Gemma Verhoeven
Impact Investment Team Lead Good Fashion Fund
We aim to widely share our results and lessons learned
The Good Fashion Fund is a one-of-its kind initiative to create systemic change in the textile and apparel industry by financing the implementation of highly impactful and disruptive production technologies in Asia. The Fund is managed by FOUNT, which provides investment and fund management expertise in emerging countries as well as industry knowledge, and cooperates with Fashion for Good, (the Sub Advisor) which provides unrivalled industry network and technology knowledge. In an interview with Fibre2Fashion, the Fund’s Impact Investment Team Lead Gemma Verhoeven talks about the organisation’s activities and how it helps the textile industry go sustainable.
What is the Good Fashion Fund?
The Good Fashion Fund is an impact investment fund, initiated by Laudes Foundation and Fashion for Good. It is a first-of-its-kind fund as it has a focus exclusively on enhancing sustainable technology solutions in the textile and apparel industry. The fund provides $1 million to $2.5 million loans to manufacturers in the apparel supply chain to procure impactful and disruptive production technologies. Each such investment should lead to a minimum of 50 per cent reduction in consumption of either energy, water or materials (i.e., raw materials or chemicals or waste generated), as well as be economically interesting. The impact will be quantified and measured against a baseline. The fund integrates social improvements in its action plan, focusing specifically on workers’ rights, gender equality and a safe and healthy working environment. Following the overall circular approach all five goods are then covered: Good Energy, Good Water, Good Materials, Good Lives and Good Economy. Besides concrete impact on investee companies, the fund has the objective to create systematic change in the sector. We aim to widely share our results and lessons learned in order to motivate and encourage manufactures, brands and other stakeholders to invest in sustainability.
How does the funding work and who can apply for funding?
The fund manager is FOUNT, with Fashion for Good as technical advisor. The funding consists of a senior USD loan, and the terms will be documented in a loan agreement. The purpose of the loan will be documented as well and is specifically to be used by the manufacturer to fund the procurement of impactful equipment. Any party meeting the funds objectives and criteria can apply. Based on initial exchange of information, the fund manager will assess eligibility. Subsequently a thorough onsite due diligence process follows to confirm and verify results, with renown advisors such as Fairwear Foundation and Sphera. We seek a partnership with our investee companies, whereby both parties invest time and resources for optimal results and continuous ambitions.
What kind of companies or projects does the Good Fashion Fund plan to fund?
We are constantly in dialogue with interested parties active in the textile and apparel supply chain to see if there is a match. Important criteria are:
I.planning investment that is creating aspired impact (>50 per cent savings),
II.meeting environmental and social standards,
III.meeting financial criteria in terms of profitability and debt service capacity.
What is the total amount of funds that are granted annually for funding?
The maximum amount of one loan is $2.5 million (at the initiation of the facility this was $5 million). We do not have annual thresholds. The current overall fund size is close to $19 million. By demonstrating the success of our investments, we aim to raise more funds in the future.
Are there any funds that have been allotted to a company? If yes, please share a few details and Good Fashion Fund’s role in it.
In 2021 Q4, the Fund closed its first deal in India with Pratibha Syntex Limited. Currently four transactions have been approved to be closed later this year. The investments are diverse and relate to enhancement of ETP facilities, adaptation of state-of-the-art spinning equipment, new installation or replacement of washing unit equipment, and expansion of unique waste-to-yarn recycling facility. The Good Fashion Fund not only provides the loan but also agrees an environmental and social action plan with all counterparts in order to establish the plan of improvements for the period to come following the investment.
What progress has been made as a result of the fund?
In the case of Pratibha Syntex Limited, significant savings have been accomplished in all three Goods—energy, water and materials. Pratibha has made great progress on the agreed environmental and social action plan, and moreover identified further ambitions in this regard for the future in their Vision 2025 sustainability strategy.
How do you monitor the implementation and progress after funding?
The investee companies report monthly during project implementation and quarterly once equipment has been installed. Every year we plan an onsite monitoring visit to confirm and verify the results. The Good Fashion Fund is being supported by a Development Evaluator team to track the results but more importantly to learn from and share those results to encourage mainstream adoption of impact technologies and drive awareness on sustainable technology opportunities and increased Good Fashion practices.
How has the Good Fashion Fund benefitted the sustainable textile industry?
The Good Fashion Fund creates direct impact by enabling manufacturers to invest in the production process and make it more sustainable both environmentally and socially. Investments relate to capital-intensive and high-impact equipment, often used in the wet processing like dyeing, washing, printing and finishing as well as wastewater treatment, generating a positive impact on the workforce and surrounding ecosystems. On the social side, administrative and strategic systems and policies have been implemented, trainings have been enhanced and increased and female supervisors are being promoted to name a few examples. Together with the Development Evaluator we are working on the indirect impact to the sector as a whole by creating case studies, lessons learned and engaging with several initiatives in the sector.
Published on: 21/12/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
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