ArticleSAN FRANCISCO, Sep. 17, 2024 – Today, Apparel Impact Institute (Aii), with support from HSBC, launched the Brand Playbook for Financing Decarbonization. The guide offers 12 financial strategies to help the global apparel and footwear industry access capital that can fund supply chain decarbonization efforts.
While the industry has long recognized its significant carbon footprint, the burden of decarbonization has fallen disproportionately on producers and manufacturers, who face barriers to accessing the necessary capital to finance on-site investment. While financing for decarbonization projects is readily available, interest rates are prohibitively high, and producers are not sufficiently incentivized to invest in climate transitions. The lack of producer decarbonization is stalling the sector’s net zero progress and leaving brands scrambling to meet their ESG goals, particularly around Scope 3 emissions.
Leveraging Aii’s industry expertise and the knowledge and resources of HSBC and other financial institutions, the Brand Playbook for Financing Decarbonization presents a myriad of unique financial models that brands can undertake to incentivize producers to invest in carbon reduction projects. Such strategies range from brands paying producers a premium for green products to providing direct loans for facility improvements. Backed by real-world examples, the playbook explains the risks and benefits of each model, acknowledging that every brand and retailer requires a different strategy for investing in decarbonization for Scope 3 emissions.
“As part of HSBC’s commitment to supporting the transition to net zero, we’re proud to join forces with Aii to help empower companies to make strides toward decarbonisation, and to mobilise sustainable finance across their value chains,” said HSBC Group Head of Policy & Partnerships, Jenny McInnes. “As a global financial institution, we want to work closely with brands and suppliers to provide tailored, innovative financing that can scale up investments in sustainable practices across supply chains."
“Climate change is already one of the biggest vulnerabilities in today’s global supply chains. Brands and producers need to transcend traditional power imbalances and shift towards bold, collaborative approaches that support systemic change,” said Lewis Perkins, President of Apparel Impact Institute. “At Aii, we have a vantage point that allows us to understand each stakeholder’s unique challenges and barriers, and we’re excited to help brands determine how to best use their resources to create attractive financing options for their suppliers and drive tangible change across the industry.”
With options for how different sources of funding within a brand or retailer can be deployed, including how brands can use philanthropic funds to deliver the most impact, the playbook builds on Aii’s broader efforts to unlock $2 billion in capital for industry-wide decarbonization.
Download a copy of the Brand Playbook for Financing Decarbonization here.
About Apparel Impact Institute (Aii): Apparel Impact Institute (Aii) is a 501(c)(3) global nonprofit collective founded in 2017. The organization is dedicated to identifying, funding, scaling, and measuring the apparel and footwear industry’s proven environmental impact solutions. Aii has built a $250M Fashion Climate Fund to leverage a first-of-its-kind collaborative funding model between philanthropy and corporate entities. It is designed to catalyze climate action by funding and scaling solutions for decarbonization, and marked to unlock a total of $2B in blended capital, to meet the industry’s goal to halve carbon emissions by 2030. Most recently, Aii has updated its widely credited 2021 “Roadmap to Net Zero,” a report and guide calling for the system-wide collaboration needed to reduce GHG emissions in the apparel and footwear industry by 45% at minimum by 2030 and to zero by 2050. To learn more about Aii, please visit: apparelimpact.org.
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