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NEW PROJECT: Financial Tools to Achieve Science Based Targets

Published: 22 February 2021
3 min read
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Financial Tools to Achieve Science Based Targets 

About the Apparel Impact Institute: Aii identifies, validates, funds, and scales proven quality solutions to accelerate positive impact in the apparel and footwear industry. Aii programs focus on areas that result in positive environmental impact from the production of apparel and footwear products to improve the industry. To learn more about this program, email Lewis Perkins 

Project Context: 

As an Addendum to the WRI & Aii joint report on “Apparel & Footwear Sector Roadmap to Net Zero Emissions,” Aii is investigating the total financial funding/ investment required to achieve the implementation recommendations from the report, as well as identifying the most promising areas for financial capital to play a role. We believe this work will provide direction for future pilots of financial tools, with the ultimate goal of creating a larger role for financial capital in facilitating the energy transition of the apparel supply chain. 

Part 1. “Size of the Prize” Analysis on Key Reduction Opportunities 

Aii team, along with research partners, will quantify the estimated financial investment required to decarbonize the apparel & footwear supply chain. For example: 

  • Deploying renewable energy for tier 1 – 3 facilities (onsite and offsite)
  • Transition out of coal as a thermal energy fuel source 
  • Expanding mill improvement programs to X% of mills globally 
  • Scaling up the use of lower-carbon materials (e.g., what will it take to take rPoly from its current market share of roughly 14% to 50% or more?) 
  • Other potential levers for decarbonization 

Part 2. Mapping Available Sustainable Financial Tools and Key Barriers / Accelerant

Aii team will map the landscape of currently available financial tools/instruments that manufacturers/brands can access (e.g. supplier trade finance, green bonds) as well as identify promising new financial tools/structures. Additional value will come from bank and industry perspectives on the challenges and accelerants to broader adoption of these tools (e.g. loan must be at least a certain size for bank underwriting). Examples of apparel brands that have utilized these financial tools will also be included (e.g. Walmart, Puma). 

Project Timeline: 

Month (2021) Project Activities
March Methodology review, identify interviewees and data sources
April Data collection and stakeholder interviews
May Final stakeholder interviews and Size of the Prize modeling
June Draft report and initial conclusions
July Stakeholder review and comment period
AugustFinalize report and conclusions, prepare for public release
SeptemberReport released publicly, webinar/panel event (TBD)

This project is funded by HSBC