H&M Group has announced the launch of a new collaborative finance tool that will help suppliers reduce greenhouse gas emissions.
The tool is part of the company’s Green Fashion Initiative, which provides funding to suppliers to invest in technologies and processes that can help them reduce their environmental impact.
The new tool is a partnership between H&M Group, DBS Bank, and Guidehouse. It will provide suppliers with access to “highly favourable” terms for financing from DBS and technical support from sustainability consultant, Guidehouse, to implement factory upgrades that will reduce their climate impact.
“H&M Group has been engaged in climate mitigation for years, and we continuously push ourselves to demonstrate climate leadership within our industry,” said Ulrika Leverenz, Head of Green Investment at H&M Group.
“We see that our industry is committed to tackling its negative climate impact, but 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.”
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The first successful transaction with the new tool has already been completed. A manufacturer in India used the loan to finance the installation of solar panels, energy-efficient motors, and water conservation technologies. The company expects these upgrades to reduce its greenhouse gas emissions by 20%.
H&M Group is encouraging other brands and financial institutions to join its initiative. The company will also be looking to meet with interested stakeholders at COP28 to continue the dialogue.
H&M Group has set a goal to achieve net zero emissions by 2040, with interim targets to reduce absolute Scope 1, 2 and 3 emissions by 56% by 2030.
As with most fashion retailers, Scope 3 value chain emissions, or those outside of a company’s direct control, account for the vast majority of the retailer’s emissions footprint, almost 99% in H&M’s case. Of these, over 60% derive in supply chain areas including fabric production, garment manufacturing, raw materials and transport.
In order to tackle these emissions, H&M has also introduced an internal carbon price tool. Similar to other carbon taxes such as at payment processor Klarna, the tool is designed to drive behavioural change within its buying, design and merchandising teams as well as in production and logistics, steering towards the purchase of low-carbon materials for products and the selection of low-emission production units.
