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H&M, lululemon Lead Funding for New $250M Fashion Climate Fund

The Apparel Impact Institute (Aii) has introduced the $250 million Fashion Climate Fund, which will be used to identify, fund, scale and measure verified impact solutions to decarbonize and modernize notoriously wasteful fashion industry supply chains. The first four lead funders include H&M and lululemon, along with the H&M Foundation and the Schmidt Family Foundation.

Using a collaborative funding model between philanthropy and corporate entities, the Fund is designed to unlock an estimated $2 billion in blended capital in additional asset classes, including debt and equity, to help achieve the industry’s ambition of cutting carbon emissions in half by 2030. Aii is currently in discussions with additional lead partners, with the goal of each fund committing $10 million over eight years.

“By aligning industry leaders and climate-focused philanthropists behind scalable solutions, the Fashion Climate Fund opens a pathway for greater collaboration and cross-pollination of solutions, facilitating greater investment and stronger collective action while also seeking climate justice for the citizens and communities where our fashion is made,” said Lewis Perkins, President of Aii in a statement. “We are greatly encouraged by the leadership and decisiveness shown today from these lead partners and honored to play this role as we open up this first phase of the project finance.”

While hundreds of fashion brands and retailers have pledged their support to the Science Based Target Initiative to reduce greenhouse gas emissions, large barriers to effective action remain. According to the Aii and World Resources Institute’s recent report, Roadmap to Net Zero: Delivering Science Based Targets in the Apparel Sector, 96% of the fashion industry’s emissions come from third-party farms and factories that are shared across the industry and deemed too risky for brands, retailers or traditional sources of capital to make necessary upgrades and overhauls.

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In response, the Fashion Climate Fund will provide programmatic funding for supplier interventions across the value chain, including:

  • Transitioning to renewable electricity;
  • Accelerating next-generation materials;
  • Scaling sustainable materials and practices;
  • Eliminating coal in manufacturing; and
  • Improving efficiency.

Additionally, Aii will launch a Climate Solutions Portfolio tool that will go into beta development in 2022. The Portfolio will serve as an online registry of early, mid- and late-stage initiatives that tackle supply chain greenhouse gas emissions. Major stakeholders include brands, retailers, suppliers, solution providers, innovators, foundations, government grant makers, private equity and banks.

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