Investigating the prospect of cleaner production in informal enterprises: A scientific assessment of environmental burdens and economic efficiency

The present study aims to assess the prospects for cleaner production (CP) and sustainable development (SD) of informally operated small manufacturing enterprises, which are frequently blamed for uncontrolled waste disposal and causing pollution to the environment. The economic efficiency level of these firms has been explored to this end, and the metallic pollution loads in the surrounding environment have been scientifically analyzed to investigate the nexus between these two. DEA (Data Envelopment Analysis)-Tobit analysis has been employed, and a pollution load index (PLI) of heavy metal pollution comprising two environmental compartments (soil and water) has been constructed based on the concentration level of metalloid pollutants in the samples collected from the surrounding areas of the studied informal firms in Bangladesh. The study disproves CP practice in majority of the informal firms in Bangladesh by observing a positive relationship between firm-level efficiency and pollution load sourced from their production activities. Afterwards, this study estimates the eco-efficiency level of firms by considering pollution load as an undesirable output and minimizing its impact in an input-oriented DEA model. Applying the eco-efficiency scores in censored Tobit regression analysis, the outcome endorses the prospect of CP for informally operated enterprises in Bangladesh. However, the CP prospect can only materialize if and only if firms are provided with adequate technical, financial, and strategic support for achieving eco-efficiency in their production. The informal and marginal nature of the studied firms restricts them from getting access to the facilities and support services needed for implementing CP and moving towards sustainable manufacturing. Therefore, this study recommends green practices in informal manufacturing and limiting the informal firms by bringing them gradually under the coverage of formalization, which is in line with the achievement of the targets mentioned in Sustainable Development Goal 8. •Economic efficiency of informal manufacturing enterprises has been investigated.•Pollution Load Index has been constructed based on metallic contaminations.•The efficiency level of informal firms is positively associated with pollution.•AcHievement of eco-efficiency promotes cleaner production in informal enterprises.•Green practices with institutional support can ensure cleaner production at firms.