H&M Group Collabs with DBS in Green Loan Program

Traffic outside of an H&M store

(Credit: Unsplash)

by | Nov 28, 2023

H&M Group has teamed up with Southeast Asia’s largest bank, DBS, in a new collaborative finance tool that aims to facilitate supply chain decarbonization in the apparel sector.

The tool has already helped a manufacturer in India fund capital expenditures to reduce Scope 3 greenhouse gas emissions. Supplier Raj Woollen financed the installation of solar panels, energy-efficient motors, and water conservation technologies, H&M Group said. 

“H&M Group has been engaged in climate mitigation for years and we continuously push ourselves to demonstrate climate leadership within our industry,” Ulrika Leverenz, head of green investment at H&M Group, said in a statement. “We see that our industry is committed to tackle 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.”

Fashion’s Climate Impact

The apparel sector — and fast fashion, in particular — has a big carbon footprint.

Overall, the fashion industry produces about 10% of global CO2 emissions, according to UNECE. Plus, the industry’s emissions are only expected to continue rising. Fast fashion, which is inexpensive clothing that is produced rapidly by mass markets retailers such as H&M, has worsened the apparel sector’s overall climate impact, with the number of new garments made per year nearly doubling over the past 20 years and global consumption of fashion increasing by 400%, said the Center for Biological Diversity. 

Several apparel companies are introducing new recyclable materials that could reduce some textile waste, but the overall climate footprint of the sector still looms large.

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Using Green Financing to Lower Supply Chaing Emissions

H&M Group has set a goal to reach net-zero emissions by 2040 and has most recently focused on taking action to make funding available to reduce greenhouse gas emissions in its supply chain and beyond. For instance, its Green Fashion Initiative enables suppliers and factories to invest in technologies that can reduce energy demand and emissions.

The collaborative finance tool developed with DBS enables suppliers to have access to financing from DBS, plus technical support from sustainability consultant Guidehouse. With the financing, they can upgrade factories to decrease their climate impact.

H&M Group has also identified collaboration as an important part of its climate action framework, with collaborative financing efforts as a means to create rapid changes. The company also urged more businesses to join its initiative to share the financial responsibility and give further alternatives to support suppliers aiming to decarbonize.

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