From Catwalk to Carbon Neutral: Mobilising Funding for a Net Zero Fashion Industry

Today marks the release of a pivotal supplier-led report, “From Catwalk to Carbon Neutral: Mobilising Funding for a Net Zero Fashion Industry,” co-commissioned by Epic Group, TAL Apparel, NITEX, Pactics Group, Artistic Milliners, MAS Holdings, Simple Approach. It is supported by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, FABRIC Asia Project, and Transformers Foundation, and endorsed by the International Apparel Federation (IAF) and Fashion Producer Collective (FPC).

The report sheds light on the urgent need for innovative funding models in the apparel sector’s journey towards decarbonization. As the industry grapples with its significant contribution to global greenhouse gas emissions, this report offers a deep dive into the challenges and solutions for funding climate action in apparel manufacturing.

The apparel sector, a substantial force in the global economy, is currently responsible for an estimated 2-8% of the world’s greenhouse gas emissions. On the one hand, most of those emissions – by some estimates as much as 80% – are in the supply chain. On the other hand, these are the entities with the lowest margins and least able to foot the bill.

If we fail to devise new ways of financing decarbonization we will also fail to realise our climate goals. This paper aims to inspire more expansive, creative, and imaginative thinking about how the sector might go about collectively funding decarbonization in such a way that goes beyond business-as-usual, and primarily debt-based, solutions.

Conducted through interviews with 21 apparel manufacturers and key stakeholders, supplemented by extensive desk research, the report provides insights from a diverse range of countries and business types. Although not claiming to be a representative survey, it offers a comprehensive perspective on the sector’s challenges and potential solutions.

The questions this paper sets out to investigate are:

• What types of funding needs do manufacturers have for decarbonisation and what constraints do they face?
• What are innovative funding models the sector should consider to equitably and effectively address these gaps?

The report reveals that most manufacturers are inclined towards smaller-scale, short payback projects due to current funding models. There’s a significant need for solutions that address medium to long-term initiatives and acknowledge challenges like increased operational costs. The report also highlights the impact of macroeconomic fluctuations and business cycles, emphasizing the necessity for adaptable funding solutions.

Concluding with a call to action, the report urges the apparel sector to adopt a more equitable and effective approach to funding climate action. It emphasizes the need for collaborative efforts across the value chain and the exploration of innovative financing models to achieve the goals of the Paris Agreement.