Fashion giants join forces to decarbonise supply chains

Leading fashion brands are collaborating on an innovative financing initiative to accelerate the decarbonisation of their global supply chains, which account for an estimated 99 percent of the industry’s total greenhouse gas emissions.

The Future Supplier Initiative, facilitated by The Fashion Pact in partnership with the Apparel Impact Institute, Guidehouse and DBS Bank, will provide a collective financing model and technical support to help suppliers in key manufacturing hubs transition to renewable energy and adopt low-carbon technologies.

Major fashion businesses on board

Founding participants Bestseller, Gap Inc., H&M Group and Mango have committed to an initial programme in Bangladesh, with plans to expand to Vietnam, India, China, Italy and Turkey. The scheme aims to address barriers that have hindered progress on suppliers’ science-based targets, such as the prohibitive upfront costs and lengthy payback periods associated with upgrading to cleaner energy sources.

“The cost of inaction on climate change is unaffordable,” said Eva von Alvensleben, executive director of The Fashion Pact. “The Future Supplier Initiative is a unique opportunity for fashion retailers to join forces and drive progress… No single business alone can solve this challenge, but by sharing the costs, risks and responsibilities of the transition to renewable energy, we can kickstart a new era of change.”

Participating brands will work to reduce the cost of capital for supplier loans to fund decarbonisation projects, while partner organisations will provide technical assistance to identify and implement efficient solutions, as well as monitoring emissions reductions.

“Accelerating net zero for supply chains requires the rapid scaling of low-carbon technologies, innovative financing models and deliberate action by an ecosystem of partners to drive adoption,” said Tan Su Shan, group head of institutional banking at DBS Bank.

The first year will focus on identifying high-impact factories and developing technical proposals, with project implementation and impact monitoring to follow in the second year. By bringing more brands and geographies into the programme, the Future Supplier Initiative aims to support the industry in achieving its near-term science-based targets by 2030.