Frequently Asked Questions

The Future Supplier Initiative offers a collective financing model to support deep decarbonisation in the apparel sector. The initiative is a brand-agnostic mechanism that will develop and finance projects to support both brands and suppliers to meet their Science-Based Targets (SBTs), enabling decarbonisation across fashion supply chains.

A combination of technical support and financial incentives will be used to overcome the barriers that prevent many factories from adopting energy-efficiency and renewable energy solutions.

The scale of decarbonisation needed calls for a collective approach, and no single business alone can solve this challenge.

By its nature, the fashion industry is highly fragmented and competitive. However, if we can overcome this, we can achieve a greater impact. 

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 positive change.

Big picture

The Future Supplier Initiative aims to reduce the financial burden for suppliers by working with fashion brands to decrease the cost of capital for loans that can accelerate decarbonisation. 

Alongside financial incentives, technical support will be provided to help suppliers identify and implement low carbon processes, technologies and solutions. Baselining and monitoring emission reductions will also be conducted to demonstrate the impact of projects financed and implemented by the initiative.

The initiative will identify and match projects with the highest potential for impact. By identifying common factory units, interventions and costs, it will enable a global and regional joint effort between fashion brands, moving from targets and roadmaps to implementation and measurable reduction, beyond energy efficiency measurements. 

In detail: launch schedule

The schedule for the launch of the initiative is as follows:

• Launch: Participating brands sign contracts and submit eligible supplier lists.
• Month 1-3, Programme kickoff: A steering committee is formed, supplier evaluations are conducted, suppliers are introduced to the programme, and initial proposals to engage suppliers are developed.
• Months 3-18, Projects identified: Suppliers make commitments to participate and projects are developed, estimating the costs and benefits. OEM facilitation takes place; loan amounts are finalised.
• Months 6-24, Funds deposited: Financial agreements are made between parties, and GHG accounting and monitoring plans are developed for each factory; loan agreements are signed.
• Months 13-24, Project implementation: Funds are disbursed to factories, technologies installed at factory sites, and reporting of carbon benefit takes place.

Regular Steering Committee meetings will take place throughout.

No, individual brands determine whether they want to derisk or incentivize each individual supplier’s projects.

Its role is to shape the vision, mission and strategy, and support the programmatic needs of FSI. Each brand choses one point person to participate in this, who is supported by their other team members who facilitate outreach to suppliers and support decisions.

Each cohort  is planned for an initial period of two years. Following this, the brands would rejoin to carry on identifying and investing in new projects. Guidehouse would continue to manage the factory projects with supplier commitments and funding already committed.

Yes. The program was designed based on supplier feedback that technical and financial support are needed to decarbonize. Suppliers are consulted from the very beginning of the process and are instrumental in approving and shaping these projects.

Through the financial strength, strong partner bank network and supplier relationships of participating brands and organizations, the Future Supplier Initiative can enable very attractive financing to suppliers to make the identified investments.

Success will be measured by the number of brands participating, number of regional cohorts, number of suppliers onboarded/loans issued and ultimately – tons of emissions reduced.

Each country requires policy analysis, specific technology evaluation and lists, original equipment manufacturer partner development, and banking relationships and contracts. When each cohort is developed, we will develop these resources within the country.

Each brand should evaluate the contracts and projects individually to evaluate their potential exposure.

Future programmes are dependent on the confirmation of additional brands, but with the intention of expanding to other key apparel manufacturing regions including Vietnam, India, China, Italy and Turkey.

So far,  BESTSELLER, Gap Inc, H&M Group and Mango have committed to the initiative, through the first programme in Bangladesh.

Participating brands are committing to share lists of their Tier 1 and Tier 2 factories, and enabling the financing, and implementing of impactful energy efficiency projects within the two-year timeframe of the project.

Absolutely! We are actively recruiting more brands, and urge as many as possible to be involved. For more information on how to join, please contact us.

There is no prerequisite for joining; in order to foster greater scale, the initiative is open to all brands.

The initiative offers brands a way to collaborate and share the costs of making quantifiable reductions in their Scope 3 emissions that help them individually achieve their Science-Based Targets.

The only ROI are the emission reductions at this stage.

The Fashion Pact brings together CEO leadership and recruits brands and future cohorts.

Guidehouse is facilitating the initiative, running the supplier assessment and analysis, conducting project management and implementation, and onboarding brands.

The Apparel Impact Institute is providing first loss capital, recruiting brands, and identifying projects at suppliers.

DBS Bank is the partner bank.

Aii’s Fashion Climate Fund is a pooled fund of catalytic capital built by some of the world’s biggest brand retailers, financial institutions, and climate philanthropists to:

1. Subsidize the start of suppliers’ sustainability journeys and connect them with technical assistance products. 
2. Guide suppliers through a data-driven, science-based approach to help them “follow the carbon” and identify the exact path they must take to meet their climate goals.
3. Conduct country- and region-specific research to identify proven and promising tools and solutions.
4. Increase solution affordability by using a blended capital approach to lower interest rates and create more incentivized finance.

As part of Aii’s blended capital approach, some Fashion Climate Fund dollars will be used as Future Supplier Initiative first loss capital, offering a valuable enhancement to brands’ guarantees and encouraging better interest rates for producers.

The mechanism was initiated by H&M Group, who recognised the potential for it to be a brand-agnostic mechanism, enabling other brands to join forces to deliver collective impact.

The Fashion Pact has been brought in to mobilise CEO support for the initiative and bring it to the attention of the wider industry.

The fashion industry contributes greatly to the pollution and overall impacts of climate change, and it’s estimated to be responsible for 10% of global carbon emissions – more than international flights and maritime shipping combined. 

Most of fashion’s environmental impact takes place during energy-intensive manufacturing activities like dyeing and treating fabrics – in fact, an estimated 99% of total fashion brand emissions occurring in the supply chain (Scope 3).

Transitioning to renewables in supplier factories is not a simple task. It requires substantial investments, often with lengthy payback periods exceeding 15 years. This can pose a significant challenge for the factories as they struggle to find the economic rationale to make such investments. The financial burden and extended payback time deter many factories from embracing renewable energy solutions, hindering progress towards decarbonisation goals. 

Therefore, we need to drive a transition to net zero by sharing the financial risks and responsibilities of transitioning to renewable energy sources in Tier 1 and 2 garment and textile factories.

If the fashion sector is to meet its climate goals and implement real changes to its supply chain, we urgently need brands to play a key part in addressing the gap between ambition and action.