BANKS ON: World Bank HSBC is joining the Apparel Impact Institute’s Fashion Climate Fund, pledging $4 million over the next three years to fund projects that reduce supply chain emissions.
Aii’s FCF is a $250 million hybrid fund that combines contributions from brands and manufacturers with philanthropic donations. Lululemon, H&M Group, PVH Corp. and Target Corp. are corporate backers, as well as the H&M Foundation and The Schmidt Family Foundation, co-founded by former Google CEO Eric Schmidt.
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The fund launched in June 2022, with backers committing to contribute $10 million over eight years to focus on the fashion supply chain. The goal is to reach $100 million in philanthropic donations, and $150 million each from brands and manufacturers, to unlock an additional $1.6 billion in debt and equity financing for infrastructure improvements.
London-based HSBC, with a global market capitalization of $148 billion and assets of more than $3 trillion, is the first bank to join the fund. The partnership was announced on Sunday during a panel at COP28’s Goals House.
“We’re really trying to change the market around sustainable finance by making sure that suppliers have the right kind of financial tools or financing available that makes this more incentivized for suppliers,” said Lewis Perkins, president of the Apparel Impact Institute, about the umbrella strategy of the group.
While suppliers will do the heavy lifting to secure financing and upgrade infrastructure, AII aims to “make it more equitable” for both the industry and the region.
The Rockefeller Foundation is also joining the partnership which aims to support stakeholder engagement as AII ramps up their activations.
The idea is to create better conditions for suppliers to upgrade their facilities. The goal is to start at the facility level with Scope 3 suppliers of brands, such as renewable electricity and waterless dyeing at textile mills and processors, with the intention of later expanding to Scope 4 agricultural and commodity levels.
AII is looking at facilities that require “larger capital investments,” Perkins noted, saying there is a “bottleneck, a barrier to incentivizing suppliers” to take on the debt to finance these large infrastructure investments.
While the focus will be on upgrading suppliers that work with AII’s brand partners, such as H&M, the programs will not be exclusive. Perkins added that since suppliers supply a number of brands, there will be a lot of overlap with brands outside the AII universe. “Ultimately, AII seeks to support suppliers on their journey to a low-carbon economy and provide financing or financing options that don’t have to be tied solely to the suppliers of these brands,” he said. “That’s where the wind is blowing for everyone in the industry.”
The group also plans to add more brands to its network, either as lead partners of the fund or at lower contribution levels, to bring smaller brands on board.
The AII’s Roadmap to Net Zero report, updated in June, notes that materials processing accounts for 53 percent of industry emissions, and raw material processing contributes 15 percent.
“We are in the 100-day sprint to develop and release something specific [financial] vehicles,” said Perkins, and will bring together stakeholders from 22 brands, suppliers and banks to develop these programs, pooling capital from all contributing sectors. Specific announcements are planned for the end of the first quarter or the beginning of the second quarter of next year.
In terms of attending COP28, Perkins said there was a more robust mix of brands and suppliers on site learning from different industries outside of the strictly fashion-oriented events.
However, he noted that fashion could – and should – play a bigger role in multilateral conversations. “There needs to be more brand representation in the future, especially as this is a great place to connect with country strategies, to connect with some of the big financial partners that are part of development banks and commercial banks and to run programs to build. ,” he said. “I think a better COP next year would be if there was a little more organized participation from the retailers of fashion brands, then more suppliers will come.”
WALL TO WALL: Nonprofit organization Accelerating Circularity has received a new round of $1.5 million in funding from the Walmart Foundation.
The group’s mission is to create circular textile-to-textile supply chains and keep used textiles out of waste streams.
“We are fortunate to have the support of the Walmart Foundation to do this next level of work and move closer to realizing our vision of a world where textiles are no longer wasted,” said Karla Magruder, president of Accelerating Circularly. “We aim to broaden our involvement as we continue to build the business case for circularity and invite new industry partners to join this effort.”
The follow-up amount of $1.5 million will be used to investigate the technical feasibility of textile-to-textile recycling systems.
To this end, Accelerating Circularity will develop a tool to create a waste hierarchy to optimize the flow of used textiles based on their potential to be reused or have the greatest potential for reducing greenhouse gases, and to collaborate with brands and retailers in the US. to create better disposal and collection systems to prevent clothing from ending up in landfill.
Accelerating Circularity also aims to make progress in making textile-to-textile recycling feasible by scaling up to what the industry needs to meet its production needs. The group will work to develop additional circular fibers, yarns and fabrics, and span strategic new regions to establish sustainable circular supply chains in North and Central America.
It is the second grant from Accelerating Circularity from the Walmart Foundation. The group received $1.2 million in 2021 and has used the funding to study textile waste on the East Coast to identify gaps in the recycling and circular chains. The group also launched pilot programs in textile-to-textile recycling to demonstrate that it is scalable and can work, in the US and Europe.
VIRTUAL SIGNALING: Inditex has rolled out a virtual try-on for its youth brand Bershka. The technology is a virtual fitting room called YourFit, powered by 3DLook, which aims to provide more accurate size and fit recommendations. The technology aims to reduce product returns from online sales.
“The fashion industry is undergoing rapid transformation, with a strong focus on sustainability and efficiency – and it is up to the industry giants to lead by example. Our virtual fitting room technology has the power to revolutionize the online shopping experience and contribute to the development of a greener, more sustainable and more efficient fashion industry by reducing size-related returns and empowering a younger, camera-driven digital generation to speak.” said Whitney Cathcart, co-founder and chief commercial officer of 3DLook.
The tech is voice-activated and uses front and side photos of the customer; The solution’s precise 3D mapping technology and size recommendation engine then provide immediate feedback on which size would fit best, delivering a highly accurate and photorealistic virtual trial experience.
Bershka is monitoring the technology and it could be expanded to other Inditex brands in the future.
Elsewhere, Inditex’s fast-fashion giant Zara expanded its second-hand resale platform to other European countries: Austria, Belgium, Croatia, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Portugal, Netherlands, Slovakia, Slovenia and its home country of Spain. The service launched in the UK in October 2022 and expanded to France in September.
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