A number of the biggest fashion brands on the planet are cooperating on a new Future Supplier Initiative that “offers a collective financing model for brands to support apparel suppliers’ deep decarbonisation”.
It’s been facilitated by The Fashion Pact along with Apparel Impact Institute, Guidehouse, and DBS Bank and “will combine financial incentives, such as de-risking loans, with technical support”.
The debut programme is to launch in Bangladesh with support from Bestseller, Gap Inc, H&M Group and Mango, and more brands are being “actively” recruited “with the aim of expanding to additional regions”.
It comes as an estimated 99% of total fashion brand emissions occur in the supply chain and aims to accelerate the transition to net zero by “sharing the financial risks and responsibilities of transitioning to renewable energy sources in Tier 1 and 2 garment and textile factories”.
The brand-agnostic mechanism will develop and finance projects to support both brands and suppliers to meet their Science Based Targets (SBTs) and stay within the 1.5 degree trajectory.
A combination of technical support and financial incentives will be used to help overcome the barriers that prevent many factories from adopting electrification and renewable energy solutions.
Eva von Alvensleben, Executive Director and Secretary General of The Fashion Pact said: “The cost of inaction on climate change is unaffordable. If the fashion sector is to meet its goals and transform its supply chain, we urgently need to address the gap between ambition and action.
“The Future Supplier Initiative is a unique opportunity for fashion retailers to join forces and drive progress towards science based targets, and offer much needed financial and technical support to apparel suppliers in their journey to decarbonisation. No single business alone can solve this challenge, but by sharing the costs, risks and responsibilities of the transition to renewable energy, we can build an ecosystem of solutions and kickstart a new era of change.”
The problem up to now has been that to achieve significant emission reductions, suppliers adopting measures to help often face payback periods that can take decades. This deters many.
The Future Supplier Initiative aims to reduce the cost for them by working with fashion brands to decrease the cost of capital for loans that can accelerate decarbonisation.
There will also be technical support to help suppliers identify and implement low-carbon technologies and solutions. Baselining and monitoring emission reductions will demonstrate the impact of projects financed and implemented by the initiative.
The aim is also to identify and match projects with the highest potential for impact. “By identifying common factory units, interventions and costs, it will enable a global and regional joint effort between fashion brands, moving from targets and roadmaps to implementation and measurable reduction, beyond energy efficiency measurements,” we’re told.
Anders Holch Povlsen, Owner and CEO of Bestseller, said: “We are working intensively to improve our climate footprint. We have largely managed to tackle our direct emissions, but it is clear that emissions in our value chain require ambitious efforts on a scale that calls for innovative, joint solutions.”
And Daniel Ervér, CEO of H&M Group added: “The Future Supplier Initiative shows that solutions are readily available and come with proven impact, but it requires commitments from brands and investors that are willing to invest.”
Mango CEO Toni Ruiz also said that the “joint effort that represents the Future Supplier Initiative is definitely a huge step forward from the industry in allowing for affordable funding for factories to engage in energy efficiency initiatives, and a sign that cooperation is possible in our sustainability journey”.
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