Collaboration & Co-Creation

Fashion Giants Join Forces to Share Cost of Supply Chain Decarbonization

The Future Supplier Initiative’s collective-financing model aims to address the main barriers preventing many textile factories from reducing resource consumption or implementing renewable-energy solutions.

Published 6 months ago | About a 4 minute read

Image: JJXX

A group of apparel brands — including Bestseller, Gap Inc, H&M Group and Mango — are collaborating to share the costs, risks and responsibilities of reducing CO2 emissions in the fashion industry's value chain. The goal is to drive the transition to renewable energy and other scalable solutions that will reduce CO2 emissions from the textile factories that manufacture their goods.

To meet global climate goals, apparel brands must cut their supply chain emissions roughly in half by 2030. The technologies required to do this exist; but the financial burden and extended payback time deter many factories from adopting electrification and renewable-energy solutions, slowing progress towards decarbonization goals.

The Future Supplier Initiative (FSI) — facilitated by The Fashion Pact in collaboration with the Apparel Impact Institute, Guidehouse and DBS Bank — introduces an unprecedented blend of financial security, technical expertise and economic incentives. The collective-financing model addresses the main barriers preventing many textile factories from reducing resource consumption or implementing renewable-energy solutions.

Through the Future Supplier Initiative, participating companies anticipate leading the path towards reducing CO2 from the fashion industry's value chain (scope 3), which currently accounts for about 99 percent of the sector's total emissions.

“The cost of inaction on climate change is unaffordable. If the fashion sector is to meet its goals and transform its supply chain, we urgently need to address the gap between ambition and action,” says Eva von Alvensleben, Executive Director and Secretary General of The Fashion Pact. “The Future Supplier Initiative is a unique opportunity for fashion retailers to join forces and drive progress towards science-based targets, and offer much needed financial and technical support to apparel suppliers in their journey to decarbonization. No single business alone can solve this challenge; but by sharing the costs, risks and responsibilities of the transition to renewable energy, we can build an ecosystem of solutions and kickstart a new era of change.”

Similar in principle to industry-collaborative efforts such as the recently launched Clean Energy Procurement Academy — in which Apple, Nike, Amazon, Meta, PepsiCo and REI Co-op are working with the Clean Energy Buyers Institute to equip their suppliers with the technical readiness to explore and adopt clean energy; or the NRDC’s Clean by Design program, which was also aimed at cleaning up apparel manufacturing — FSI says it will develop and finance projects that allow apparel mills, manufacturers and brands to achieve near-term science-based targets.

“For us, supply chain decarbonization is a shared responsibility,” says Thomas Børglum Jensen, CFO of Bestseller — a Danish, family-owned fashion company home to brands including Jack & Jones, JJXX, Only and Vero Moda. “If we as businesses want to achieve our science-based targets, we need to innovate a way forward and join forces with the industry. Collective financing allows us to bridge the implementation gap towards greener supply and secure a transition to renewable energy. The Future Supplier Initiative is critical in that sense and a great example of industry combined effort.”

Starting in Bangladesh and Vietnam

FSI manages multiple supplier cohorts in different geographies. The first two will take place in Bangladesh and Vietnam — two of the world's largest fashion-producing countries — with cohorts also planned for China, India, Italy and Turkey. Baseline measurements and ongoing reduction assessments will document the impact of the projects funded and implemented through the Initiative. The alliance will prioritize projects with significant potential for impact and those that can be widely scaled across the fashion industry.

“At H&M Group, we want to lead the way within our industry and decarbonizing our supply chain is one of the most important keys to further reduce our emissions,” says H&M CEO Daniel Ervér. “The Future Supplier Initiative shows that solutions are readily available and come with proven impact, but it requires commitments from brands and investors that are willing to invest. We encourage others to join our efforts to tackle our industry’s negative climate impact.”