Ferragamo, Under Armour Among 12 Fashion Brands Inking Solar Power Alliance
Twelve big brands have joined together to sign a first-of-its kind collective virtual power purchase agreement (CVPPA), which will help meet their demand for renewable energy.
The agreement gives participating brands, including Bally, Capri Holdings, Ermenegildo Zegna Group, Farfetch, Ferragamo, Kering, Prada Group, PVH Corp., Ralph Lauren, Tapestry, Under Armour, and Zimmermann, access to solar energy produced by Lightsource bp, enabling them to decarbonize their operations.
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The brands involved have something in common: they are all members of The Fashion Pact, a nonprofit working toward increased commitment to sustainability throughout the industry. It first debuted at the G7 Summit in 2019.
Per the agreement, Lightsource bp will produce 160,000 MWh annually — the equivalent of eradicating the CO2 created by charging nearly 14 billion smartphones — over the course of 10 years, said Eva von Alvensleben, The Fashion Pact’s executive director and secretary general.
According to a release, the power will come from Lightsource bp’s solar projects in Spain. In March, the company committed 1.2 billion euros ($1.27 billion) to bolstering its capabilities there. The company recently signed deals with resale platform eBay and technology giant Microsoft.
A Lightsource bp spokesperson declined to disclose the financial details of its CVPPA with The Fashion Pact.
Members of The Fashion Pact have pledged to use 50 percent renewables in their business by 2025 and 100 percent by 2030. According to von Alvensleben, this purchase agreement marks a step in the right direction.
“The CVPPA is a successful example of how the power of the collective can effectively make the industry move forward. Concretely, it will help brands achieve a reduction of their Scope 2 emissions while adding more renewable energy to the European grid,” she said. “It is also driven by an inclusive approach for smaller and medium-sized companies to join forces.”
Lightsource bp said its new agreement with The Fashion Pact’s members could also show other companies that an agreement of this kind is possible.
“Agreements of this kind… pave the way for other fashion brands and other sectors with lower power demand to decarbonize their energy supply mix, by demonstrating how creating a collective initiative can make the difference in reaching their net-zero targets and allowing [those] with a low energy consumption, who otherwise wouldn’t be in this position, to purchase renewable power,” the Lightsource bp spokesperson told Sourcing Journal.
The Fashion Pact does not have plans to expand the initial CVPPA to include other members, von Alvensleben said.
“It would have been unreasonable to create a consortium for a PPA as large as our member base, since multi-buyer power purchasing agreements usually have three to five members. Our CVPPA already shows the scale of the renewable energy commitment of our members by having 12 brands (the largest one in the industry),” von Alvensleben told Sourcing Journal. “With this example of a collective VPPA, we will work towards promoting similar consortiums by sharing the lessons learned and supporting any members interested by guiding them through the different steps of a collective agreement.”
While some brands involved in The Fashion Pact may join other CVPPAs in the future, others elected not to join the CVPPA for a number of reasons. In some cases, they’ve already figured out how to ink deals with other suppliers.
Helena Helmersson, CEO of Swedish fashion brand Hennes & Mauritz (H&M), has served as the co-chair of The Fashion Pact since May. The CVPPA efforts began before her arrival, and H&M did not sign the CVPPA.
An H&M spokesperson said that’s because the retailer has other commitments in place.
“For several years, H&M Group has been exploring ways to contribute to adding more renewable electricity into the world’s power grids through PPAs with solar and wind farms. Examples for our work within this area are the power purchase agreements that H&M Group has signed with Neoen and Alight for a new solar park in Sweden (90 MWp) as well as Matrix Renewables earlier this summer. Considering fashion’s environmental impact, we see great value in moving away from just using certificates to contributing to more clean energy,” the spokesperson said.
H&M announced Thursday it had issued its first green bond.
Lightsource bp said it could work on deals with other companies going forward, given its experience brokering singular and collective PPAs.
“As Lightsource bp is currently progressing over 60 gigawatts (GW) of utility-scale solar projects at different stages of development across the globe, there will be the opportunity for other collectives, corporations and utilities seeking to reduce greenhouse gas emissions associated with their electricity supply to partner up,” the spokesperson said.
The CVPPA has been in the works for some time. The Fashion Pact first announced it would work on the project in December of 2022. It worked with law firm Baker McKenzie and consultancy firm Guidehouse to ink the final deal.
For von Alvensleben and the members involved, working on the deal represented an opportunity to learn.
“PPAs are complex structures that require stakeholders across sustainability, procurement, finance, legal and accounting to align. We realized that a large amount of capacity building was needed in order for companies to be able to make the decision to participate. We brought in industry experts for a series of educational webinars and office hours to answer questions from member participants, creating a common understanding,” von Albensleben explained.
“It was also a decisive advantage to have CEO leadership and commitment throughout the project,” she added. “It allowed us to overcome internal roadblocks and achieve key milestones during the negotiation on time.”
