As the fashion world races to cut its carbon emissions, garment makers are calling for a global fund to share the cost of the green transition between big brands and manufacturers in the Global South.
The investment needed for the industry to meet its goal of net-zero emissions by 2050 is estimated at US$1 trillion. So far, most of the bill is being paid by manufacturers in leading garment-making countries such as Bangladesh, India and Cambodia.
While about 80 per cent of the sector’s carbon footprint stems from manufacturing, well-known global brands take a bigger share of the profits, are less indebted and have more financial clout for green investments.
Here’s what you need to know.
What are the proposals for an industry-wide climate fund?
The US$2-trillion global fashion industry is rushing to meet a target to halve its planet-heating CO2 emissions by 2030, requiring massive investment to switch to renewable energy and boost energy efficiency.
But the participation of leading brands in footing the decarbonisation bill “is almost non-existent”, said Vidhura Ralapanawe, a member of the Fashion Producer Collective - a group of fashion manufacturers calling for fairer ways of financing the sector’s climate transition.
Earlier this week, it outlined calls for a global cost-sharing fund in a report launched in partnership with Transformers Foundation - a New York-based think-tank that represents denim makers and brands.
Under the proposals for the Fair Climate Fund, players at every stage of the supply chain - from retailers, garment factories to textile mills - could contribute to the fund based on their share of final revenue, the report said.
How else could the costs be shared?
To meet the diverse types of investments needed for curbing emissions - some with easy paybacks and some with little to no payback and larger capital or operating expenditures - the report laid out several alternative financing solutions.
“There is no easy and quick fix, and just betting on one system or methodology will not work,” said Ani Wells from Transformers Foundation.
For example, brands could lend to suppliers with repayments made by product discounts on future orders, Ralapanawe said.
Additionally, consumers could be encouraged to pay a small premium on products with green tags, the report said, adding that other entities linked to the industry - from regulators to manufacturing associations - could also help boost access to affordable finance.
What about sharing the cost of climate adaptation?
Extreme weather linked to climate change such as floods and heatwaves could cut the clothing export earnings of key producing countries by as much as 68 per cent and take away 8.6 million jobs by 2050, according to a study last year by the ILR Global Labor Institute (GLI) at US-based Cornell University and investment manager Schroders.
If the sector is ill-equipped to manage heat or flooding risks, it not only hurts productivity, but also results in lost wages and soaring costs for workers.
Brands at the top of the supply chain should also be involved in managing climate risks that can disrupt the flow of goods, said Sheikh H M Mustafiz, managing director of the Bangladeshi fashion company Cute Dress Industry Ltd.
“Managing climate risks is now everyone’s responsibility,” he said.
Garment factories are already putting measures in place to keep workers safe from rising heat and flood risks.
For example, Indian manufacturing firm Globe Textiles Limited has installed solutions ranging from reflective roof sheets to improved ventilation systems, while building plinths were raised to guard against flooding, said CEO Bhavin Parikh.
Such adaptation investments can be financed by commercial lenders or government-backed initiatives, but brands should also play a role, said Jason Judd, executive director of the GLI at Cornell University.
They should come forward to subsidise health insurance for all workers, while the global loss and damage fund should also be tapped to compensate workers for the growing climate burden on them, said M. Zakir Hossain Khan, a climate finance expert and head of the Dhaka-based think-tank Change Initiative.
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