Aii and its lead partners have established the Fashion Climate Fund to drive collective action to tackle fashion's supply chain emissions. By leveraging a first-of-its-kind collaborative funding model for fashion between philanthropy and corporate entities, the fund could unlock an estimated $2 billion in blended capital across various asset classes, including debt and equity, to help meet the industry’s goal to halve carbon emissions by 2030, Aii said in a media statement.

While hundreds of fashion brands and retailers have pledged support to the Science Based Target Initiative (SBTi) to reduce their supply chain greenhouse gas emissions, large barriers to action remain: According to Aii and World Resources Institute’s recent report, Roadmap to Net Zero: Delivering Science Based Targets in the Apparel Sector, 96 per cent of the fashion industry's emissions come from third-party farms and factories that are shared across the industry and deemed too risky for brands, retailers, or traditional sources of capital to make necessary upgrades and overhauls.

Following the report’s roadmap, and the financial modelling insights set in Aii and Fashion for Good’s report, Unlocking the Trillion-dollar Fashion Decarbonisation Opportunity, the Fashion Climate Fund will provide programmatic funding for supplier interventions across the value chain: transitioning to renewable electricity, accelerating next-generation materials, scaling sustainable materials and practices, eliminating coal in manufacturing, and improving energy efficiency. Aii has created strategic collaborations with Textile Exchange, Fashion for Good, and Solidaridad, among others, to address those focal areas.

Through Aii’s unique model, philanthropic funds will provide the necessary form of capital to accelerate and de-risk pre-seed and pilot innovations, and industry support will advance proven solutions from pilots to scaled impact. This would unlock the estimated $2 billion in blended capital over the next eight years, according to Aii.

The Fashion Climate Fund is a bolder, more urgent, and holistic evolution of Aii’s existing programme, Clean by Design. Since 2018, Clean by Design has aggregated and deployed over $12 million in philanthropic funding into energy efficiency programmes for factories, which has unlocked $175 million in financial capital in addition to environmental savings.

To best support management of solutions and apply use of funds, Aii will launch a Climate Solutions Portfolio to serve as an online registry of early, mid- and late-stage initiatives that tackle supply chain greenhouse gas emissions. Fund partners and strategic advisors will use the portfolio as a tool for industry alignment and decisions on programmes and grants. Major stakeholders for this tool, which will go into Beta development in 2022, include brands, retailers, suppliers, solution providers, innovators, foundations, government grant-makers, private equity and banks.

“By aligning industry leaders and climate-focused philanthropists behind scalable solutions, the Fashion Climate Fund opens a pathway for greater collaboration and cross-pollination of solutions, facilitating greater investment and stronger collective action toward the industry goal of halving emissions by 2030, while also seeking climate justice for the citizens and communities where our fashion is made. We are greatly encouraged by the leadership and decisiveness shown today from these lead partners and honoured to play this role as we open up this first phase of the project finance,” Lewis Perkins, president of Aii, said in a statement.

Fibre2Fashion News Desk (GK)