How H&M Group, DBS Support Suppliers Fighting Climate Change
H&M Group is taking steps to help decarbonize the fashion supply chain.
The Swedish fast-fashion firm this week announced that it is partnering with Southeast Asia’s biggest bank to create a green loan program supporting climate action in the fashion sector. Alongside financial services group DBS, H&M has created a collaborative financing solution that will bolster carbon-cutting measures across the value chain.
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The financing tool will support the Monki owner’s commitment to zeroing out emissions by 2040, complementing efforts to tackle greenhouse gas (GHG) reduction from manufacturing operations. Known as the Green Fashion Initiative, the project has enabled suppliers to adopt technology and processes that mitigate the need for fossil fuels.
With new financing options, factories and other players across the fashion value chain can access capital from DBS as well as technical support from Guidehouse, a corporate consultancy that helps companies with growth, sustainability initiatives and regulatory compliance. Suppliers engaged in H&M-approved factory upgrades and GHG emission reduction activities will receive “highly favorable” financing terms.
“H&M Group has been engaged in climate mitigation for years and we continuously push ourselves to demonstrate climate leadership within our industry,” H&M head of green investment Ulrika Leverenz said. While the industry has been espousing its desire to turn the tide when it comes to climate impact, “we also see that impactful climate action requires collaborative financing.”
“For us, sustainability investments are not only a responsible approach but a strategic necessity for future success,” she added.
“Accelerating net zero for supply chains requires the rapid scaling of low-carbon technologies and new, innovative financing models to drive adoption,” added DBS group head of institutional banking Tan Su Shan, noting that the new tool is a “prime example” of how organizations can positively impact suppliers.
“DBS is excited to be harnessing our extensive network in Asia, in partnership with H&M Group, to provide access to sustainable financing in a practical way—by directly funding factory upgrades to help suppliers improve their energy efficiency and decarbonize,” she continued. The bank has championed social enterprises and businesses focused on environmental impact through its philanthropic arm, and developed sustainability focused collaborative financing programs with PVH Corp. and Reset Carbon.
This week, DBS and H&M representatives will attend the 28th Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC COP28). The climate event will draw heads of state and political leaders as well as climate experts to Dubai. H&M said it hopes to engage in conversations about emerging climate policies, industry best practices and solutions that could facilitate change in the fashion sector.
The partners will also speak to the collaborative financing program’s first successful supplier relationship this year. H&M and DBS facilitated a loan for India-based manufacturer Raj Woollen Industries, which funds capital expenditures to reduce Scope 3 GHG emissions. The loan enabled the yarn and textile supplier to install solar panels as well as energy-efficient motors and water-saving technology at its factory in the city of Panipat’s industrial park.
Raj Woollen managing partner Sumeet Nath said the manufacturer has been working to curb its environmental impact through clean energy and resource conservation. “This joint project with H&M Group, Guidehouse, and DBS has been a successful combination of expert energy assessment, close support in selecting the most suitable technology solutions, and an attractive financing model,” he added. “We are confident that this will ensure the highest possible results in our decarbonization journey, and we are grateful for this partnership.”
In its statement this week, the COS, Weekday, & Other Stories, H&M Home and Arket owner said it “identifies collaboration as a cornerstone of its climate action framework and collaborative financing efforts as the only way to create rapid change at scale.” Joint financing helps the fashion supply chain to scale its sustainability initiatives, but the clothing giant said it is incumbent upon brands and investors to “share the financial responsibility” of addressing carbon emissions by supporting suppliers.
