The Apparel Impact Institute (AII) has announced the lead funders in its new $250 million Fashion Climate Fund: Lululemon, H&M Group, H&M Foundation, and the Schmidt Family Foundation.
The initiative: AII and its partners have established the Fund to drive collective action to tackle fashion's supply chain emissions, a press release stated. "By leveraging a first-of-its-kind collaborative funding model for fashion between philanthropy and corporate entities, the Fund could unlock an estimated $2 billion in blended capital across various asset classes, including debt and equity, to help meet the industry's goal to halve carbon emissions by 2030," the Institute said.
The backdrop: According to AII and the World Resources Institute's recent report, Roadmap to Net Zero: Delivering Science Based Targets in the Apparel Sector, 96% of the fashion industry's emissions come from third-party farms and factories that are shared across the industry and deemed too risky for brands, retailers, or traditional sources of capital to make necessary upgrades and overhauls.
The funds: The Fashion Climate Fund will provide programmatic funding for supplier interventions across the value chain: transitioning to renewable electricity, accelerating next-generation materials, scaling sustainable materials and practices, eliminating coal in manufacturing, and improving energy efficiency. The AII has created strategic collaborations with Textile Exchange, Fashion For Good, and Solidaridad, among others, to address those focal areas.
- The funds will provide the necessary form of capital to accelerate and de-risk pre-seed and pilot innovations, and industry support will advance proven solutions from pilots to scaled impact. This would unlock the estimated $2 billion in blended capital over the next eight years, the Institute claimed.
- The Fashion Climate Fund is a bolder, more urgent, and holistic evolution of AII's existing programme, Clean by Design. Since 2018, Clean by Design has aggregated and deployed over $12 milion in philanthropic funding into energy efficiency programs for factories, which has unlocked $175 million in financial capital in addition to environmental savings.
- The AII will launch a Climate Solutions Portfolio to serve as an online registry of early, mid- and late-stage initiatives that tackle supply chain greenhouse gas emissions. Fund partners and strategic advisors will use the portfolio as a tool for industry alignment and decisions on programmes and grants.
- The AII is also in discussion with additional lead partners, with the goal of each fund committing $10 million over eight years. This, the Institute said, is the first step of a larger industry and capital markets commitment to reach science-based targets.
