Aii explained that HSBC will support the Fashion Climate Fund, a $250m project aimed at driving industry-wide convergence to modernise apparel and footwear supply chains to meet the industry’s ambition to halve carbon emissions by 2030.
Aii shared how HSBC's support will help fund market insight reports, regional research projects to identify and overcome financial barriers, as well as build connections between facilities, brands, NGOs, governments, and financial institutions.
The funding will also aid FCF in building the infrastructure needed to enable partners to identify, measure, secure finance for and deploy decarbonisation solutions from renewable energy to energy efficient measures, according to Aii.
The recent report Unlocking The Trillion-Dollar Fashion Decarbonisation Opportunity: Existing And Innovative Solutions, co-authored by Aii and Fashion for Good and supported by HSBC, outlines that more than 2% of global greenhouse gas emissions stem from the fashion industry.
Aii noted that findings in the report are significant with analysis showing an estimated $1tn is required to finance the decarbonisation of the fashion industry by 2050 and bringing together a diverse range of actors from across the value chain is critical to enabling solutions.
Lewis Perkins, president of Aii said: "With this announcement, HSBC continues to show its support in critically needed sustainable supply chain finance to fund the textile, apparel, and footwear industry’s transition to net zero. We estimate the total cost for the decarbonisation of this industry to be $1 trillion between now and 2050 – the majority of which will go towards capital investment in the supply chain. We applaud HSBC for its continued support and ongoing collaboration during this critical time."
Jenny McInnes, Group Head of Policy and Partnerships at HSBC, believes that the financial services company is not only leveraging philanthropy but also its trade finance expertise to support the apparel sector’s journey to net zero along with the decarbonisation of trade and global supply chains.
She added: "Aii plays an important role in bringing key stakeholders to design solutions that tackle some of the systemic challenges facing the apparel and footwear industry."
HSBC has joined the current list of FCF backers that includes Target Corporation, H&M Foundation, H&M Group, Lululemon, The PVH Foundation, and the Schmidt Family Foundation.
Suite of new financial tools to help suppliers
Aii said it is also working on building innovative financial tools to complement its portfolio of solutions with support from FCF's lead partners, including HSBC.
These tools aim to create greater incentives for suppliers to undertake decarbonisation projects via access to more affordable capital.
The Rockefeller Foundation, as a collaborator with Aii, is furthering this initiative by committing significant grant support to the FCF to bring these financial tools from conversation to deployment.
Aii added that this fall, Aii and a small group of key stakeholders from across the value chain including HSBC, BNP-Paribas, Standard Chartered, MAS Holdings, Brandix, PVH, Lululemon, H&M Group and Guidehouse, gathered to create an activation plan starting with the most critical regions.
One of the outcomes of this meeting is an Aii-backed "climate finance solutions" marketplace portfolio approach to facilitate suppliers’ access to affordable capital.
Aii pointed out this will include two initial financing initiatives that could look like (a) Facility Loan Guarantees and (b) blended capital supplier funds. Three working groups made up of participating representatives will further operationalise these primary options.
Looking ahead to early 2024, Aii shared the focus of FCF’s continued work will be on creating an enabling environment to develop financial instruments and expanding membership of brands and manufacturers.
