fashion Pact with the Apparel Impact Institute, Guidehouse, and DBS Bank) launched because 99% of fashion brand emissions occur in the supply chain (Scope 3); H&M's Green Fashion Initiative subsidizing rooftop solar for Bangladeshi suppliers; H&M and Bestseller co-investing in a 500MW offshore wind farm near Cox's Bazar; and, in Vietnam, Nike-backed 20-year solar power agreements with TotalEnergies under the country's Direct Power Purchase Agreement (DPPA) framework.
6Leading Pakistani manufacturers named as already adopting energy efficiency and renewable energy solutions include Interloop Limited, Artistic Milliners, Soorty Enterprises, and Nishat Mills Limited; recommended technical pathways span rapid rooftop/captive solar deployment, wheeling and competitive electricity market access (CTBCM), variable frequency drives and waste-heat recovery, ISO 50001 energy management systems, and facility-level MRV systems, with institutional actors such as NEPRA, PPIB, and NEECA, and international organizations including NEXT Group, Oxfam, the Asia Clean Energy Coalition, AIGCC, SFIA, and SEACEF identified as key partners.

STRM Document

Key Figures & Data

Figure 9 (from the manual): Brands' green commitments vs. challenges faced by suppliers, shown as a balance scale. On the 'Global Brands' side sit bold green commitments, unwillingness to pay a price premium, use of digital passports, and compliance fatigue; on the 'Pakistani Suppliers' side sit financial limitations, absorbing capital costs, import dependencies, and rising energy costs, illustrating the report's 'client paradox': brands demand sustainability but suppliers bear the cost.

Figure 10 (from the manual): Framework of the brand-supplier shared responsibility model, presented as a 12-step circular diagram anchored by the core idea 'Brand-Supplier Shared Responsibility Model.' The steps run from brands benefiting from a green supply chain and sharing costs/risks, through suppliers undertaking renewable energy projects, enhanced contract stability, and shared emissions accounting, to the roles of regulators, international organizations, and industry associations in facilitating dialogue and alignment.

Figure 1 (from the manual): Energy mix of Pakistan's textile industry (ADS Report, 2025), shown as a donut chart. Grid electricity accounts for the largest share at 42%, followed by natural gas at 23%, coal at 20%, and renewables at just 15%, underscoring the sector's heavy reliance on fossil-fuel-based grid power and its limited renewable energy penetration.