By Lewis Perkins, president of Apparel Impact Institute & Sarah Geisenheimer, vice president convenings & networks at Rockefeller Foundation
It’s no secret that the apparel industry has a significant impact on the environment, which was only further emphasized by recent studies like the Roadmap to Net Zero from the World Resources Institute (WRI) and the Apparel Impact Institute (Aii). According to the latest research, the industry is responsible for 2% of the world's greenhouse gas (GHG) emissions, which is equal to 1.025 gigatonnes of CO2. The majority of GHG emissions happen during the early stages of making clothes, like harvesting raw materials, creating fabric, and processing and dying that fabric.
To reverse the climate crisis requires big bets and systemic transformations. And big bets require committed coalitions and alliances, however unlikely they might be. Over the last decade, the industry has put wheels in motion for real change. Brands and manufacturers are implementing energy efficiency improvements in factories, phasing out coal, and using cleaner, less carbon-intensive materials. Yet, there is still much to be done, and due in large part to a continuing increase in production, the industry will need to redouble efforts in the coming years to meet the ambitious industry goal of 45% reduction in GHG by 2030.
The Barriers Facing Today’s Fashion Industry
The fashion industry must overcome two emergent, critical barriers to make significant progress in the race against climate change. The first is financing, as the burden of expensive capital improvements in factories ultimately falls on the manufacturer. And given that many apparel production facilities are small, family-owned enterprises, a majority lack the funds or creditworthiness to pursue major expenditures like replacing a coal boiler. Financial institutions are ready and able to make loans to suppliers, but without apparel brands committing to long-term purchase agreements from the suppliers, banks are hesitant to offer attractive financing rates to these small enterprises.
This puts all major players at an impasse and illustrates the second barrier to decarbonization—disparate stakeholders are siloed. With very few exceptions, apparel brands do not own their production, sharing facilities with many other brands. As such, each brand has limited influence, and a supplier often struggles to meet the needs of the many brands it produces for. Additionally, despite a common recognition that the industry needs “collective action” to move forward, gatherings to discuss these issues are often homogenous, and frequently absent are the voices of the small or medium suppliers. Brands, suppliers, financial institutions, philanthropies, solutions providers, and NGOs must join forces to build financial structures that will pave the way for decarbonization solutions at scale.
Intentional Design to Match Supply and Demand
To move urgently to action, companies need to be intentional with how they workshop, craft, and launch innovative solutions for the industry. In other words, carrying these solutions forward requires a committed coalition.
In the philanthropic sector, the primary tool of support is the grant; however, financial resources can only go so far. There are two other critical assets that are often overlooked: convenings and influence. To bring big bets to life requires forging collaborations between unlikely partners by intentionally designing convenings and engagements to foster collaboration and coalitions.
Case Study: A Catalytic Convening to Unlock a Breakthrough
When facing a challenge as overwhelming as reversing the climate crisis, it can be difficult to pinpoint where best to start. In November 2023, the Aii convened at The Rockefeller Foundation’s Bellagio Center to move ideas about decarbonizing the apparel supply chain into concrete action.
Convening at Bellagio helped to unlock opportunities for manufacturers to invest in decarbonization technology, with support from apparel brands, to meet their mutual climate goals. Getting to this outcome required engaging people deeply familiar with multiple sides of the business: brand sustainability executives, brand financing executives, apparel manufacturer general managers and financing executives, and banks and international financial institutions. In addition, industry consultants provided an invaluable vantage point that enabled them to synthesize and spot areas of opportunity and challenge, moving the needle forward.
Prototyping helped this diverse group to explore a wide range of design solutions. They were able to assess the viability of different designs, identify any potential problems, and make necessary refinements. By creating a space to dig into these prototypes, companies received valuable feedback across the value chain and, ultimately paved the way for the group to craft the final solutions. The attendees agreed to launch a "climate finance solutions'' marketplace portfolio approach to facilitate suppliers' access to affordable capital: loan guarantees for facilities and a blended capital supplier fund.
Reversing the climate crisis may be the challenge of our time. But these challenges are solvable. When unlikely partners come together to make big bets and bring their ingenuity and creativity to the table, breakthroughs emerge. As a result of convening at the Bellagio Center, a group of interested individuals became a committed coalition working together to overcome this barrier to net zero in the apparel industry.
Article