H&M Group A Frontrunner In Collaborative Financing For Climate Action

H&M Group,in collaboration with DBS, Southeast Asia's largest bank, has launched a green loan programme to support the decarbonisation of fashion supply chains. The programmme is designed to facilitate the decarbonisation of apparel supply chains and is considered the first of its kind in the industry.

The initiative highlights H&M Group's efforts to promote sustainable development in the fashion industry through collaborative financing solutions. This week, Dubai will host the 28th Conference of the Parties of the UNFCCC (COP 28), a global decision-making platform for climate issues. The conference will bring together climate experts, political leaders, heads of state, civil society, and youth delegates to discuss and address challenges related to climate change.

The upcoming conference strives to capitalise on past achievements and set the stage for future endeavours in the fight against climate change. H&M Group and DBS representatives will attend the event to discuss the latest policies, share best practises, and explore innovative solutions.

Ulrika Leverenz, Head of Green Investment at H&M Group, states that the company has been working on mitigating climate change for years and aims to be a leader in the industry regarding climate action. While the fashion industry is trying to reduce its negative impact on the environment, Leverenz emphasises that effective climate action requires collaborative financing. She also notes that investing in sustainability is not only responsible but crucial for the company's future success.

H&M Group is committed to achieving net-zero CO2 emissions by 2040 and has been taking steps to make funding available to reduce greenhouse gas emissions beyond its own supply chain. The Green Fashion Initiative programme by H&M Group aims to fund supplying factories to invest in energy-efficient technologies and processes that reduce greenhouse gas emissions in the fashion industry.

A collaborative finance tool has been created to boost green initiatives in the supply chain. The programme offers suppliers access to financing from DBS and technical support from sustainability consultant Guidehouse to help them reduce their climate impact by upgrading their factories. Unlike traditional banking solutions that indirectly encourage green activities, this programme directly provides financing with highly favourable terms to suppliers for specific GHG emission reduction activities approved by H&M Group.

To achieve net zero in supply chains, it's necessary to rapidly expand the use of low-carbon technologies and implement innovative financing models. One such model is the collaborative finance tool, which can positively impact suppliers. In partnership with H&M Group, DBS is leveraging its Asian network to offer practical access to sustainable financing. This involves directly funding factory upgrades to help suppliers enhance their energy efficiency and reduce their carbon footprint.

In a recent development, a collaborative finance tool successfully funded a manufacturer in India to reduce their scope of three greenhouse gas emissions. This was achieved by providing a loan to supplier Raj Woollen, which was used to install solar panels, energy-efficient motors, and water conservation technologies. This will help conserve resources and reduce carbon emissions.

Raj Woollen Industries strives for sustainable and environmentally friendly manufacturing processes, and to minimise its ecological impact, it utilises eco-friendly practises. A key goal is to reduce the effect of production on the environment. Working alongside H&M Group, Guidehouse, and DBS, this joint project has reported significant success. Expert energy assessments and support in selecting suitable technology solutions backed by an appropriate financing model have ensured optimum results in terms of decarbonisation.

H&M Group acknowledges the complexity and scope of the climate challenge and views collaboration as a cornerstone of its climate action framework. It considers collaborative financing efforts as the only way to create rapid change at scale. Existing and under-developed collaborative financing models can build an ecosystem of solutions.

However, further commitment from brands and investors is needed to co-invest and share the financial responsibility of a project to provide more alternatives to support suppliers in their decarbonisation journey. H&M Group invites other brands and financial institutions to join its initiative, and their COP28 delegation looks forward to meeting with involved stakeholders at the conference to continue the dialogue.