Major brands commit to innovative collective financing model to decarbonise the fashion sector – H&M Group

The Future Supplier Initiative, facilitated by The Fashion Pact in partnership with Apparel Impact Institute, Guidehouse, and DBS Bank, offers a collective financing model to support deep decarbonisation in the apparel sector. 

With an estimated 99% of total fashion brand emissions occurring in the supply chain* (Scope 3), the Future Supplier Initiative 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 initiative is a brand-agnostic mechanism that 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

Overcoming barriers to decarbonisation

To achieve significant emission reductions, suppliers might adopt a range of energy efficient technologies and processes, as well as transitioning to renewable energy sources, often with lengthy payback periods that can take decades. This deters many suppliers from embracing electrification and renewable energy solutions, hindering progress towards decarbonisation goals.  

To help accelerate progress and bridge these gaps, the Future Supplier Initiative aims to reduce the cost for suppliers by working with fashion brands to decrease the cost of capital for loans that can accelerate decarbonisation. 

Alongside financial incentives, technical support will be provided to help suppliers identify and implement low carbon technologies and solutions. Baselining and monitoring emission reductions will also be conducted to demonstrate the impact of projects financed and implemented by the initiative.

The initiative seeks 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.

Anders Holch Povlsen, Owner and CEO of BESTSELLER

Richard Dickson, President and CEO, Gap Inc.

Daniel Ervér, CEO of H&M Group

Lewis Perkins, president and CEO, Apparel Impact Institute

Tan Su Shan, Group Head of Institutional Banking, DBS Bank

Gaurav Menon, Partner at Guidehouse

Global initiative to begin in Bangladesh, with aims to expand

The initiative will begin with a programme in Bangladesh, supported by Bestseller, Gap Inc., H&M Group and Mango.

The Future Supplier Initiative is actively recruiting more brands, with the intention of expanding to other key apparel manufacturing regions including Vietnam, India, China, Italy and Turkey.

In its first year, the cohort will prioritise factories based on impact, build technical proposals for achieving deep decarbonisation, and de-risk lending to suppliers to implement these projects at more attractive rates. Year two of the programme will focus on project implementation and monitoring of the climate impact created through these investments.

By bringing in more brands and geographies into the programme, the Future Supplier Initiative aims to support brands and their supply chains in achieving their near-term Science Based Targets by 2030.  

The Future Supplier Initiative is actively recruiting more brands and suppliers. For more information on how to join, please visit https://futuresupplierinitiative.com.