Apparel Impact Institute (Aii), the San Francisco-based non-profit organisation dedicated to accelerating climate action and sustainability solutions in fashion, has announced the lead funders of its new $250 million Fashion Climate Fund – Lululemon, H&M Group, H&M Foundation and The Schmidt Family Foundation.

Aii and its partners have established the fund to drive collective action to tackle fashion’s supply chain emissions. By leveraging a first-of-its-kind collaborative funding model for fashion between philanthropic and corporate entities, it could unlock an estimated $2 billion in blended capital across various asset classes, including debt and equity, to help meet the industry’s goal to halve carbon emissions by 2030.

While hundreds of fashion brands and retailers have pledged support to the Science Based Target Initiative (SBTi) to reduce their supply chain greenhouse gas emissions, large barriers to action remain.

According to Aii and the 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.

De-risking

Following the report’s roadmap, the Fashion Climate Fund will provide funding for supplier interventions across the value chain – transitioning to renewable electricity, accelerating next-generation materials, scaling sustainable materials and practices, eliminating coal in manufacturing, and improving energy efficiency. Aii has created strategic collaborations with Textile Exchange, Fashion For Good, and Solidaridad, among others, to address these areas.

Philanthropic funds will provide the necessary capital to accelerate and de-risk pre-seed and pilot innovations, and industry support will advance proven solutions from pilots to scaled impact.

The Fashion Climate Fund is a bolder, more urgent, and holistic evolution of Aii’s existing program, Clean by Design. Since 2018, Clean by Design has aggregated and deployed over $12 million in philanthropic funding into energy efficiency programmes for factories, which has unlocked $175 million in financial capital.

“By aligning industry leaders and climate-focused philanthropists behind scalable solutions, the Fashion Climate Fund will open a pathway for greater collaboration and cross-pollination of solutions, facilitating greater investment and stronger collective action towards the industry goal of halving emissions by 2030, while also seeking climate justice for the citizens and communities where our fashion is made,” said Aii president Lewis Perkins. “We are greatly encouraged by the leadership and decisiveness shown from these lead partners and honoured to play this role as we open up the first phase of the project financing.”

Aii is currently in discussions with additional lead partners, with the goal of each funder committing $10 million over eight years. This is the first step in raising the targeted $250 million for the fund,

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