Textile sector: shared transition, shared responsibility

Pakistan’s textile mills are caught in a contradiction they did not design. The brands they supply in Europe and North America want renewable energy, lower carbon, and verified emissions data. The same brands want lower prices, shorter contracts and last-minute orders. The two demands cancel each other out, and the cost lands on the supplier.

The stakes are national. Textiles and apparel provide close to 60% of export earnings, about 8.5% of gross domestic product (GDP) and some 40% of industrial jobs. Yet the rules of trade are tightening. The European Union’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase in January 2026, textiles are expected to follow within the decade, and the bill for Pakistani exporters could exceed 350 million euros a year. GSP plus access already depends on environmental compliance, and buyers’ net-zero targets have become conditions of sourcing. Prove low-carbon production, or lose the order.

Here is what that demand collides with. Pakistani industry pays roughly 15.7 cents a unit for grid electricity, among the highest rates in the region, inflated by capacity payments to under-used plants and a cross-subsidy that loads about 6.5 rupees onto every industrial unit. The link to exports is not theoretical: when the regionally competitive energy tariff briefly fixed industrial power near 9 cents, textile exports rose more than 50% in a year; when it was withdrawn, that growth stalled. Now a levy on captive gas is pushing mills off their own generation and onto a grid that is both expensive and carbon-heavy.

Many have turned to solar, but rooftop panels cannot run a spinning or dyeing unit on their own, and net-metering returns have been cut. The real unlock is buying clean power directly, at scale. That is precisely what the Competitive Trading Bilateral Contracts Market (CTBCM) was built to allow: bulk consumers above one megawatt can contract directly with generators, including wind and solar, and wheel that power through the grid. The first 800-megawatt wheeling auction is now under consultation. But it will only help if wheeling and use-of-system charges stay low. The industry is asking for one to 1.5 cents a unit; loaded with cross-subsidies, directly purchased renewable power becomes as costly as the grid it was meant to bypass.

This is where shared responsibility stops being a slogan and becomes practical. A supplier cannot rewrite the tariff structure or stand up an electricity market on its own. Government and brands can. The state must make the CTBCM work with rational, predictable charges, so a mill can sign a ten-year solar or wind contract with confidence. Brands must move from compliance monitor to co-investor: co-financing renewable projects, offering five to ten year orders that make green loans bankable, pricing in the real cost of decarbonisation, and replacing the threat of delisting with phased compliance and joint measurement.

None of this is hypothetical. Vietnam built a direct power purchase framework with brands such as Nike and Adidas behind it. In Bangladesh, H&M, Gap, Mango and Bestseller pool capital through the Future Supplier Initiative (FSI), and H&M and Bestseller are backing offshore wind to green the grid. The Apparel Impact Institute’s Fashion Climate Fund finances the costliest upgrades. The money and the mechanisms exist; they are simply flowing to our competitors and not to us.

Pakistan should respond on three fronts at once. Operationalise the CTBCM with low, predictable wheeling charges so textile hubs can buy renewables directly, the single most important lever in the sector’s reach. Aggregate blended finance, brand capital alongside the International Finance Corporation (IFC) and Asian Development Bank (ADB) lending and the State Bank’s green instruments, into a facility that mid-tier and small suppliers can actually reach, not just the few that can self-finance. And convene a single platform of brands, manufacturers, financiers, standard-setters and government, underpinned by credible, independently verified measurement. This is the work Alternate Development Services has begun through its Shared Transition Responsibility Movement (STRM) and development of a consortium.

The choice being forced on our manufacturers, between staying competitive and staying responsible, is false. It is the product of a trade system that pushes the cost of sustainability onto those least able to pay, and of a power market that has long worked against the very industry that keeps it solvent. The fix is a fairer distribution of who invests, who commits and who carries the risk. Brands that profit from Pakistani production should help pay to clean it, and the state must build the market that makes clean power affordable.

The transition is shared, or it is not just.

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