Collective financing for climate

Addressing energy efficiency, electrification and renewable energy are key to driving decarbonisation of the fashion industry. Suppliers need both technical & financial support to transition at the pace required for apparel brands to achieve their Science Based Targets and stay within the 1.5 degree pathway.

There is an increased focus to decarbonise our industry- however, transitioning to renewables in supplier factories requires substantial investments. With FSI we aim to bridge the implementation gap towards 2030 and beyond.

Why collective financing?

What others say

The fashion industry urgently need to catalyse tangible actions removing hurdles to fund decarbonisation through increased access to affordable capital.

Why is funding fashion’s climate goals so hard?

Most of fashion’s environmental impact takes place during energy-intensive manufacturing activities like dyeing and treating fabrics. The majority of the industry’s profits, however, go to large brands. And while many of fashion’s biggest businesses are setting impressive sustainability goals, they’re mostly not stumping up cash to help support the transition. Meanwhile, many manufacturers are small and medium-sized businesses in emerging economies that already struggle with access to affordable capital, let alone find the financing for long-term climate projects with dubious payback prospects…

“All the pressure of decarbonisation and the funding of decarbonisation lies with suppliers,” said Saqib Sohail, responsible business projects lead at Pakistan-based denim manufacturer Artistic Milliners. “The risk, we feel, is not shared across the whole supply chain.”

Make collaborations action oriented

Not only will taking these actions help fashion executives achieve accelerated [greenhouse gas] abatement at a modest cost, but they can also create substantial business value in sustainable transformations. To capture the opportunity, time is of the essence. Early movers can realize commercial value and positive effects on brand equity for years to come. We also see an early-mover advantage on the cost side: while the cost of sustainable solutions will likely fall over time, we expect that a widening supply-and-demand gap in the near term will increase the price of scarce sustainable solutions and assets (including materials, machinery needed for decarbonisation, renewable energy, and manufacturers with more sustainable processes). Moving early can help a brand secure access at lower prices than its peers can and reach its 2030 decarbonisation targets.

Impact of the Fashion Industry

For 2022, Aii and the World Resources Institute (WRI), using data from Cascale, Wordly and Textile Exchange, estimated total apparel sector GHG emissions for 2022 to be 878.7 Mt CO2e, or 0.879 Gt. Roughly 2 percent of annual global greenhouse gas emissions.

Assuming business-as-usual growth for the sector, emissions are projected to be 1.243 Gt in 2030. To stay within a 1.5°C trajectory — achieving 45 percent reduction by 2030 — the sector would need to reduce emissions from 0.889 Gt in 2019 to 0.489 Gt by 2030.

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SCOPE 1 + 2

1%

SCOPE 3

99%

TIER 4

21%

TIER 3

15%

TIER 2

55%

TIER 1

9%