Why Bestseller and H&M Backed This Bangladesh Wind Project
Holly Syrett, impact programs and sustainability director at Global Fashion Agenda (GFA), would be the first to concede that a fashion advocacy group and a global leader in wind power development make for unlikely bedfellows—but only at first blush.
“We actually feel that there’s a lot of logic in that,” she said at the United Nations climate change conference known as COP28 in Dubai on Tuesday.
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Earlier that morning, GFA and Copenhagen Infrastructure Partners (CIP), together with Bestseller and H&M Group, announced plans to develop Bangladesh’s first utility-scale offshore wind project, part of a bid to increase the availability of renewable energy in one of the world’s preeminent garment manufacturing centers. Bestseller has pledged to underwrite the $100 million required to get things off the ground. Should feasibility studies, permit procurement and contracting work over the coming years pan out, roughly $1.3 billion in financing, distributed over construction debt, equity and industry investment, will be necessary before turbines are spinning at full tilt off the coast of Cox’s Bazar sometime in 2028.
Despite the multiple hedges—plenty can still trip up efforts—the move is a groundbreaking one, Syrett said. “We feel that this collective investment shows the collective responsibility of the fashion industry to support the countries that it produces in their renewable energy transition,” she said. “Without this action now and without these commitments now, we will never be working toward the 1.5-degree Celsius pathway and the actions and the investment that’s needed to create a renewable energy future.”
There is still “quite a bit of work” that must be done before the project can be considered a viable means of improving “energy security and enhanced resilience” in Bangladesh, the second-largest exporter of clothing after China, agreed Radu Gruescu, partner at CIP.
“There are a few fundamental questions that we, as a developer of a renewable energy project, need to confirm through work, through investments, through resources that are committed to this process,” he said. “Are ground conditions suitable? Can the grid accommodate the project? And we are prepared to do this over the coming months and years. This is not…simple; it’s not a trivial endeavor.”
The fashion industry has been yoked with anywhere from 1.8 percent to 10 percent of the world’s total greenhouse gas production. What is less contentious is that the sector needs to transition away from fossil fuels—especially coal, which fires the boilers that get temperatures steamy enough for processing, dyeing and finishing textiles—to renewable energy. A 50 percent transition to a zero-carbon source for thermal energy and electricity alone can save 105 million tons of carbon dioxide equivalent, a 2021 study from the Apparel Impact Institute (Aii) and the World Resources Institute estimated. Switching to 100 percent renewable energy for all manufacturing from Tiers 1 through 3 can take a swing at a hefty 424 million tons. But one question continues to loom large: who’s going to pay for all of this?
“To me, it’s about catalytic action…in incentivizing our own stakeholders,” said Lewis Perkins, president of Aii. “If a supplier is asked by a brand or 20 brands to replace boilers, to invest in thermal heat technologies, to dry waterless dyeing, to look at renewable energy…what is the incentive to take on this debt? What is the role of the brand or retailer in subsidizing or supporting that? And to me, it’s actually to enable the markets that are there to do that work to step in faster.”
The ‘wrong direction’
Against this backdrop are doom-and-gloom pronouncements by activist organizations that fashion’s emissions are wildly beyond what they need to be to align with Paris Agreement targets. On Thursday, an assessment by Stand.earth found that many of the UN Fashion Charter for Climate Action’s biggest signatories will fail to meet their 2030 promise to keep additional warming under 1.5 degrees Celsius unless they take “serious action.” Only H&M, Levi Strauss & Co. and Nike showed a reduction in emissions for the past two years, it said. And if the current five-year trajectory continues to 2030, only Gap Inc., Kering, Levi’s and Ralph Lauren are projected to reduce emissions to the level needed to fulfill their end-of-decade commitments.
Stand.earth said that luxury and athletic or outdoor brands showed the “most dramatic” short and long-term changes versus fast fashion, which displayed steadier progress, something that might be surprising. Chanel, LVMH Moët Hennessy Louis Vuitton and Lululemon, in particular, are “traveling dangerously in the wrong direction,” having increased their manufacturing emissions above their baseline year of 2019.
LVMH, which inked agreements to combat deforestation and improve the environmental footprint of its stores at COP28, disputed Stand.earth’s findings, saying that its Scope 3 emissions increased by 7.5 percent between 2021 and 2022, not 10 percent, as the report claimed. “We are far from a two-digit evolution,” a spokesperson said. The luxury giant also pointed out that the uptick was due to the addition of Tiffany & Co. into its environmental reporting and that without the jeweler, emissions would have decreased by 2.2 percent. From its baseline of 2019, Scope 3 emissions for energy consumption in 2022 shrank by 15. 1 percent, it added. Chanel and Lululemon did not respond to requests for comment.
Signatories of the Fashion Charter have all pledged to phase out on-site coal by 2030, while Adidas, H&M and Puma have agreed to use only coal-free factories by 2025, though Stand.earth has expressed consternation that biomass is being positioned as a “supposedly sustainable” alternative when the inefficiency of burning, say, wood for energy releases more carbon dioxide per unit of energy than coal or gas. H&M, Kering and Puma have also set public targets to move some or all of their supply chains to renewable energy.
In a Fashion Charter event in Dubai on Tuesday, Conor Barry, engagement manager at UN Climate Change, admitted that moving from commitments to impact is the “hard part,” adding that “we know how difficult it is to get commitments signed off, but it’s much more difficult to be able to turn those commitments into action.” Barry noted, however, that the organization is “proud” to work with the industry “across the ecosystem” to create the “enabling environments and the policy conditions right for the action that needs to take place.” Later this year, the Fashion Charter will be releasing a report detailing the transition plans of its nearly 100 participants.
“What we’re learning is what we partly knew,” he said. “It’s difficult. It’s difficult for any individual brand, any individual supplier, any individual component in the ecosystem to make this journey alone. No one has yet met net zero—no individual country, no individual company can claim to be fully net zero. It is something that we are on a journey toward achieving together.”
Access to sources of renewable energy can vary radically by geography, and buyers and suppliers don’t always agree on whose responsibility it is to source cleaner power, especially when price pressures run high on both sides. The fact also remains that companies can’t buy renewable electricity if it’s not available in the first place.
“We have a role to play as international brands, but we also need governments to really start looking at how do we make that transition…if we really want to see improvements down the road,” said Sarah Negro, global public affairs senior management at H&M.
A replicable solution
Bangladesh has policymaker buy-in. The country’s government has set a goal of deriving 15 percent of its electricity from renewables by 2030, 40 percent by 2041 and 100 percent by 2050. But with wind, hydropower and solar currently contributing to less than 5 percent of Bangladesh’s energy mix, or 1,200 megawatts, according to the Sustainable and Renewable Energy Development Authority, there’s still a long way to go. GFA and CIP’s proposed wind park, with its approximate capacity of 500 megawatts, will help but only so far.
“The ratio of renewable electricity in Bangladesh needs to be increased and for that you need investments,” said Ulrika Leverenz, head of green investment at H&M. “But you also need to have easy access to [this] electricity, for instance, through corporate power purchase agreements, which will ease up the ability to invest. A project like this is a good example how how private investments could be combined with policy work. And that is also the reason why it’s so important that more brands join us.”
Leverenz said that H&M makes up “quite a small” piece of production at each of its suppliers, which it shares with other clothing purveyors, including Bestseller. Because they share the same challenges, she said, brands should also “share the ambition in working to change.”
Providing renewables into the grid across key sourcing countries is one of the most important things Bestseller can do, said Dorte Rye Olsen, the Denmark-based retailer’s head of sustainability.
“Of course, [as a] company we need work at a company level, facility level, with suppliers, but we also truly believe in investing into systemic change,” she said. “That’s the short answer to why we have engaged in this project and [contributed] the financing.”
The effort is a shot at the bow but hopefully not the last one, Gruescu said. “I think time will tell if it will be developed successfully; we very much hope so,” he said. “We will be working hard to do so but obviously there can be no guarantees. Having said that, I think what the announcement…really brings to the table is the fact that it is a solution that is very much replicable…and adapted to similar situations.”
What’s important, Gruescu said, is that the industry focuses on deliverable projects that can happen not at some indeterminate future point but within the next few years. “And in that context, I think the announcement…is the start of such a discussion,” he said.
Liv Simpliciano, policy and research manager at advocacy group Fashion Revolution, said that it’s time for brands to put their “money where their mouth is” and share the financial risk with suppliers across their supply chain to support the transition to renewable energy. “Brands are quick to share commitments but far quieter about actual impacts,” she said. “Supplier-led and brand-supported action is the only way we can truly decarbonize fashion manufacturing.”
For Syrett, the question isn’t whether money is available but how it is being spent. She said that practical implementation of decarbonization programs often proves to be challenging because “proactive participation” of the industry in project delivery is “often missing.”
“There’s already enough capital out there to decarbonize the world, but it’s not being accessed,” she said. “It’s not being unlocked.”
