Sustainable finance

Overcoming the industry’s financial barriers

The trillion dollar report Our strategy presentation

Our sustainable finance strategy

AII IS COMMITTED TO UNLOCKING $2B TOWARDS THE $1T GOAL BY 2030

Financing is keeping us from our decarbonization goals, and traditional funding structures aren’t working. If we’re going to meet our 2030 targets, we can’t continue with business as usual. We have to innovate. In order to do this we’re aligning the apparel and footwear industry, philanthropy, and financial institutions to catalyze innovation.

IT WILL TAKE $1 TRILLION IN INVESTMENT FOR THE APPAREL AND FOOTWEAR INDUSTRY To REACH NET ZERO

Aii is building a coalition of brands, financial institutions, and manufacturers to collectively fund the decarbonization of the apparel and footwear industry supply chain through a mix of capital sources. One approach is our $250M Fashion Climate Fund, which provides grants for early- to mid-stage projects. We’re also stewarding an initiative to unlock $2 billion in capital, providing attractive sources of financing for suppliers to make climate-improvement investments.

EXAMPLE APPLICATION OF FINANCIAL ASSISTANCE

Access to finance is a major barrier to reaching net zero. Aii deploys grants to solutions with a data-backed path to significant carbon reductions, intended to help them reach scale quickly. We understand that billions will be needed in capital expenditures for facility improvements, and that it’s challenging for suppliers to access attractive financing. Aii is building a portfolio of innovative financial tools and will pair suppliers with the loans and other financial vehicles they need.

Example application of financial assistance

Breaking down the $1 Trillion

Reaching net zero will require a variety of stakeholders and solutions. We believe that not all solutions are created equal, and we’re committing to funding and amplifying those solutions that are proven to make a meaningful impact on carbon emissions. Aii’s portfolio of solutions boasts a more favorable cost-per-tonne ratio than other solutions on the market.

Funder distribution

Program cost

Types of funders that contribute to the $1 Trillion investment

Bank debt, bonds, and loan funds (Debt investment)

Venture capital and private equity (equity investment)

Government, development banks and philanthrophy (debt, equity and grants)

Brands and manufacturers (debt, equity and grants)

Sustainability premiums

Types of Funders. Source: Aii and FFG analysis (2021)

Program cost per tonne of reduction of CO2e over useful life

*cc&s = Carbon Capture and Storage

Source: Kenneth Gillingham and James H. Stock. “The cost of Reducing Greenhouse Gas Emissions.” 
Journal of Economic perspectives 32, no. 4 (Fall 2018) 53-72.

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Frequently asked questions

How do you plan to “unlock” financial investment and drive a total of $2 billion into the supply chain?

The Fund is applied to the entire program portfolio from incubation to commercialization. Once an intervention has proven successful, Aii recruits financial institutions to supply attractive sources of financing for suppliers to make climate-improvement investments. Aii is also advancing new and creative financial solutions for the market and tracking the amount of external capital leveraged as a result of our Fund, as well as the financial ROI and payback period for the supplier that is making the investment.

How did you come up with $2 billion total?

This is a conservative estimate coming from our experience with programs like Clean by Design, as well as the findings in our joint report with Fashion for Good, "Unlocking the Trillion-Dollar Fashion Decarbonisation Opportunity". Based on the ratios of form of asset class applied to the solutions in the report, we expect $100 million in philanthropy combined with $150 million in industry contributions (together, the $250 million Fashion Climate Fund) will drive $150 million in supplier contributions; $400 million in venture capital and private equity; and $1.2 billion in bank debt, bonds, and loan funds for supplier capital investments, resulting in a total of $2 billion.

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HELP US CREATE SYSTEMIC CHANGE IN THE INDUSTRY

Contact us to learn more about our strategy and how you can get involved, or learn how we’re raising and deploying grants through the Fashion Climate Fund.

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