Despite over 400 companies committing to science-based targets, the funding for decarbonizing the apparel sector's production - where over 80% of emissions originate - largely falls on manufacturers. This creates a significant gap in collective action and equitable financing.
Commissioned by Artistic Milliners, Epic Group, MAS Holdings, NITEX, TAL Apparel, Pactics Group, Simple Approach, and supported by GIZ, FABRIC Asia Project and Transformers Foundation, the report reveals the urgent need for a transformative approach to funding decarbonization in the apparel sector, exploring funding needs and constraints, current funding options, as well as proposed solutions for innovative financing models.
This report has been endorsed by the International Apparel Federation and Fashion Producer Collective.
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The Aim of this Report is to Answer:
1. What types of funding needs do manufacturers have for decarbonisation and what constraints do they face?
2. What options do manufacturers seeking to fund decarbonisation currently have? Which gaps do they or don’t they fill?
3. What are innovative financing models the sector should consider to equitably and effectively address these gaps?
Recommendations:
The following recommendations aim to foster collaboration, bring a strong focus on value chain decarbonisation and to enhance accessibility, availability and affordability of funding.
1. Policy advocacy that supports financing for decarbonisation. Manufacturers, in partnership with brands, need to lobby for government policies that support decarbonization, including financial incentives like subsidies and regulatory frameworks.
2. Impose Transparency and Reporting Standards. The industry must commit to strict sustainability reporting, showing how decarbonization financing is being allocated across the value chain.
3. Establish the Fair Climate Fund. A collective effort is needed to pilot and scale this fund, echoing the principles of Fairtrade, to support comprehensive industry decarbonization.
4. Increase the availability, accessibility and affordability of financing schemes for sector decarbonisation. It's crucial to increase the availability, accessibility, and affordability of financing, especially for SMEs and manufacturers in developing countries. This includes low-interest rate funding and risk underwriting.
5. Seize the moment by commercial banks and private sector lending institutions. Commercial banks are called upon to allocate a fixed percentage of their lending portfolio to finance decarbonization in the apparel industry, setting a new sustainability standard in finance.
6. Change the narrative. Decarbonization shouldn't be seen as solely a manufacturer's responsibility. It's a value chain challenge that requires collective action and innovative solutions.
7. Create an environment that facilitates value chain decarbonisation. Decarbonization: Brands and retailers must reevaluate their relationships within the value chain, mitigating business risks and fostering a positive environment for sustainability investments.
This report is endorsed by:
