A new white paper developed by H&M Group in collaboration with HSBC, Ernst & Young AB, and the Apparel Impact Institute, outlines groundbreaking financing solutions to decarbonise fashion supply chains.
INDUSTRY-WIDE EMISSIONS CHALLENGE
Responsible for up to 10 percent of global greenhouse gas (GHG) emissions, the fashion industry faces significant challenges in terms of reducing its environmental impact due to the dispersed and multi-tiered nature of its supply chains.
The new white paper from H&M, titled Accelerating Fashion Decarbonisation – An Efficient Approach to Unlocking Corporate Value and Financing the Supply Chain Transition, highlights the urgent need for collaboration and innovative financing models to overcome these hurdles and achieve decarbonisation targets across the industry.
It emphasises the importance of collective action and shared investment when it comes to deploying and scaling solutions, accelerating the renewable transition, and helping to ensure the industry stays on track with net-zero goals as outlined in the Paris Agreement.
PROPOSING FINANCE SOLUTIONS
Proposing several financing models, the white paper addresses the fragmented and complex nature of fashion supply chains.
Blended and collaborative finance models, for example, are recommended to bundle multiple supplier-level decarbonisation projects into a single blended finance vehicle, making them more attractive to investors.
Sustainable supply chain finance, meanwhile, sees banks offering early payments to suppliers based on credit standing and enhanced by sustainability performance.
The models proposed aim to pool resources, align incentives, and create scalable solutions to overcome the challenges posed by fragmented supply chains and enable effective decarbonisation across the industry.
As such, the paper serves as a resource for finance leaders by offering practical guidance on sustainable finance solutions for decarbonising supply chains with different risk-sharing and return profiles.
EXECUTIVE INSIGHTS
“The cost of inaction on climate change is simply too high – for the planet and for our industry.
“Chief Financial Officers (CFOs) have a fiduciary responsibility to safeguard long-term business resilience, not just short-term profitability.
“As CFOs, our role is not to debate whether sustainability targets should be met, but to ensure how they are delivered.
“This requires a conversation combining cost efficiency and value creation: reducing risk, strengthening resilience, and safeguarding long-term corporate value.”
– Adam Karlsson, CFO H&M Group
“Fashion has a unique opportunity to work together to solve these challenges. We are seeing growing momentum for industry-wide collaboration and an openness to explore new financing models that can help accelerate the green transition.
“Many industry leaders already recognise that supply-chain decarbonisation not only strengthens resilience but also builds long-term confidence, and they understand that this is the moment to act.
“The case studies in this paper show that the foundations are already in place, and the ongoing initiatives signal that this is the time to strive for greater impact and global collaboration.
“Fashion brands must be active stewards of their value chains, not just customers of them.”
– Anna Ryott, Nordic Chief Impact Officer and Partner, Ernst & Young AB
“Investing in climate mitigation today can help to reduce long-term costs and business risk.
CFOs can play a critical role by embedding climate risk into capital allocation decisions and championing collaborative financing models.”
– Clair Smith, Head of Sustainable Trade Solutions at HSBC
This article was produced by the editorial team at Sustainability Outlook and published as part of the Outlook Publishing global network of B2B industry magazines.
Outlook Publishing delivers industry insights, company stories, and sector coverage across sustainability, energy transition, manufacturing, mining, construction, supply chains, healthcare, and food production.
Sustainability Outlook provides ongoing coverage of organisations and developments shaping the global sustainability landscape.
