Copyright © 2019 e Authors. Published by VGTU Press.
is is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/),
which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited..
To link to this article: https://doi.org/10.3846/btp.2019.31
VERSLAS: TEORIJA IR PRAKTIKA / BUSINESS: THEORY AND PRACTICE
ISSN 1648-0627 / eISSN 1822-4202
2019 20: 329–341
or “sustainability” has emerged. Nowadays, the biggest bu-
sinesses in the world, such as Toyota, Honda, GE, Puma,
Unilever and so on, are keen to transform their businesses
into green ones (Benn et al. 2014).
To proceed to sustainable development, we need to have
proper indicators. As the nature of change is not the same
throughout the world, it is hard to frame common sets of
indicators for all. Since the governments of the world and
the UN are encouraging sustainable development, most of
the measures have been developed to assess sustainability
at national, regional or communal level. Although some
frameworks include an “institutional” level of assessment,
as the UN has directed (UNCSD 2001), far less work has
been done to assess sustainability at the organization level
DEVELOPMENT OF THE SUSTAINABILITY INDEX FOR THE READY-MADE
GARMENTS SECTOR IN BANGLADESH
Md Abdus SALAM 1, Kalayanee SENASU2
1 School of Human Resource Development (HRD), National Institute of Development Administration (NIDA),
2School of Human Resource Development (HRD), National Institute of Development Administration (NIDA),
E-mails: email@example.com (corresponding author); firstname.lastname@example.org
Received 16 January 2019; accepted 26 March 2019
Abstract. e aim of this research is to develop a simple and easily useable scale to assess sustainable development in the
ready-made garments (RMG) sector in Bangladesh. A framework has been proposed where sustainable development dimen-
sions, sub-dimensions (or variables) under dimensions, and items under sub-dimensions, are developed through an extensive
literature review. is framework serves as the base for index development in this study. e proposed framework comes in the
form of a questionnaire. Aer receiving satisfactory results from the pilot study, further information was gathered from the Tier
1 RMG factories in Bangladesh using the proposed questionnaire. Excluding the incomplete responses, a total of 238 responses
were considered for further analysis. Following this, the collected data were passed through a number of statistical processes
including item-total correlation and CFA (Conrmatory Factor Analysis). Aer rigorous analysis, only 30 items were shown to
be model t according to the proposed second-order sustainability index model. Finally, the results of factor loading showed
that dimensions load very well on the proposed framework. erefore, this study culminated in developing a 30-item valid and
reliable sustainability index for three dimensions: economic, environmental, and social, for the Bangladeshi RMG sector.
Keywords: sustainability, index, ready-made garments, Bangladesh, economic dimension, social dimension, environmental
JEL Classication: O130, Q010, Q560.
“ere is only one alternative to sustainability:
Unsustainability” (Bossel, 1999, p. 1).
Roughly every twenty years, the world’s economy doubles,
and the population doubles every half century, but natural
resources are not growing (Meadows 1998). But in the
process of developing ourselves, we are exploiting natural
resources, which have endangered the world’s ecosystem.
Development is a continuous and indispensable process, a
fact that we cannot deny. Now, the question is how can we
continue our development process without doing any harm
to the ecosystem and our healthy social lives? To nd the
answer to these issues, the term “sustainable development”
(Veleva and Ellenbecker 2000). us, the author of this pa-
per has built a framework for the sustainability of a specic
sector of a specic country, where such development has
1. Problem statement
In the late seventies, the export-oriented apparel industry
or ready-made garments industry (RMG) started their
journey in Bangladesh. With the help of the guaranteed
customer through the Multi-Fibre Agreement (MFA) of
GATT entrepreneurs took the opportunity to boost their
businesses, and the Bangladeshi government helped them
duly at that time. In the four decades since then, the RMG
sector has become a leading export earning sector for the
country, contributing to almost 80% of the total export. e
growth in the export market was US$ 12 million in 1984/85
increasing to US$ 21.5 Billion in 2012/13. Currently, there
are around 4500 big, medium and small garments industries
and almost four million people working for them (Export
Promotion Bureau, Bangladesh, 2015). e arrival of the
garments industry reduced poverty signicantly, from 70%
during the late 1970s, to less than 20% currently. Not only
has there been poverty alleviation, it has also increased
life expectancy, literacy rates and per capita food intake.
Bangladesh’s economy has grown nearly 6% every year
since the mid-1990s (World Bank 2014). e ready-made
garments industry did not exist during independence of the
country in 1971, but in the last four decades, it has become
one of the leading apparel suppliers of the world. During
the 1990s, Bangladesh supplied only 0.6% of the total of
apparel products throughout the world, and it rose to 5% by
2011 and that share is consistent until now (International
Labor Organization 2013). Besides signicant economic
growth, it shows a signicant human development and
empowerment of women.
Although the country has seen a booming growth in the
industry, and development of the economy and workforce,
some issues have been observed and noted. Exploitation,
social degradation, environmental pollution and so on are
the residuals of this development. Hundreds of people have
died as a result of some accidents during last few years. ere
was a re in Tazreen, and a building collapsed in Rana Plaza.
Moreover, employee unrest is very common in this sector.
By not following the ILO’s convention, the country’s exist-
ing law is believed to be the major reason for such incidents
(Yunus and Yamagata 2012). Very oen, human rights’ is-
sues are questioned in this sector as the discussed sector
pays one of the lowest wage rates in the world (Salam and
Mclean 2014). As this sector proved to be ver y important for
the economy and employment of this overpopulated coun-
try, survival and sustainable development in this sector has
become a current issue. Furthermore, there is a new world-
wide trend for “sustainable fashion,” especially in developed
countries, who are the major buyers of RMG products from
Bangladesh. e term sustainable fashion is dened as the
production and distribution of clothes/garments following
fair trade principles, which are environmentally and labour-
friendly, do not use hazardous chemicals and other harmful
materials, do not exploit workers, follow an ethical code
of conduct and use recycled materials as much as possible
(Fletcher 2008, Joergens 2006). erefore, to survive in the
race, the industry must address this issue.
2. Purpose of the study
e main objective of this paper is to develop a sustaina-
bility index for the RMG sector in Bangladesh. erefore,
the rst concern of this paper is to gure out the RMG
industry-specic sustainable development (SD) indicators
of the three aspects of SD: economic, environmental and
social, based on previous literature.
As existing sustainable development scales do not pro-
vide unidirectional assessment or a “simple measurement
of SD”, eort has made to create a simple but representative
scale and assessment framework for sustainable develop-
ment in the ready-made garments sector in Bangladesh.
3. Dening sustainable development
e term sustainable development literally means to be
able to maintain progress, and to be accepted over time.
However, it was dened dierently in dierent sectors to
t users’ purposes. By early 1990s, more than seventy de-
nitions of sustainable development were discovered by
Holmberg and Sandbrook (1992). Although there are a
number of denitions for this term, the Boston Consulting
Group (BCG) showed that two-thirds of sustainability
experts, who are mainly business leaders, dene sustainable
development using the Brundtland Commission (WCED
1987) and/or the TBL (Elkington 1998) denition (BCG
It is worthwhile mentioning here that the concept of
sustainability was adopted from agro-biology; and the term
was dened as a system capacity to maintain productivity
even in an adverse situation (Jimenez-Herrero 2000). is
is also true for realities other than agriculture, as we have
to grow and sustain even though we are facing diculties,
challenges and unfavourable conditions in the real world.
According to Docherty et al. (2002), sustainability
encompasses three levels: individual, organizational and
societal. Sustainability at one level cannot be achieved by
exploiting others because all these levels are closely related
to each other and to the organization’s stakeholders (i.e.
personnel, customers, owners, and s ociety). at means we
need to balance the level of development among individu-
als, organizations, and society. Achievement of sustainable
development is not possible if one of them is ignored.
330 Md A. Salam, K. Senasu. Development of the sustainability index for the ready-made garments sector in Bangladesh
4. Measurement of sustainable development:
dimensions and variables
ough sustainability is a major concern in many walks of
life, a common standard to measure sustainability has yet
to be found. Businesses vary in nature as they have diverse
activities; besides, dierent countries have dierent busi-
ness styles and policies. erefore, it is dicult to have the
same yardstick to measure the SD of all businesses (Goyal
et al. 2013, Whitley 1992). is fact has inspired the authors
to nd a country and sector-specic scale and study to as-
sess sustainability and to help grow industry sustainability.
Some researchers (Salzmann et al. 2015) opine that country
and sector-specic research in the area of SD could provide
more accurate and reliable measures. is research looks
into the ready-made garments sector of Bangladesh, which
is one of the biggest suppliers of ready-made garments all
over the world. Recently, several accidents and negative
reports have made this sector’s position vulnerable in the
world market. To grow sustainably and to gain back custo-
mers’ trust, a proper framework and assessment is needed
for this sector.
Sustainable development consists of development in
three major areas, economic, environmental and social.
From the Brundtland Commission report (WCED 1987)
until now, researchers have rarely denied the reality of add-
ing these three in sustainable development. L ater Elkington
(1998) in his famous book “Cannibals with Forks: e Triple
Bottom Line of 21st Century Business”, brought the term
triple bottom line (TBL), which gave ground for these three
dimensions of sustainable development. In these studies,
the authors focused on the development of all three areas
Each of the three dimensions has several variables, and
the number of variables varies from author to author, or
context to context. Some variables are industry-specic and
some are general (RobecoSam 2013). Industry specic sub-
dimensions are chosen for ready-made garments industry in
Bangladesh. Global Industry Classication Standard (GICS)
of Standard & Poor’s is followed to determine the category
of discussed industry; ready-made garments industry falls
under industry 252030: Texti les, Apparels & Luxury Goods
(Standard & Poor’s 2006). Later based in that classication,
sub-dimensions are derived by following RobecoSAM’s cor-
porate sustainability assessment (RobecoSAM 2013, 2014,
2016). Questionnaire Items to measure the social and en-
vironmental sub-dimensions of sustainability are derived
from Sustainable Apparel Coalition (SAC) by following the
measurement concept of RobecoSAM (RobecoSAM 2014,
SAC 2015); for economic dimensions items are derived
from Global Reporting Initiative (GRI) to measure t he sub-
dimensions except nancial performance. Questionnaire
items to measure nancial performance are developed by
the authors by adopting the concept of Dess and Robinson
(1984). Moreover, questionnaire items derived from dier-
ent sources are modied accordingly to match the industry
and country context.
4.1. Economic dimension
Economic capital has to be maintained sustainably because
no business focuses on only short term prot as it instead
focuses on gaining prots and surviving. e monetary
value of a company’s assets gives us an idea about the rm’s
nancial health but cannot inform us about the position in
terms of economic sustainability. To know the economic
sustainable position, one has to consider several capitals
such as the current nancial capital, xed tangible capital,
intangible capital and so on. Intangible capital includes the
reputation of the company, innovation practice, ecient
management, ethical standards and so on.
e economic dimension of sustainability is closely re-
lated to the social and environmental dimension (WCED
For the purpose of this paper, the authors of this paper
found some compatible economic variables both from gen-
eral and sector-specic pool, which are:
4.1.1. Risk and crisis management
Economic dimension does not only focus on nancial
growth or better performance but also focuses on long-
term stable growth which consists of elements such as the
ability to recover quickly, having nancial backups and so
on (RobecoSAM 2013). Areas to consider during risk and
crisis management could be as follows: insurance against
natural and other disasters, basic coverage against income
crisis, and a safety net during the event of a market crisis.
is sub-dimension is measured by using the questions
related to the existing risk management culture of the orga-
nization; such as “is facility has a proper training program
in place throughout the organization on risk management
Compliance describes the ability of an organization to act
according to an order, set of rules or request. Compliance
can be either external rules that are imposed upon an or-
ganization as a whole or internal systems of control that are
imposed to achieve compliance with the externally imposed
rules. In the real world, it means both. In countries like
Bangladesh, where anti-corruption laws are not properly
implemented, companies are exposed to reputational and
legal risks. Evidence of corrupt or illegal practice can result
in exclusion from contracts nancing authorities, interna-
tional buyers, and overall international consumers.
Six items questionnaire used to measure this sub-di-
mension. It includes items as “Corporate codes of conduct
Business: eory and Practice, 2019, 20: 329–341 331
have been dened at the facility for corruption & bribery
and Money-laundering and/or insider trading/dealing” and
“Dedicated help desks, hotlines and/or complaint boxes are
4.1.3. Supply chain management
A supply chain is dened as “A set of three or more en-
tities (organizations or individuals) directly involved in
the upstream or downstream ows of products, services,
nances and/or information from a source to a customer”
(Mentzer et al. 2001, p. 4). In light of this denition, supply
chain management is dened as the coordination of bu-
siness functions within any specic company and across
the businesses within the specic supply chain to improve
the performance of both company and supply chain in the
long run (Mentzer et al. 2011). is variable aims to identify
sustainable supply chain management as an opportunity to
improve the long-term nancial performance of the gar-
Supply chain management is measured by considering
the steps taken by the company to maintain the sustainabil-
ity practice through the supply chain; such as “e facility
has taken measures in order to manage sustainability risks
amongst your tier 1 suppliers on Environmental and hu-
man rights standards for supplier’s processes, products or
4.1.4. Financial performance
e main objective of the prot-oriented businesses’ orga-
nization is to earn money from the business and survive.
e Caux Round Table believed that surviving is not the
sucient goal of the business but rather business should
always be viable and in good economic health (CRT 2009).
is variable is directly related to the nancial measure
of an organization’s current operation which determines
whether the company will continue or not.
A six-item modied version of Dess and Robinsons’
(1984) subjective nancial measure scale is used for this
4.2. Environmental dimension
Ecosystems are believed to have a limited regeneration
capacity and our regular activities (including business,
personal and so on) have every chance of impacting the
environment negatively such as eroding land, air and water
(Bansal 2005), decreasing biodiversity, deforestation, and
toxic spills (Doering et al. 2002) and so on. Environmental
sustainability is based on the concept that exploitation of
natural capital cannot be continued forever (Lovins et al.
1999). Variables in this dimension represent the measu-
rement of the consumption and pollution of the natural
resources and the perception/awareness of that. Ideally,
the variables have a long-range history of availability and
could measure the impact of a specic project or industry
in the environment.
Variables included here are:
4.2.1. Environmental management system
e Environmental Management System (EMS) is believed
to be one of the most used approaches to address the envi-
ronmental bottom line. Elements of EMS include setting
up an environmental policy with objectives and targets,
adopting a program with a dateline to implement those
objectives, measuring and evaluating the eectiveness of
the program and reviewing it from time to time to mat-
ch the program with the organization’s operations (Tibor
and Feldman 1996). e EMS of any organization (here,
the sector) can be a good measure of the environmental
sustainability of the product/process. EMS measures the
impact of the organization’s activity on the nature; a proper
measure can help to reduce the adverse eect signicantly.
4.2.2. Energy use and emission to air
Direct energy can come from sources including fossil fuels
(e.g., coal, petroleum/oil, natural gas) burned on site to
generate electricity, steam or heat. Emission to air makes
the environment of the locality polluted by creating smoke,
smog, acid rain, respiratory problems, blackening buil-
dings and so on. Electricity generation by these facilities
and bought electricity from a third-party power company
could be harmful to the environment. Setting the record
straight for electricity use could be a good way to esta-
blish an environmental measurement of sustainable deve-
lopment. Energy use is directly related to the emission to
air, furthermore, emission to air might come as the form
of the non-processed smoke from machinery, uncontrolled
use of biofuels, chemical clouds and so on. erefore, a
six items questionnaire, adopted from SAC (2015), is used
to measure this dimension. It includes question such as
“is site’s environmental management systems certied
and/or audited by an independent third party auditor or
an accredited internal auditor” and so on.
4.2.3. Waste, wastewater and chemical management
is is a process for evaluating the use of dierent waste and
wastewater treatment methods to understand a factory or
facility’s accountability towards the environment (Yoshida
et al. 2009). Sometimes, due to relaxed government policy
and/or implementation of environmental laws, industrial
waste is neither collected nor managed.
On the other hand, wastewater management ensures the
quality of the wastewater thrown into public canals, rivers,
lakes and other public water systems. It includes reduc-
ing suspended soils, biodegradable organics, pathogenic
332 Md A. Salam, K. Senasu. Development of the sustainability index for the ready-made garments sector in Bangladesh
bacteria and nutrients (World Bank Group n.d.). ough
wastewater management organizations make sure that their
wastewater is not going to change the direction of the canal
and river, it is important not to make a dead zone for sh by
throwing BOD (biochemical oxygen demand) or dumping
anything that could be hazardous for public health. is
sub-dimension also includes the use and control of chemi-
cals to avoid the threat to the human body, environment
is sub-dimension includes the measure of quantity
and quality of solid and liquid waste the company dumps to
the nature as well as use of bio-hazardous chemical. A six-
item scale is used which includes item as “is site monitors
the quantity and quality of waste and wastewater pro duced”
and “is facility systematically monitors applicable chemi-
cal use regulations on a regular basis to ensure compliance
and to identify new or changing compliance requirements”.
4.3. Social dimension
Although it seems a very limited connection to business
with social activities, it is important to measure and assess
an organizations’ impact on the social systems in which
they operate, from the local to global level (Elkington 1998).
It could include measurements of education, equity, well-
being, quality of life, access to social resources, social capital
and so on. Some social issues such as sweatshops, child
labour etc. occur due to cost-cutting eorts of the organi-
zations and brands (Niinimäki 2010).
Reporting social dimensions in sustainability assess-
ment has many for ms such as: TBL tools (Daizy et al. 2013),
CSR principles from the United Nations Global Compact
(EC 2011), the ISO social responsibility standard, ISO 26000
(ISO 2014), the GRI sustainability reporting framework
(GRI 2014) and so on. e following are variables compat-
ible with the discussed sector of this study.
4.3.1. Labour and workforce management
Employees are the main driving force of the business. Good
relationships with employees are one of the most important
factors for a business to be successful, especially industries
like ready-made garments characterized by organized la-
bour. Labour management includes, but is not limited to,
the freedom of association and the recognition of the right
to collective bargaining, the elimination of child labour, the
abolition of any form of forced labour and equality in terms
of gender and ethnicity (both in recruiting and remunera-
tion). is variable also considers the conformance of the
local laws and policies regarding labour aairs.
4.3.2. Workplace management
A safe and healthy working environment is another im-
portant measurement in the social dimension. It not only
means a hygienic workplace but also a fear-free, discrimi-
nation-free, and fairly treating organization. In workplace
management issues, a properly built factory, safe machinery
operating, sanitation, drinking water, workplace security,
and so on, are included.
4.3.3. Stakeholders engagement and community impact
Stakeholder engagement matters a great deal in this indus-
try, and some recent accidents and man-made destructions
are proof of that. rough stakeholder engagement, compa-
nies can create a positive relationship with the stakeholders
(labour unions, regulators and/or local community) which
in turn, help to reduce unexpected nancial and reputatio-
nal loss (through incidents such as strikes, sabotage and so
on). Moreover, a company’s philanthropic activities associ-
ated with its business size measures the community impact
of the business. Hence, this variable measures the internal
and external engagement and community impact through
employee oriented welfare activities, corporate citizenship
and corporate philanthropic activities.
5. Research model
From the discussion above we developed the research model
depicted below (Figure 1). is model is the construction
of the proposed sustainability index which is mapped from
existing literature and models. e sustainability index of
this study also considers two components of sustainability
in the organization, policy and practice. erefore, the mo-
del is designed to assess from both the policy and practice
point of view.
6. Population and sample
As the target sector is ready-made garments (RMG), RMG
factories are the main area of interest of this study. e
department of Inspection for Factories and Establishment
gave a total number of 4809 factories all over the country
(DIFE 2016). But unocially, the number is much higher
than that of the government’s calculation. Stern Business
School of New York University has carried out extensive
research and eldwork on this data. Researchers at Stern
Business School compiled data from all the available sour-
ces (DIFE, BGMEA, BKMEA, Alliance, and Accord) and
deducted mutually inclusive numbers, which gave them a
total of 7,179 RMG factories in Bangladesh (Labowitz and
But all the above-mentioned factories are not producing
for foreign brands, but rather a majority of them work-
ing as “sub-contractors”. is study aimed to collect data
from Tier 1 factories, who are the direct exporters to the
brands. e Stern Business School team used the UD list
(Utilization Declaration) collected from the BGMEA (not
Business: eory and Practice, 2019, 20: 329–341 333
Figure 1. Research model
publicly available) and worked out that there are around
3,200 direct exporter factories in this sector of Bangladesh
Table 1. Number of direct exporting factories
(source: Labowitz and Baumann-Pauly 2015)
Total export volume, apparel products,
Bangladesh 1.57 Billion Units
Number of direct exporting factories 3200
Average units per direct exporting factory 490,625
Hence, the population of this study is 3,200 direct RMG
exporter factories in Bangladesh. e sample size is deter-
mined using Slovin’s formula: n = N / (1 + Ne2), where
accepting a 5% error gives us a sample size of 355 facilities/
factories. A convenient sampling technique was used as ac-
cess as some factories are restricted for security reasons.
For the extreme condentiality of the information of dis-
cussed industry, it was not possible to reach the target of
355 factories. Aer two months of data collection about 290
responses were collected out of which 238 completed ques-
tionnaires were qualied to go throug h the further process.
7. Pilot study
Aer a rigorous study, the index included 62 items which
covered all three dimensions and ten sub-dimensions of
sustainability. A ve-point Likert scale is used to develop
the index. An item-objective congruence (IOC) conducted
by sending the initial questionnaire to two scholars and
three practitioners. e result of IOC showed that no item
scored less than 0.75.
A pilot study was conducted to test the validity and
reliability of the proposed 62 items in the sustainability
questionnaire. ere were 30 respondents from the human
resources and compliance departments of various RMG
factories. Responses were taken individually and their re ac-
tions were observed. Both a Bengali and an English ques-
tionnaire were provided, but respondents chose, without
exception, to answer in English.
Cronbach’s alpha values of the dimensions of this pilot
testing were as follows: Economic dimension 0.875, Social
dimension 0.943 and Environmental dimension 0.870
Table 2. Reliability measures for sustainability dimensions
Dimension N of Items Cronbach’s Alpha
Economic 24 0.875
Social 20 0.943
Environmental 18 0.870
8. Data collection and analysis
e objective of this study is to develop an index to assess
sustainability in the RMG industries in Bangladesh. Once
334 Md A. Salam, K. Senasu. Development of the sustainability index for the ready-made garments sector in Bangladesh
the theoretical index is developed, it needs to be tested. To
do so, primary data was collected from RMG factories in
Bangladesh. Questionnaires were distributed both physi-
cally and electronically using Survey Monkey. Target res-
pondents included Ocers, Senior Ocers and Managers
of Human Resource, Production, Procurement and other
departments in RMG factories. Besides, two international
brands provided their supplier lists which were also exploi-
ted to collect data. e researcher physically visited many
factories to observe the conditions and collect data. e
questionnaire contained two parts: demographic data in the
rst part, and a sustainability questionnaire in the second
part. A total of 238 complete responses were considered
for further analysis.
e following table (Table 3) provide the demographic
characteristics of the respondents and the factories.
Table 3. Demographic characteristics
Variabl e Frequency Percent
20–30 28 11.8
31–40 117 49.2
More than 40 93 39.1
Knit 56 23.5
Wov e n 87 36.6
Knit and woven 79 33.2
Others 16 6.7
Below 1000 20 8.4
1000–3000 64 26.9
3000–5000 83 34.9
More than 5000 71 29.8
9. Multivariate outlier analysis
To check if any participant is responding dierently than
other participants in multiple dimensions a multivariate
analysis conducted by using Mahalanobis Distance (M-D).
Mahalanobis distance can detect any outlier containing
extreme scores in two or more variables (Tabachnick
and Fidell 2001). By using SPSS regression function
Mahalanobis distance is calculated and any individual’s ha-
ving p<0.001 is considered as outlier (Tabachnik and Fidell
2001). e result shows that there is no outlier according
to the Mahalanobis Distance; this also conrms that there
is no careless response (Meade and Craig 2012).
10. Item analysis
For item analysis, an item-total correlation and indepen-
dent t-test were performed along with Cronbach’s alpha.
e purpose of conducting these tests was to determine
whether any item in the developed scale was inconsistent
with the average value of the set of items. Any value below
0.3 or above 0.8 suggests that the items either did not cor-
relate properly or correlated too well to be accepted (Field
2005). Hence, items showing item-total correlations scores
ranging from 0.3 to 0.8 were only considered for further
analysis and others were removed. Similarly, items having
t-value>2 and p≤0.05 were retained.
Aer this process, 50 items were le for further analysis.
e reliability of the items were measured once again aer
this process using Cronbach’s alpha. At this level, Cronbach’s
alpha was found satisfactory for all dimensions (0.82≤ α
≥0.90) and sub-dimensions (0.6 ≤ α ≥ 0.87) (Table 4).
Table 4. Reliability measures of dimensions and
Risk & Crisis
Management 5 0.865
Compliance 3 0.62
Management 4 0.60
Performance 3 0.67
EMS 6 0.70
Energy Use 5 0.66
Waste Mgt. 6 0.69
Labour Mgt. 4 0.80
Mgt. 6 0.68
Stakeholder 8 0.775
11. Conrmatory Factor Analysis
Confirmatory factor analysis (CFA) was conducted to
examine how well the data ts into the model consists of
three dimensions and ten sub-dimensions derived from
the theoretical foundation.
CFA conducted on the 50 items were derived from
previous steps; the analysis provides following readings:
CMIN/df = 5.868; RMR = 0.048; RMSEA = 0.143; CFI =
0.865; TLI = 0.822. It does not provide a proper model t
as the standards were not met.
To examine which items are not consistent with sub-
dimensions and dimensions, three separate second order
CFA has been conducted for three dimensions by consid-
ering items under sub-dimensions as the latent variable.
Loading value of the items and model t are obs erved to re-
move the inconsistent items. Aer this process, 20 items are
removed as they show very weak relation with the dimen-
sions. Removed items are Economic Dimension: RCM 1, 2,
3, SCM 5; Environmental Dimension: EMS 3, 5, 6, Energy
Business: eory and Practice, 2019, 20: 329–341 335
3,6, Waste 3, 5, 6; Social Dimension: Labor 6, Workplace 2,
5, 6 and Stakeholder 4, 5, 6, 8.
Aer all these analyses only 30 items remained and provid-
ed following result (Table 5). All the t indices show model t.
e mean value of the items of each sub-dimension is consid-
ered and sub-dimensions are treated as latent variables. Figure
2 shows the sustainability index consisting nal 30 items.
Factor loadings of variables are also considered. Items
showing factor loading more than 0.4 are only retained for
the sustainability index. Items having loading value less than
0.4 are considered as “weak loading” (Deng 2010). However,
on nal scale no latent variable (sub-dimension) is found
to be “weakly” loaded (Table 6).
All of the ten sub-dimensions included in the hypoth-
esized three-dimensional model remained in the nalized
model-t version of the sustainability index. e 30-item
sustainability index included 11 items from the Economic
dimension (Risk and Crisis Management – 2 items,
Compliance – 3 items, Supply chain Management – 3 items
and Financial Performance – 3 items), nine items from the
environmental dimension (Environment Management
System – 3 items, Energy use and Emission to Air – 3 items,
and Waste and Wastewater Management – 3 items) and
10items from the social dimension (Labour Management –
3items, Workplace Management – 3 items and Stakeholder
Engagement – 4 items) (Table 7).
Table 5. Results of CFA for 30-Item RMG Sustainability Scale
CMN/df RMR RMSEA CFI TLI GFI AGFI NFI IFI PNFI
1.626 0.021 .051 0.981 0.974 0.959 0.930 0.954 0.982 0.678
Table 6. Factor Loadings of CFA for 30 Items Sustainability
Dimension Sub-dimension Loading
Risk and Crisis Management 0.671
Supply Chain Management 0.685
Financial Performance 0.712
Energy Use and Emission
to Air 0.526
Waste and Wastewater
Labor Management 0.916
Workplace Management 0.649
Stakeholder Engagement 0.894
Figure 2. RMG sustainability Index
12. Reliability of the developed scale
An attempt was taken to conrm the reliability of the de-
veloped index. e result of that process is presented here
in Table 8.
Cronbach’s alpha values of 0.90 or more is considered
excellent, 0.80 is considered good and 0.70 is considered as
adequate, and values below 0.5 are considered as unreliable
and hence, should be avoided (Bentler and Chou 1987).
336 Md A. Salam, K. Senasu. Development of the sustainability index for the ready-made garments sector in Bangladesh
Table 7. Finalized version of sustainability index
Dimension Sub-dimension Item Code Item
Risk and Crisis
RCM1 is facility measures continuous improvement in risk management practices through
the involvement of employees in a structured feedback process.
RCM2 is facility has a proper training program in place throughout the organization on
risk management principles.
Com1 Corporate codes of conduct have been dened at the facility for corruption & bribery
and Money-laundering and/or insider trading/dealing.
Com2 Responsibilities, accountabilities and reporting lines are systemically dened in all
Com3 Dedicated help desks, hotlines and/or complaint boxes are in place.
SCM1 e facility has a formalized process in place to identify sustainability risks in the
e facility has taken measures in order to manage sustainability risks amongst your
tier 1 suppliers on Environmental and human rights (ILO convention, e.g. forced or
child labor, freedom of association) standards for supplier’s processes, products or
e facility has taken measures in order to manage sustainability risks amongst your
tier 1 suppliers on Environmental and human rights (ILO convention, e.g. forced or
child labor, freedom of association) standards for supplier’s processes, products or
FP1 e facility experienced signicant growth in total revenue during the current year.
FP2 e facility observed signicant growth in Return on Assets (ROA) during the current
FP3 e facility has demonstrated improvement in overall nancial performance.
EMS1 One or more members of management are specically responsible for environmental
EMS2 is facility has been in compliance with all legal requirements/permits during the
past 12 months.
EMS3 is site’s environmental management systems certied and/or audited by an
independent third party auditor or an accredited internal auditor.
Energy Use and
Emission to air
Eng1 is site calculates and tracks, at least annually, its energy use and greenhouse gas
Eng2 is site sets and reviews at least annually improvement targets for reducing energy
use (including fuel use for on-site transportation if applicable).
Eng3 is site has implemented energy conservation or eciency measures.
Wst1 is site monitors the quantity and quality of waste and wastewater produced.
Wst2 is site segregates hazardous and non-hazardous waste and provides training to
personnel on handling and segregating waste.
Wst3 is facility systematically monitors applicable chemical use regulations on a regular
basis to ensure compliance and to identify new or changing compliance requirements.
Lbr1 All workers are provided with a legally recognized, written contract or agreement and
an employee handbook and training on the contents of that.
Lbr2 ere is a written policy on employee handbook, formal contract paper, food, and
transportation facilities and other benets.
Lbr3 ere is a written policy on hours of work, days o, overtime hours, grievance
procedure, and it applies to all workers in the Facility.
e facility provides means and opportunities for workers to increase health
awareness and/or develop life skills and provides free, voluntary and condential
medical screening on an ongoing basis.
e Facility has a building construction authentic certication certicate from the
agency responsible for authorizing construction in that country with the number
of oors authorized in the certicate matching the number of oors that exist in
the building today. Furthermore, electrical wiring throughout the Facility is in full
compliance with local regulations.
Business: eory and Practice, 2019, 20: 329–341 337
Discussion and conclusions
Although sustainable development is a recent phenome-
non, there are a numbers of methods to measure that.
However, sustainability still lacks a common way of being
measured because of its diverse nature. Some of the met-
hods are widely used but still need improvement. is study
is an attempt to ll such a gap in the ready-made garments
sector in Bangladesh.
First of all, this study provides a three-dimensional
model of sustainability which is supp orted by widely accept-
able corporate sustainability measures. ree dimensions of
sustainability in this study are rst introduced by Elkington
in his TBL (Triple Bottom Line) approach. Elkington (1998)
rst brought all three aspects of sustainability together to
hypothesize the modern measure of sustainability (Jamali
2006). Although the TBL approach is widely accepted and
used as a base of the sustainability study, it is quite abstract
in nature and dicult to implement (Lozano 2012). It is also
failed to set up proper boundaries for reporting which could
pose a threat for companies to lose their reputation (Archel
et al. 2008). is study tries to remove the diculties faced
by the TBL approach.
Another major benet of the index developed in this
study is it does not focus on certication of sustainability,
but rather it helps organizations to measure their actual
position in sustainability. As environmental sustainability
has become a major concern all over the world, cert ain cer-
tications have become important when striving for success
in business, and ISO is one of them. EMS (Environmental
Management System) is used in all environmental sus-
tainability certications. Using the ISO certication,
corporations all over the world report the performance of
their responsibilities towards the environment, to stakehold-
ers and the public (Melnyk et al. 2003). But EMS gives the
freedom to the companies to measure the environmental im-
pact in their own way (Ahlroth et al. 2011). Moreover, EMS
focuses on certain aspects of sustainability rather than as a
whole but this index measures all the areas of sustainability.
Corporate Social Responsibility (CSR) plays an impor-
tant role in the area of social sustainability. Although widely
used, no consensus of a common denition has been made
yet for CSR. e concept is used dierently in the dierent
area of knowledge. is study considers CSR as an impor-
tant concept and integrates that as a part of social dimension
along with other two.
e indicators for the social and env ironmental dimen-
sions in this study are adopted and modied the Higg in-
dex provided by the Sustainable Apparel Coalition (SAC),
which is specically given for the apparel industry. In spite
of adding detailed measures for important constructs of the
above mentioned two dimensions, the Higg index cannot
be fully implemented in the RMG sector in Bangladesh.
A lack of instruments/methods to measure certain vari-
ables made it unusable for the companies, especially for
medium and small ones. Besides, it lacks a holistic view as
the economic dimension is not added there. Similar issues
were observed in the measures provided by GRI (Global
Reporting Initiative). e variables for the Higg index are
adopted from the GRI, which includes more indicators for
sustainability. is made the GRI too big to handle. To re-
solve this issue, this index only considered the indicators
and items from all three dimensions which could be readily
Table 8. Reliability measure of the developed index
Overall Index No. of Items Cronbach’s α Dimension No. of Items Cronbach’s α
Development 30 0.925
Economic Dimension 11 0.826
Social Dimension 10 0.905
Dimension 9 0.837
Dimension Sub-dimension Item Code Item
WP3 e facility has clearly written a policy on health awareness program, risky machine
operation training and re drill.
Stak1 e facility has a policy of engaging with local, regional and international stakeholders
to improve working condition and to address issues of concern.
Stak2 Facility participates in multi-stakeholder or industry forums to develop a full
understanding of the risks and challenges in the value chain
Stak3 Facility engages with key local /regional/international stakeholders to improve
working conditions in the value chain.
Stak4 e facility has implemented innovative community projects that improve the social
well-being of workers and their families.
End of Tab l e 7
338 Md A. Salam, K. Senasu. Development of the sustainability index for the ready-made garments sector in Bangladesh
applicable and easily measurable in the ready-made gar-
ments sector in Bangladesh.
Limitations of the study
is study is not beyond limitations. Several limitations
observed during the research process are as follows:
First of all, acquiring data was a maj or limitation for this
research. Companies were found to be reluctant to provide
data related to the sustainable development to an indepen-
dent researcher. Some of the areas discussed in this index
are considered condential for companies. Although con-
dentiality was assured, many factories would not respond
to the questionnaire.
Second, there are several types of factories in RMG sec-
tor of Bangladesh; some are direct suppliers to the brands
(Tier 1), and others are simply ‘sub-contractors. In such
situations, it is hard to generalize as these organizations have
dierent compliance and management styles. e focus of
this study is only Tier 1 factories, which are half of the total
RMG factories in Bangladesh.
ird, the questionnaire in this research adopted a ve-
point Likert scale which was purely based on the percep-
tion of the respondent. Although this is a widely used and
acceptable measure, some questions in the questionnaire
deserved more detail and/or quantitative answers.
Fourth, this study adopted a deductive approach of item
generation which limits the freedom of adding items be yond
the prescribed denitions. As the denitions of dimensions
and variables were adopted from existing literature, it is
dicult to add new phenomena in the industry beyond
the previous research.
Finally, this index does not provide a detail measure for
the companies to acquire certication; rather it is aimed
to help them to primarily assess their position in terms of
Further research is needed to address the above mentioned
issues and to replicate the developed index of this study.
To avoid data collection diculties, research should be
conducted with the collaboration of government agencies
and international brands. Although some organizations
are working on it, a combined eort should be given to
overcome the hurd les. Such collaboration may also educate
responsible employees to help do the research eectively.
Other approaches of research should be considered to
conduct such studies which include, but are not limited to,
quantitative research other than the Likert scale, qualita-
tive fact ndings by interviewing CEOs, and inductive ap-
proaches of item generation.
Research in sub-contract factories is badly needed to
understand the reasons for such malpractice and to prop ose
solutions. A mishap in such factories may ruin the reputa-
tion of the whole industry.
e developed item for the RMG industry in Bangladesh
should be tested in other related industries such as tanner-
ies, shoes and so on. Moreover, major RMG supplier coun-
tries should replicate this to test these developed measures.
e ready-made garments sector has become the lifeblood
of Bangladesh’s exports. Besides, huge numbers of people
are employed there; a statistic showed that about 18 to 20
million people earn their livings from this sector, both di-
rectly and indirectly (Bhuiyan 2013). With lack of sustai-
nable practice, very oen factories in this industry face
unavoidable adverse situations such as employee unrest,
accidents, high turnover, low productivity, and so on, which
eventually bring nancial and reputational loss.
Making a sustainable business strategy and practising
that is urgent at this point for the factories in that industry.
e sustainability index developed in this research will help
all the interested parties including the government, factory
owners, business associations and international buyers, to
assess and monitor sustainable development in this sector.
e developed index in this study could be used as a base
for similar scales in other industries. e proper use of this
index could help RMG factories in Bangladesh to overcome
the diculties they face in regard to sustainability.
We, the authors, acknowledge the contribution of Dr.
Arnond Sakworawich, faculty, Graduate School of Applied
Statistics, NIDA, for his contribution on the data analysis
section of this study. His suggestion helped us to improve
our results of this study.
Both MAS and KS conceived the study and were respon-
sible for the design and development of the data analysis.
MAS was responsible for data collection and both MAS
and KS were responsible for data analysis. MAS and KS
were responsible for data interpretation.
We, Md Abdus Salam and Kalayanee Senasu-authors of
this paper, declare that there is no competing nancial,
professional, or personal interest from other parties to
conduct this study.
Business: eory and Practice, 2019, 20: 329–341 339
Ahlroth S, Nilsson M, Finnveden G, Hjelm O, Hochschorner E
(2011) Weighting and valuation in selected environmental
systems analysis tools – suggestions for further developments.
Journal of Cleaner Production 19 (2-3): 145-156.
Archel P, Fernández M, Larrinaga C (2008) e organizational
and operational boundaries of triple bottom line reporting: A
survey. Environmental management 41 (1): 106-117.
Bansal P (2005) Evolving sustainably: a longitudinal study of
corporate sustainable development. Strategic Management
Journal 26: 197-218. https://doi.org/10.1002/smj.441
Benn S, Dunphy D, Griths A (2014) Organizational change for
corporate sustainability. Routledge, London.
Bentler PM, Chou CP (1987) Practical issues in structural mode-
ling. Sociological Methods Research 16 (1): 78-117. https://
Bhuiyan MI (2013) Reasonable wages for workers to eliminate
unrest in Bangladesh’s ready-made garments (RMG) sector.
BDRC, VA USA. https://doi.org/10.2139/ssrn.2271118
Bossel H (1999) Indicators for sustainable development: eory
method and application. IISD, Manitoba Canada.
Boston Consulting Group (BCG) (2009) e business of sustai-
nability: imperatives advantages and actions. e Boston
Consulting Group, Boston USA.
Caux Round Table (CRT) (2009) Principles for business
Daizy, Sen M, Das N (2013) Corporate sustainability reporting: A
review of initiatives and trends. e IUP Journal of Accoun-
ting Research Audit Practices 12 (2): 7-18.
Deng LF (2010) e city worker mental health scale: a validation
study. Psychological and Health-Related Assessment Tools
Developed in China (p. 34). https://doi.org/10.2174/978160
Dess GG, Robinson Jr RB (1984) Measuring organizational
performance in the absence of objective measures: the case
of the privately‐held rm and conglomerate business unit.
Strategic Management Journal 5 (3): 265-73.
DIFE (2016) RMG Factories http://database.dife.gov.bd/factories
Docherty P, Forslin J, Shani AB (2002) Creating sustainable work
systems: emerging perspectives and practice. Routledge,
Doering DS, Cassara A, Layke C, Ranganathan J, Revenga C,
Tunstall D, Vanasselt W (2002) Tomorrow’s markets: global
trends and their implications for business. World Resources
Elkington J (1998) Cannibals with forks: e triple bottom line
of 21st century business. New Society Publishers, Gabriola
European Commission (EC) (2011) A renewed EU strategy 2011-
14 for corporate social responsibility. European Commission,
Export Promotion Bureau Bangladesh (EPB) (2013) Export data
Field A (2005) Discovering statistics using SPSS (2nd ed). Sage,
Fletcher K (2008) Sustainable fashion and textiles: design jour-
neys. Earthscan, London.
Global Reporting Initiative (2014) About GRI https://www.glo-
Goyal P, Rahman Z, Kazmi AA (2013) Corporate sustainability
performance and firm performance research: Literature
review and future research agenda. Management Decision
51 (2): 361-379.
Holmberg J, Sanbrook R (1992) Sustainable development: what
is to be done? In: Holmberg J (Ed) Policies for Small Planet.
Earthscan, London UK (p. 19-38).
International Labor Organization (ILO) (2013) Bangladesh: See-
king better employment conditions for better socioeconomic
outcomes. International Institute for Labor Studies, Geneva.
ISO (2009) Risk Management – Vocabulary ISO Guide 73:2009.
ISO (2014) Discovering ISO 26000. ISO,Geneva.
Jamali D (2006) Insights into triple bottom line integration from
a learning organization perspective. Business Process Mana-
gement Journal 12 (6): 809-821.
Jimenez-Herrero LM (2000) Sustainable development: Transition
towards global evolution. Piramide, Madrid.
Joergens C (2006) Ethical fashion: Myt h or future trend? Journal of
Fashion Marketing and Management: An International Jour-
nal 10 (3): 369. https://doi.org/10.1108/13612020610679321
Labowitz S, Baumann-Pauly D (2015) Beyond the tip of the
iceberg: Bangladesh’s forgotten apparel workers. NYU Stern
Centre for Business and Human Rights, New York USA.
Lovins AB, Lovins LH, Hawken P (1999) A road map for natural
capitalism.Harvard business review77: 145-161.
Lozano R (2012) Towards better embedding sustainability into
companies’ systems: an analysis of voluntary corporate ini-
tiatives. Journal of Cleaner Production 25: 14-26.
Meade AW, Craig SB (2012) Identifying careless responses in
survey data. Psychological Methods 17 (3): 437-455.
Meadows D (1998) Indicators and information system for su-
stainable development. e Sustainability Institute, Vermont
Melnyk SA, Sroufe RP, Calantone R (2003) Assessing the impact of
environmental management systems on corporate and envi-
ronmental performance. Journal of Operations Management
21: 329-351. https://doi.org/10.1016/S0272-6963(02)00109-2
Mentzer JT, DeWitt W, Keebler JS, Min S, Nix NW, Smith CD,
Zacharia ZG (2001) Dening supply chain management.
Journal of Business Logistics 22 (2): 1-25.
Niinimäki K (2010) Eco‐clothing consumer identity and ideo-
logy.Sustainable Development18 (3): 150-162. https://doi.
340 Md A. Salam, K. Senasu. Development of the sustainability index for the ready-made garments sector in Bangladesh
RobecoSAM (2013) Dow jones sustainability world index guide.
McGrawHill Financial, Switzerland.
RobecoSAM (2014) Corporate sustainability assessment: Sample
questionnaire. RobecoSAM, Zurich.
RobecoSAM (2016) RobecoSAM’s corporate sustainability as-
sessment companion. RobecoSAM, Zurich.
SAC (2015) Introduction to Higg Index 2.0
Salam MA, McLean GN (2014) Minimum wage in Bangladesh’s
ready-made garment sector: Impact of imbalanced rates on
employee and organization development. In HRD: Reec-
ting upon the Past Shaping the Future. Edinburgh Scotland:
Salzmann O, Aileen Ionescu-somers, Ulrich S (2005) e business
case for corporate sustainability: literature review and rese-
arch options. European Management Journal 23 (1): 27-36.
Standard & Poor’s (2006) Global industry classication standards
(GICS). New York: Standard & Poor’s.
Tabachnick B G, Fidell LS (2001) Principal components and factor
analysis. Using Multivariate Statistics 4: 582-633.
Tibor T, Feldman I (1996) ISO 14000: A Guide to the New En-
vironmental Management Standards Burr Ridge IL: Irwin
United Nations Commission on Sustainable Development
(UNCSD) (2001) Indicators of sustainable development:
Guidelines and methodologies. United Nations, Geneva.
Veleva V, Ellenbecker M (2000) A proposal for measuring bu-
siness sustainability: Addressing shortcomings in existing
frameworks. Greener Management International 31: 101-120.
Whitley R (1992) Societies rms and markets: the social structure
of business system. In: Whitely R (Ed) European Business
System. Firms and Markets in eir National Contexts. Sage,
World Bank (2014) Bangladesh overview http://www.worldbank.
World Bank Group (WBG) (Undated) Sanitation Hygiene and
Wastewater Resource Guide http://water.worldbank.org/
World Business Council for Sustainable Development (WBCSD)
(1999) Corporate social responsibility: meeting changing
expectations. WBCSD, Geneva.
World Commission on Environment and Development (WCED)
(1987) Our common future. Oxford University Press, Oxford.
Yoshida H, Takahashi K, Takeda N, Sakai SI (2009) Japan’s waste
management policies for dioxins and polychlorinated biphe-
nyls.Journal of Material Cycles and Waste Management11
(3): 229-243. https://doi.org/10.1007/s10163-008-0235-z
Yunus M, Yamagata T (2012) e garment industry in Bangla-
desh. Takahiro Fukunishi (Eds). Dynamics of the garment
industry in low-income countries: experience of Asia and
Africa. IDE-JETRO, Chiba Japan.
AMOS – Analysis of Moment Structures
BGMEA – Bangladesh Garment Manufacturers and
CFA – Conrmatory Factor Analysis
CMin/df – Minimum Discrepancy
CSR – Corporate Social Responsibility
DIFE – Department of Inspection for Factories and
EMS – Environmental Management System
GATT – General Agreement on Tari and Trade
GRI – Global Reporting Initiative
IOC – Item Objective Congruence
ISO – International Organization for Standardization
RMG – Ready-made Garments
SD – Sustainable Development
TBL – Triple Bottom Line
UN – United Nations
Business: eory and Practice, 2019, 20: 329–341 341