The H&M Group, in partnership with Southeast Asia’s largest bank, DBS, has unveiled a groundbreaking green loan program aimed at catalyzing what it describes to be the “necessary” decarbonization of fashion supply chains.
The initiative, the H&M Group explains in a statement announcing the move, seeks to transform the apparel sector by providing targeted financial support to suppliers committed to reducing their carbon footprint.
“We see that our industry is committed to tackle its negative climate impact. But we also see that impactful climate action requires collaborative financing. For us, sustainability investments are not only a responsible approach but a strategic necessity for future success,” Head of Green Investment at H&M Group Ulrika Leverenz said.
The group’s new collaborative finance tool provides suppliers with financing from DBS and technical support from sustainability consultants Guidehouse. It was developed to “help accelerate the adoption of green initiatives across the supply chain.”
“Unlike traditional banking solutions which seek to encourage such green activities indirectly, this programme directly provides financing with highly favourable terms to suppliers for specific GHG emission reduction activities, as approved by H&M Group,” H&M explains.
The group also sheds light on the first successful transaction, completed through the collaborative finance tool earlier this year, that helped a manufacturer in India to reduce scope 3 greenhouse gas emissions.
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The program, with the help of loan supplier Raj Woollen, “financed the installation of solar panels, energy-efficient motors, as well as water conservation technologies to conserve resources and reduce carbon emissions.”
“This joint project with H&M Group, Guidehouse, and DBS has been a successful combination of expert energy assessment, close support in selecting the most suitable technology solutions, and an attractive financing model,” said Sumeet Nath from the Raj Woollen Industries, adding:
“We are confident that this will ensure the highest possible results in our decarbonisation journey, and we are grateful for this partnership.”
In its press release, the H&M Group writes that it “identifies collaboration as a cornerstone of its climate action framework and collaborative financing efforts as the only way to create rapid change at scale.”
While recognizing that existing models and those in development have the potential to build an ecosystem of solutions, the H&M Group stresses the need for increased commitment from brands and investors to co-invest and share the financial responsibility of projects, encouraging other brands and financial institutions to join its initiative.
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — Featured Photo Credit: Tom Fisk.
