HSBC Backs Aii’s Decarbonization Grant Fund
The Apparel Impact Institute (Aii) announced Monday that it has added a new funder to its Fashion Climate Fund: HSBC.
The international banking giant has committed an initial $4 million over the next three years to the $250 million fund, which aims to helps companies in the apparel and footwear space to decarbonize their supply chains.
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Boston Consulting Group research from 2021 counts the fashion industry as one of the biggest climate offenders. The report states that eight industries’ supply chains bear responsibility for over 50 percent of global emissions. Fashion’s supply chains rank third out of eight, behind only food and construction.
Research from Fashion for Good and Aii states that the industry needs about $1 trillion to finance a net-zero sector by 2050. Garnering that much funding, the report notes, requires collaboration from financiers, manufacturers, brands, philanthropy and government.
With the Fashion Climate Fund, the latter nonprofit plans to serve as part of the way forward where funding is concerned. HSBC’s pledge adds another marquee name to the list of donors.
The Levi Strauss partner’s initial funding adds to what other major Fashion Climate Fund players have already committed. H&M Group, the H&M Foundation, Lululemon, The Schmidt Family Foundation, PVH Corp. and Target have all dedicated at least $10 million to the climate vehicle.
The investment does not come as HSBC’s first foray into sustainability. It has previously partnered with PVH Corp. to offer funding to its suppliers based on environmental targets. It has also worked with the International Union for Conservation of Nature (IUCN) on low-carbon development in Sri Lanka, among other initiatives.
Lewis Perkins, Aii’s president, said the bank’s newest sustainability investment could help tackle some of the fashion and apparel industry’s most pressing problems.
“HSBC continues to show its support in critically needed sustainable supply chain finance to fund the textile, apparel and footwear industry’s transition to net zero,” Perkins said in a release. “We estimate the total cost for the decarbonization of this industry to be $1 trillion between now and 2050—the majority of which will go towards capital investment in the supply chain.”
Per the release, HSBC’s support will fund regional research projects to spot and solve financial barriers, bankroll market insight reports and create connections between key stakeholders in the fashion and apparel sector.
Aii also announced it is working with its partners, including HSBC, to build a suite of financial tools to offer suppliers greater access to affordable capital for decarbonization projects.
The Aii-backed climate finance solutions marketplace portfolio will include two financing initiatives at its outset. Per the release, that could be facility loan guarantees and blended capital supplier funds. In order to operationalize the project, the Aii has created three working groups, which include stakeholders like BNP-Paribas, Guidehouse and Standard Chartered.
In September, Aii announced the first batch of companies receiving Fashion Climate Fund grants, which included BluWin, GIZ, Made2Flow, Precision Development and PwC. The unintentional theme of the selected companies’ proposed projects was energy efficiency.
Other areas of interest for future fund-backed companies include next-generation materials, material efficiency, better and preferred materials, thermal heat innovations and clean energy.
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