Swedish multinational fashion company H&M Group is taking a leadership position in establishing collaborative financing solutions that enable the necessary decarbonisation of fashion supply chains.
To realise this ambition, H&M Group, together with Southeast Asia’s largest bank, DBS, has initiated a collaborative finance tool – a first-of-its-kind green loan programme that facilitates supply chain decarbonisation in the apparel sector.
In line with the group’s ambition to achieve net-zero CO2e emissions by 2040, H&M Group has for the past years focused on making funding available to reduce greenhouse gas emissions across and beyond its own supply chain. Its Green Fashion Initiative enables supplying factories to invest in the technologies and processes needed to reduce energy demand and replace fossil fuels across the fashion industry.
To help accelerate the adoption of green initiatives across the supply chain, a collaborative finance tool was developed. Through the programme, suppliers get access to financing from DBS and technical support from sustainability consultant, Guidehouse, to embark on factory upgrades to decrease their climate impact.
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.
Earlier this year, the collaborative finance tool completed the first successful transaction with a manufacturer in India to fund capital expenditures to reduce scope 3 greenhouse gas emissions.
With the support of the 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.
Commenting on the transaction Sumeet Nath of Raj Woollen Industries said: “Raj Woollen is committed to its sustainability and environmental initiatives, and one key goal is to reduce the impact of our manufacturing processes on the environment. 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. We are confident that this will ensure the highest possible results in our decarbonisation journey, and we are grateful for this partnership.”