Sweden’s fashion retailer H&M Group, together with Singaporean bank DBS, has launched a collaborative finance green loan programme that facilitates supply-chain decarbonization in the apparel sector.

In line with the fashion company’s ambition to achieve net-zero carbon emissions by 2040, it has for the past years set focus on making funding available to reduce greenhouse gas (GHG) emissions across and beyond its own supply chain.

The company’s Green Fashion Initiative enables supplying factories to invest in the technologies and processes needed to reduce energy demand and replace fossil fuels across the fashion industry.

To help accelerate the adoption of these green initiatives across the supply chain, the collaborative finance programme was developed, through which suppliers get access to financing from DBS and technical support from sustainability consultant, Guidehouse, to embark on factory upgrades to decrease their climate impact.

Unlike traditional banking solutions, which seek to encourage such green activities indirectly, this programme directly provides financing with highly favourable terms to suppliers for specific GHG emission reduction activities.

Earlier this year, the collaborative finance programme completed the first successful transaction with a manufacturer in India to fund capital expenditures to reduce Scope 3 GHG emissions. With the support of the loan, supplier Raj Woollen financed the installation of solar panels, energy-efficient motors, as well as water conservation technologies to conserve resources and reduce carbon emissions.