Want to Fund Your Climate-Saving Fashion Innovation? Here’s How.
The Apparel Impact Institute, better known as Aii, is looking for solutions that can decarbonize the fashion industry—and it’s willing to pay top dollar to shake up the status quo.
From now through the end of March, the multistakeholder organization is seeking a second round of applicants for the Climate Solutions Fund, the $250 million war chest that it’s mustered to identify, fund and scale verified carbon-squashing innovations with the financial backing of H&M Foundation, H&M Group, Lululemon, the PVH Foundation, Target, The Schmidt Family Foundation and, most recently, HSBC.
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While most ideas are welcome, Aii has developed a clearer-eyed focus following its inaugural grant-seeking round, as evidenced by the “grant-funding thesis” that it published in January. In it, the Cascale partner listed priority areas such as reducing process demand for energy, reducing energy losses, reducing (or even eliminating) greenhouse gas emissions from generating heat and electricity, minimizing waste in each production phase and maximizing the circular reuse of fibers, fabrics or chemicals.
The overarching goal, Aii said, is to find technologies that can help the industry slash emissions by half by 2030—not an easy order. It’s for this reason that innovations involving energy will be more heavily weighted.
“Based on the applications we received last year, we did quite a bit of drilling down into the details of what we’re looking for thematically and what a grant project looks like as well,” Pauline Op de Beeck, Aii’s environmental portfolio lead, told Sourcing Journal. “So that’s how we came to develop the grant funding thesis [with] the levers that we’re focusing on.”
Aii flagged low-priority areas, too, based on their ability to generate the returns it seeks at the pace it wants. It won’t be accepting, for instance, projects based on downstream, consumer-focused circularity solutions such as repair and resale. Neither is it likely to green light programs involving new materials, traceability tools, carbon capturing, life cycle assessments and training for capacity development.
If this is a different approach than it employed last year, it’s because the Clean by Design promoter wants to zero in on applications that can drive the highest return on its investments, which can range from $50,000 to $250,000 per year, depending on the project. This means that Aii will evaluate solutions based on their effectiveness, meaning how much carbon reduction they can offer relative to a typical industrial baseline; their reach, i.e., the extent of the supply chain they can influence at scale; and their scalability, or how quickly they can be adopted sector-wide by 2030.
The Climate Solutions Portfolio Advisory Council, which includes experts such as environmental scientist Linda Greer, Textile Exchange Climate+ director Beth Jensen, Lululemon senior director of product sustainability and environment Crispin Wong and Aii’s chief impact officer Kurt Kipka, might have their own wishlists, Op de Beeck said, but anything that can deliver measurable CO₂ reductions is gold.
“We’re really looking for grant projects that are firstly, going to reduce emissions over the course of the project—that’s really crucial for us,” she said. “And secondly, there should be a clear thesis in the application that explains why this funding is necessary. What are going to be the learnings over the course of this project that are going to enable that solution to advance on [its] path to scale? That’s something that we want to share with the sector. It’s very important that applicants are not just trying to keep things to themselves.”
To set up applicants for success, the council has developed the so-called Ready Reckoner: Solutions Impact Evaluator, a tool that uses the baseline energy use and CO₂-equivalent emissions for the most widely used materials and processes to compare the aforementioned effectiveness, reach and realistic scale-up of the proposed solutions and, in so doing, allow for a more consistent appraisal process.
“Through this tool that they fill out, we can then see what the [maximum] reduction potential is according to our baseline; [whether] it’s applicable to 2 percent of the industry versus 0.01 percent of the industry,” Op de Beeck said. “It also helps us to evaluate different applications against each other in an apples-to-apples way, which is obviously challenging to do when you have applications coming across different tiers.”
It’s a data-driven process, she said, one that ultimately seeks to support projects that will not only cut the most emissions in the immediate term but in the future.
The call for innovators comes at a time when many fashion firms are struggling to meet their climate commitments. According to watchdog group Stand.earth, most clothing purveyors are “still not on track” to meet the 1.5 degrees Celsius pathway or their commitments to the United Nations Fashion Charter. Many of their emissions have in fact increased, “casting doubt on fossil fuel phase-out prioritization.”
Earlier this month, the Science Based Targets initiative removed the net-zero commitments of nearly 240 companies, including apparel sellers like Gap Inc., Marks & Spencer, Prada and New Look, noting that they had “expired.“ In a survey of its members, half of respondents said that the challenge of tackling Scope 3 emissions, meaning those stemming from their supply chain rather than owned operations, was a barrier to setting net-zero targets The organization is reviewing its Corporate Net-Zero Standard, which will be revised in 2025.
“This update will incorporate the latest climate data and will also consider how progress against targets is tracked through consultations and pilot,” it said in a report. “Reaching net-zero will require collaborative efforts to transform the global economy, transcending company boundaries, sectors and supply chains—it will affect all companies and all people.”
Transformation is what the Climate Solutions Fund wants to trigger, which is why it’s homing in on textile and apparel production’s less sexy but most impactful lower tiers. Op de Beeck said that the first cohort of grantees, announced in September, is progressing smoothly, with most of them having reached their full facility recruitment. Three of the five projects are expected to conclude at the close of 2024, and Aii will provide updates in the following year’s impact report.
One thing that applicants should keep in mind is the life expectancy of their project, which shouldn’t be a “one-time thing” but rather a solution that extends beyond the grant period. Fashion has a tendency to be stuck in pilot mode, so it’s critical that the innovations have legs beyond the initial hype. Most of all, Op de Beeck said, the solutions need to “move the whole sector forward.”
“We’re looking at the big picture of a solution and how the grant project can take it to that next level,” she said. “That’s really the key takeaway.”
