This article examines how emerging Environmental, Social, and Governance (ESG) regulations—particularly the European Union’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD)—affect the textile and apparel industry in Bangladesh. It highlights the sector’s dual role as a driver of economic growth and a major source of environmental degradation and greenhouse gas emissions. The study explores how the EU’s mandatory human rights and environmental due diligence frameworks extend to upstream suppliers in Bangladesh, reshaping the country’s comparative advantage and labor conditions under the ‘Brussels Effect’ It argues that without financial and technical support from global brands, Bangladesh’s suppliers risk losing market share and jobs due to weak regulatory capacity and limited resources. To mitigate these risks, the article proposes the adoption of fair and responsible cost-sharing contracts between global buyers and local suppliers. Such contractual arrangements can equitably distribute the costs of sustainability compliance, promote environmental upgrading, and ensure that workers and small producers are not unfairly burdened. By emphasizing corporate accountability, shared responsibility, and sustainable partnership, the study situates Bangladesh’s apparel sector within the global movement toward climate-aligned and socially responsible supply chains.