Riding on a Pegasus: Is ‘Sustainability’ Still a Myth in Bangladesh's RMG Sector?

ABSTRACT Although a growing number of studies explore sustainability, the role of stakeholders and institutions in shaping environmental sustainability initiatives remains overlooked particularly from the upstream fashion supply chain contexts. Drawing upon the framework proposed by Lee, our study aims to fill this gap by examining the interplay between different stakeholders and institutions that influence the environmental sustainability practices of the ready‐made garment (RMG) sector in Bangladesh. Thirty‐two semi‐structured interviews were conducted with a wide range of local stakeholders including the regulators and policy initiators, brand representatives, garment manufacturers' associations, factory management, workers, the media and NGOs. The findings show how institutional ambiguity, corruption and the prioritisation of economic development fracture the capacity of local institutions and stakeholders and provide greater discretion to businesses. Findings also reveal why lead factories adopt accommodative strategies whereas sub‐contract factories favour the obstructionist strategy. The study further points to the business‐driven motives behind international retailers' adoption of sustainability practices, raising questions about their commitment to creating an environmentally sustainable supply chain. We propose a conceptual model that illustrates how institutional and stakeholder dynamics located at local and international levels shape environmental sustainability practices within the RMG industry of developing countries.