[{"bbox": [96, 153, 1135, 261], "category": "Text", "text": "efforts for economic recovery and resilience post Covid-19. TEI2 will accelerate green industrial transformation in Cambodia, mainly related to clean energy and energy efficiency, and promote due diligence. TEI2 will target the GFT sector for the first phase, with an intention to create a model for sustainable energy use to be replicated in other exporting industries."}, {"bbox": [96, 298, 1135, 352], "category": "Text", "text": "The action will establish a policy dialogue with the Government and provide expertise to strengthen the regulatory environment for renewable energy and energy efficiency in the garment industry."}, {"bbox": [96, 377, 1135, 456], "category": "Text", "text": "The action is aligned with the EU Gender Action Plan 2021-2025 (GAP III) and its thematic area of engagement 'Addressing the challenges and harnessing the opportunities offered by the green transition and the digital transformation'."}, {"bbox": [85, 485, 342, 516], "category": "Section-header", "text": "## 2.2 Problem Analysis"}, {"bbox": [96, 541, 1135, 862], "category": "Text", "text": "Cambodia's GFT productivity is amongst the lowest in the region (22% of the level in Thailand's garment sector)¹¹ with sustainable energy practices holding great potential for productivity improvement. Cambodia is losing its competitive edge due to its overreliance on electricity generation from coal (planned increase to 54% of national electricity production in 2023¹²), inefficient energy generation, and reliance on unsustainable biomass use for energy purposes. The country has the highest electricity tariff in ASEAN, which results in uncompetitive energy cost of GFT goods (US$ 560 per ton)¹³, and which represents a disadvantage to automation technology (requiring higher energy consumption)—key for productivity improvement¹⁴. For CMT factories, energy cost constitutes a significant share (10-15%), putting pressure on their already tight profit margin¹⁵. Furthermore, the predominant use of non-traceable and cheap fuelwood in factories contributes to the country's rapid forest depletion, and further exacerbates the sector's poor ecological footprint. GFT factories consume large quantities of wood (700,000 m³/year) for steam production; most of this wood (66%) is sourced from forests contributing to deforestation, while only a third is sourced from plantations¹⁶."}, {"bbox": [96, 887, 1135, 1154], "category": "Text", "text": "Poor working conditions are known as a contributing factor to lower GFT productivity. Heat stress and air pollution, for instance, are issues affecting factory workers¹⁷. In a 2021 study, 55.5% of workers experienced at least one environmental impact within their factory in the past year, with air pollution and extreme heat being the most common problems, due to poor building design and ineffective cooling/ventilation methods; 22% of the workers experiencing heat stress reports productivity loss, which translates to 2.75% reduction in overall productivity, equivalent to the country's loss of USD 290 million annually¹⁸. Climate change is projected to exacerbate this already precarious situation. Given the dominant presence of women workers (82%) in the sector, heat stress is likely to worsen their vulnerability in the workplace, further contributing to gender inequality. An ILO study, for instance, suggests a link between climate change impact and increased risk of exposure to violence and harassment, particularly gender-based violence and harassment, due to falling levels of productivity."}, {"bbox": [96, 1179, 1135, 1363], "category": "Text", "text": "An increasing number of international brands, to which Cambodian factories are supplying GFT goods, already set corporate targets to lower the environmental and climate footprint of their supply chains. Social compliance has become predominantly the baseline, and environmental sustainability is becoming a key sourcing criterion. Brands already raised concerns, which could lead, in case of no improvement, to investing less or even moving to countries with 'greener' pasture if the GFT sector in Cambodia does not improve its environmental performance¹⁹. This is also recognised by factories: 78% of factories surveyed reports that improving environmental performance would lead to more orders²⁰."}, {"bbox": [85, 1452, 762, 1473], "category": "Footnote", "text": "¹¹ KAS (2020) The Risks of Industry 4.0 on Cambodia’s Garment Sector: Analysis and Ways Forward"}, {"bbox": [85, 1472, 501, 1492], "category": "Footnote", "text": "¹² Electricity Authority of Cambodia 2022 key progress report"}, {"bbox": [85, 1491, 1144, 1511], "category": "Footnote", "text": "¹³ ILO & IFC, Energy Performance in the Cambodia Garment Sector - A Benchmarking Survey, Better Work, ILO & IFC in collaboration with GMAC, (2009)"}, {"bbox": [85, 1510, 762, 1530], "category": "Footnote", "text": "¹⁴ KAS (2020) The Risks of Industry 4.0 on Cambodia’s Garment Sector: Analysis and Ways Forward"}, {"bbox": [85, 1529, 931, 1549], "category": "Footnote", "text": "¹⁵ EMC (2021) Impact assessment of Regulatory measure to support sustainable energy investment in the SME Garment sector"}, {"bbox": [85, 1548, 731, 1568], "category": "Footnote", "text": "¹⁶ Study on Alternative Fuel Sources for Garment Factories in Cambodia by Geres and GIZ 2023"}, {"bbox": [85, 1567, 1120, 1588], "category": "Footnote", "text": "¹⁷ Parsons, L.; Lawreniuk, S.; Sok, S.; & Buckley, J. (2022) Hot trends: How the global garment industry shapes climate change vulnerability in Cambodia."}, {"bbox": [85, 1587, 130, 1606], "category": "Footnote", "text": "¹⁸ Ibid"}, {"bbox": [85, 1606, 570, 1626], "category": "Footnote", "text": "¹⁹ Nikkei Asia (2020) Cambodia’s shift to coal power riles global brands"}, {"bbox": [85, 1625, 583, 1645], "category": "Footnote", "text": "²⁰ USAID/GERES (2022) Training Needs Assessment among 62 factories"}, {"bbox": [1038, 1682, 1144, 1706], "category": "Page-footer", "text": "Page 6 of 29"}]