HSBC Pledges $4 Million to Apparel Impact Institute’s Fashion Climate Fund; Walmart Foundation Grants $1.5 Million to Accelerating Circularity: Short Takes

Rhonda Richford
·6 min read
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BANKING ON IT: Global bank HSBC is joining the Apparel Impact Institute’s Fashion Climate Fund, pledging $4 million over the next three years to finance projects reducing supply chain emissions.

Aii’s FCF is a $250 million hybrid fund that combines contributions from brands and manufacturers, as well as philanthropic donations. Lululemon, H&M Group, PVH, and Target Corporation are current corporate backers, as well as H&M Foundation and The Schmidt Family Foundation, cofounded by former Google chief executive officer Eric Schmidt.

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The fund was launched in June, 2022, with those backers committing to contributing $10 million over eight years to target fashion’s supply chain. It aims to reach $100 million in philanthropic donations, and $150 million each from brands and manufacturers, to unlock and additional $1.6 billion in debt and equity financing.

The London-based HSBC, with a global market capitalization of $148 billion and assets of over $3 trillion, is the first bank to join the fund. The new partnership was announced Sunday, during a panel held at COP28’s Goals House.

“We’re really trying to change the market around sustainable finance, ensuring that suppliers are getting the right kind of financial tools or funding available that make this more incentivized for suppliers,” said Aii president Lewis Perkins, of the group’s overarching strategy.

While the suppliers will do the heavy lifting of securing financing and making infrastructure upgrades, Aii aims to “make it more equitable” by both industry and region.

The Rockefeller Foundation is also joining the partnership to support stakeholder engagement as Aii ramps up their activations.

The idea is to create better terms for suppliers to upgrade their facilities. The goal is to start at the facility level with brands’ Scope 3 suppliers, such as renewable electricity and waterless dyeing at textiles mills and processors, with the intention to extend to the Scope 4 farm and raw material level later on.

Aii is looking at facilities that need “bigger capital investments.” Perkins said there is a “bottleneck, a barrier to incentivize suppliers” to take on the debt to finance these big infrastructure investments.

While the focus will be on upgrading suppliers that work with Aii’s brand partners, such as H&M, the programs will not be exclusive. Perkins added that since suppliers also provide to a number of brands, there will be a lot of overlap to brands outside the Aii universe. “Ultimately Aii is trying to support the suppliers on their decarbonization journey and provide funding or opportunities for funding that doesn’t have to just be attached to the suppliers of these brands,” he said. “That’s where there’s a tailwind that’s happening for Aii in the industry.”

The group also plans to add more brands to its network, as lead partners of the fund or at lower contribution levels to be able bring smaller brands on board.

The Aii’s “Roadmap to Net Zero” report, updated in June, noted that material processing is 53 percent of the industry’s emissions, and raw materials processing contributes 15 percent.

“We’re in the 100 day sprint to develop and put out some specific [financial] vehicles,” said Perkins, and will bring together stakeholders from 22 brands, suppliers and banks to develop these new programs blending capital all the sectors contributing. Specific announcements are slated for the end of the first quarter or early second quarter next year.

As far as attending COP28, TK said that there was a more potent mix of brands and suppliers that were on the ground engaged outside of strictly fashion-oriented events to learn from different industries.

However he noted that fashion could – and should – take a bigger part in multi-lateral talks. “There needs to be more representation from brands in the future particularly as this is a great place to be connecting into country strategies, to be connecting with some of the big financial partners that are in development banks, commercial banks, and start to build out programs,” he said. “I think a better COP next year would be to have some more organized participation from the fashion brand retailers, then more suppliers will come.”

WAL TO WALL: Non-profit group Accelerating Circularity has received a new round of backing from the Walmart Foundation to the tune of $1.5 million.

The group’s main mission is to create textile-to-textile circular supply chains and keep used textiles out of the waste streams.

“We are fortunate to have the support of the Walmart Foundation to do this next level of work and move closer to realizing our vision of a world in which textiles are no longer wasted,” said Accelerating Circularly president Karla Magruder. “We aim to broaden our engagement as we continue to build the business case for circularity and invite new industry collaborators to join us in this endeavor.”

The follow-up $1.5 million will be used to look at the technical feasibility of textile-to-textile recycling systems.

To that end it will develop a tool to create a waste hierarchy to optimize the flow of used textiles based on their potential to be reused or have the greatest potential for impact reduction, as well as work with brands and retailers in the U.S. to create better disposal and collection systems to keep clothes out of landfill.

Accelerating Circularity also wants to push forward on making textile-to-textile recycling viable by scaling up to what the industry needs to feed its production needs. The group will work on the development of additional circular fibers, yarns, and fabrics; and include strategic new geographies to establish sustainable circular supply chains across North and Central America.

It marks Accelerating Circularity’s second grant from the Walmart Foundation. The group received $1.2 million back in 2021, and has used the financial infusion to study fabric waste on the East Coast to identify gaps in the recycling and circular chains. The group also launched pilot programs in textile-to-textile recycling to show that it is scalable and can work, in both the U.S. and Europe.

VIRTUAL SIGNALING: Inditex rolled out virtual try on to its youth-skewed brand Bershka. The tech is a virtual fitting room called YourFit powered by 3DLook, which gives more accurate size and fit recommendations. The tech aims to reduce product returns from online sales.

“The fashion industry is undergoing rapid transformation, with a strong focus on sustainability and efficiency — and it is up to the industry giants to lead by example. Our virtual fitting room technology has the power to revolutionize the online shopping experience and contribute to the development of a greener, more sustainable, and efficient fashion industry by reducing the number of size-related returns and appeal to a younger camera-driven digital generation,” said 3DLOOK co-founder and chief commercial officer Whitney Cathcart.

The tech is voice guised and uses front and side photo of the customer, the solution’s precise 3D mapping technology and size recommendation engine then offer instant feedback on what size would fit best and provide a highly accurate and photorealistic virtual try-on experience.

Bershka is trailing the tech and it could be expanded to other Inditex brands in the future.

Elsewhere, Inditex’s fast fashion behemoth Zara expanded its pre-owned resale platform to 12 additional European countries including Austria, Belgium, Croatia, Finland, Germany, Greece, Ireland, Italy, Luxembourg, Portugal, the Netherlands, Slovakia, Slovenia and its home country of Spain. The service was launched in the U.K. in Oct., 2022, and expanded to France in Sept. 2023.

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