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The Future Suppliers Initiative, driven by The Fashion Pact in partnership with the Apparel Impact Institute, Guidehouse and DBS Bank, offers a collective financing model to support deep decarbonisation of the apparel industry.
Some of the world’s largest fashion brands have joined forces in this innovative initiative to achieve the fashion industry’s decarbonization goals.
The initiative will begin with a program in Bangladesh and is supported by Bestseller, Gap Inc., H&M Group and Mango.
In its first year, the group will prioritize plants based on impact, develop technical options for achieving deep decarbonization, and provide risk-reduced loans to suppliers to implement these projects at more attractive interest rates.
The second year of the program will focus on project implementation and monitoring the climate impacts of these investments.
Switching to renewable energy
With an estimated 99% of fashion brands’ total emissions occurring in the supply chain, the Supplier of the Future initiative aims to accelerate the transition to net zero by sharing the financial risk and responsibility of transitioning to renewable energy across tier-one and tier-two apparel and textile factories.
The program is a brand-agnostic mechanism that will develop and fund projects to support brands and suppliers in achieving their science-based targets (SBTs) and staying within the 1.5-degree trajectory.
We will use a combination of technical support and financial incentives to help overcome the barriers that prevent many plants from adopting electrification and renewable energy solutions.
“To achieve the industry’s ambitious climate goals, every stakeholder must use their influence to drive tangible change,” said Lewis Perkins, president and CEO of the Apparel Impact Institute.
“A collaborative effort between brands and retailers is critical to creating the conditions so suppliers have the incentive and ability to make these investments.
“As long as there are a critical mass of suppliers willing to take on the responsibility of decarbonization, financial institutions are ready to offer better financing options.
“These efforts accelerate when the industry focuses resources and investments on the most impactful solutions,” Perkins explained.
Overcoming barriers to decarbonization
To achieve significant emissions reductions, suppliers are likely to adopt a range of energy-saving technologies and processes and switch to renewable energy, which typically requires long payback periods of decades.
This has prevented many suppliers from adopting electrification and renewable energy solutions, hampering progress towards decarbonization goals.
To help accelerate progress and bridge these gaps, the Future Supplier Program aims to reduce costs for suppliers by working with fashion brands to lower the cost of loan capital that can accelerate decarbonization.
In addition to financial incentives, technical support will be provided to help suppliers identify and implement low-carbon technologies and solutions.
Emission reduction benchmarking and monitoring will also be conducted to demonstrate the impact of projects funded and implemented by the initiative.
The program aims to identify and match the most impactful projects.
Identifying common factory units, interventions and costs will enable fashion brands to join forces globally and regionally to move from targets and roadmaps to implementation and measurable reductions, rather than just energy efficiency measurements.
Eva von Alvensleben, executive director and secretary general of the Fashion Pact, said the cost of inaction on climate change was unbearable.
(Photo provided)
“If the fashion industry is to achieve its goals and transform its supply chain, we urgently need to address the gap between ambition and action.”
For her, the Future Supplier Program is a unique opportunity for fashion retailers to join forces. “They can drive the science-based targets and provide much-needed financial and technical support to apparel suppliers in their decarbonization journey.”
She added that no single company can solve this challenge alone, and it can only be achieved by sharing the costs, risks and responsibilities of the transition to renewable energy. “In this way, we can build an ecosystem of solutions and usher in a new era of change.”
Bestseller owner and CEO Anders Holch Povlsen said they are working hard to improve our climate footprint.
“We have largely succeeded in addressing direct emissions, but it is clear that addressing emissions across the value chain requires ambitious efforts and innovative joint solutions.
“The Future Supplier Program represents new thinking on how fashion companies can come together to accelerate the solutions needed to achieve a green transition across the industry, especially in countries that specialize in manufacturing.
“We know that as an industry we still have a long way to go, but we believe the Future Supplier Program can bring about positive and significant change.
Industry commitment
Richard Dickson, president and CEO of Gap Group, said Gap Group is committed to closing the climate gap by working with supply chain partners to reduce emissions, and they are eager to see their commitments take on greater importance.
“That’s why we’re part of the Supplier of the Future program, which unites brands, technology partners and financial institutions to drive meaningful climate action across the industry, better and faster than any one company could do alone.”
Daniel Ervér, CEO of H&M Group, said the Future Supplier Program showed that solutions were readily available and had a proven impact, but it required commitment from brands and investors willing to invest.
“We encourage others to join our efforts to address our industry’s negative impact on the climate”
Sustainable development journey
Mango believes that sustainability is part of the journey the fashion industry must take to achieve a more just society and reduce its environmental and social impact.
“To achieve our climate goals, fashion companies inevitably need to reduce carbon emissions in their supply chains,” said Toni Ruiz, CEO of Mango.
“The joint effort of the Supplier of the Future Program is a major step forward for the industry, providing affordable funding for facilities to participate in energy efficiency programs and demonstrating that collaboration on our sustainability path is possible,” Ruiz added.
The Future Supplier Program is actively recruiting more brands and expanding into other major apparel manufacturing regions such as Vietnam, India, China, Italy and Turkey.
By bringing more brands and regions into the program, the Future Supplier Program aims to support brands and their supply chains in achieving their near-term science-based targets by 2030.
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