2022Yearly Report

Our Vision, Mission and Values

Our Vision

A transformed apparel, footwear, and textile industry that has a positive impact on people and planet.

Our Mission

We identify, fund and scale proven quality solutions to accelerate positive impact in the industry.

Our Values

• Passionate and purpose-driven: We are ambitious about making a positive impact, and we’ll go the extra mile for the cause. We’re grounded, brave, bold, and intellectually curious.

• Trustworthy and real: We value working together in a manner that is transparent, authentic, credible. We can be trusted to do what we say we will do.
• Human-centered: We believe humans are the path to delivering data driven solutions and impact. We bridge people to people, people to ideas, and people to tools. We work with mutual respect for each other’s diverse viewpoints and examine our own bias.
• Collaborative: We seek to partner and align with existing impact-related workstreams rather than reinvent the wheel, and yet we are ready to build new pathways when gaps exist.

Our History

The Apparel Impact Institute is a not-for-profit registered in the state of California (501c3), founded in 2017 by four industry leaders: the Sustainable Apparel Coalition (SAC), the Sustainable Trade Initiative (IDH), Natural Resource Defense Council (NRDC) and Target Corporation. The organization emerged organically as a result of a real need that apparel brands and retailers self-identified.

Today, Aii is recognized as an ecosystem leader in carbon reduction programming.

Our Focus Areas

Our immediate priority is carbon reduction to work towards a zero-carbon fashion industry. The following secondary impact areas result from this work.

To achieve our primary impact area, we identified our focus areas. Intensive research conducted and published by WRI and Aii in the report Roadmap to Net Zero, concluded that six interventions would help the sector deliver the reductions needed for a 1.5C pathway: [source]

• 1. Maximizing material efficiency.
• 2. Scaling sustainable materials and practices.
• 3. Accelerating the development of innovative materials.
• 4. Maximizing energy efficiency.
• 5. Eliminating coal in manufacturing.
• 6. Shifting to 100 percent renewable electricity.

Beyond the six interventions, the paper also identified the potential benefits of circular business models and practices.

All seven areas are critical to decarbonizing the supply chain.

Aii currently focuses on five out of the seven areas, and will integrate the others in upcoming years.

As shown in the previous figure, material production is the biggest hotspot of emissions (52% of total) followed by raw material extraction (24% of total). Therefore, Aii’s programs currently focus mainly on material production.

Aii has focused its work around driving impact through its programming, including its inaugural Clean by Design Energy & Water Efficiency Program, the launch of Fashion Climate Fund, and designing the governance structure and intake process for the Climate Solutions Portfolio.

How We Work

How We Deploy Programs

With climate action becoming an integral part of most brands’ sustainability strategies, facilities have shifted to strategically work towards factory decarbonization.

This has led to a significant demand for Aii’s Carbon Target Setting Solution, which helps facilities to set 2025 and 2030 carbon reduction targets, develop a prioritized CO2e reduction action plan utilizing Aii’s Carbon Toolkit, and build the necessary capacity to continuously update the action plan and monitor progress against targets. Sixty-five factories in 9 regions set their carbon reduction targets in 2022.

While target setting is a great entry point to carbon reduction, it is neither the only entry point nor the end of this important workstream.

We must recognize that some of the seven interventions, like the elimination of coal, gain significantly more public attraction than others.

It is correct that shifting from coal to lower-carbon alternatives for thermal energy and moving to 100 percent renewable electricity are vital to decarbonizing the apparel sector. A 50 percent shift to renewable energy in global supply chains’ spinning, textile formation, and finished goods assembly facilities would reduce emissions by an estimated 213 Mt CO2e. [source]

However, the maximization of energy efficiency also has a high potential to reduce emissions (estimated at 64 Mt CO2e) [source], requires relatively low investment, and offers a quick payback period of only 1-2 years. At the same time, with rising energy prices, it can bring almost immediate economic savings. Production processes with high energy use benefit the most, such as wet-processing.

If we want to achieve our 45% reduction target by 2030, it is therefore important to understand that only the combination of interventions, including the reduction of energy consumption, can lead factories to decarbonize.

Aii’s inaugural Clean by Design Energy & Water Efficiency program has proven an effective and scalable solution in the “energy efficiency intervention” with an average of 8.27% energy and 8.24% GHG emission savings for wet-processing units since 2018.

Fashion Climate Fund

The Fashion Climate Fund is a rapid acceleration of existing Aii programmatic work to achieve our collective SBTs.

In 2022, Aii proudly launched the $250M Fashion Climate Fund with lead funders lululemon, H&M Group, the PVH Foundation, Target, H&M Foundation, and The Schmidt Family Foundation.

Pioneering a collaborative funding model between philanthropy and corporate entities, the Fund is designed to unlock an estimated $2B in blended capital in additional asset classes to help meet the industry’s ambition to halve carbon emissions by 2030. By activating a blended capital solution between industry and philanthropy, we can do more than we ever have, faster than we ever have.

The Fashion Climate Fund will aggregate funding to apply toward identifying and rapidly scaling proven CO2 emissions interventions inside a shared global supply chain. Aligning philanthropic and government grant makers alongside industry funding and blended capital with a shared and agreed upon suite of solutions will allow us to reach the ambitious timeline set by the science-based targets. We see the greatest need to apply philanthropic and industry funds to early and mid-stage projects where catalytic funding can derisk unproven solutions in order to unlock financial capital to reach scale.

Learn more about the Fashion Climate Fund

The Fashion Climate Fund also supports the development of a digital tool for transparent, standardized impact reporting: the Climate Solutions Portfolio. This will be an online registry to identify, fund and scale impact programs leading to scope 3 emissions reduction in the apparel sector.

Such a registry will create greater transparency for the impact work being financed via the fund by aligning the industry’s disparate programs and providing data assurance based on clearly defined impact criteria.

Targets we are aiming for by 2030:

• All industry opportunities will be scoped and every carbon reduction program is registered with the Climate Solutions Portfolio.
• Aii will aggregate industry and philanthropy funds to unlock $2 billion in capital to accelerate decarbonization.
• Aii’s stakeholders will widely adopt proven impact solutions across all tiers and interventions.

Allocation of Funds

Program Related Expenses in 2022 in Detail

Aii Team

Within the organization, Aii’s management and major decisions are led by the executive team, composed of the President, Chief Impact Officer, Chief Financial Officer, and Chief of Staff.*

*Employees and job titles during the financial year 2022 until 31.12.2022

Geography & Demographics of the Team

Aii is proud to be a growing, international, and diverse team, with 15 employees from 5 different nationalities based in 6 countries over 3 continents in 2022.

In 2022, Aii’s team represented almost an equal distribution of male and female employees.

Aii’s executive team is composed of 4 people — 75% identifying as male and 25% as female.

Aii Governance

Board of Directors

Aii is governed by its Board of Directors, whose role includes:

• Determining mission and purpose of Aii.
• Monitoring and strengthening programs and services.
• Ensuring adequate financial resources.
• Protecting assets and providing proper financial oversight.
• Building a competent Board, including articulating prerequisites for candidates, orienting new members, and periodically and comprehensively evaluating their own performance.
• Maintaining legal and ethical integrity.
• Enhancing the organization’s public standing.
• Establishing a balance of representation from a variety of fields on the Board to maintain diversity and encourage inspiration and innovation from a wide range of sources.
• Approving the final Fashion Climate Fund allocations as part of the budgeting process.

Aii Board Members serve a two-year term and attend quarterly Board Meetings. The Board has two established committees: Audit and Finance.

As of February 2023, we have welcomed Claire Bergkamp, CEO at Textile Exchange, as the newest member of our Board of Directors

CSP Advisory Council

The CSP Advisory Council is a multi-stakeholder group focused on determining which solutions, from a programmatic impact perspective, should be included in the Climate Solutions Portfolio.

This advisory group is named by the Aii Board of Directors for the purpose of vetting programs for funding.

The role of the Council includes:

• Reviewing the entire cohort of applicants.
• Connecting Lead Funder representatives with Apparel Impact Roundtable.
• Reviewing and analyzing applications for impact opportunities.
• Calling upon a pool of experts as needed.

In 2023 we will fill an open position on the Council for a supply chain representative.

Apparel Impact Roundtable

The Apparel Impact Roundtable (AIR) is a strategic advisory body consisting of brands, retailers, and manufacturers responsible for driving the strategic scale and implementation of sponsored initiatives.

The Apparel Impact Roundtable is composed of the industry partners contributing to the Fashion Climate Fund along with additional strategic industry partners.  Their primary responsibility is to review and provide feedback on the recommended docket of the fund.

2022 Stakeholders

* Industry & Funding Partners include organizations that previously contributed and/or currently contribute funding to Aii.

** Partners include organizations that previously contributed and/or currently contribute funding to Aii.

*** Implementation Partners include current or past partners that have supported Aii’s programs implementation.

2022 Facilities Implementing Aii Programs

Facilities That Completed an Aii Program in 2022

Distribution by Tier²¹*

Distribution by Country

* Aii’s definition of tiers can be found at the end of the report.

Facilities That Are Currently Active in an Aii Program in 2022

Distribution by Tier²²*

Distribution by Country

* Aii’s definition of tiers can be found at the end of the report.