NYC’s Fashion Pact talks funding decarbonization initiatives

At the “Financing Fashion’s Decarbonization Initiatives” event, co-hosted by the Fashion Pact, Tapestry, and J. Crew Group, industry leaders explored ways to fund the fashion sector’s transition to net-zero emissions.

As New York Fashion Week concluded, the city swiftly transitioned into hosting Climate Week – the largest annual climate event of its kind, organized in partnership with the United Nations General Assembly.

Although the event spans the five boroughs, much of the action remains centered in Manhattan.

The 16th edition of the event, hosted by the international nonprofit Climate Group, centered on the urgent theme of actions to alleviate urgent climate crisis.

In her opening speech, Helen Clarkson, CEO of Climate Group, emphasized the gravity of the moment.

“Today and this week, it’s time to think about the crucial decisions and actions we need to start taking right now,” she said.

“Because history will judge us. One hundred years from now, people will say, ‘They knew where they were heading, how many warnings from scientists did they need? How many people needed to die in heatwaves for them to really believe what was happening?”

Aligning with the theme, the Fashion Pact, Tapestry, and the J. Crew Group co-hosted the “Financing Fashion’s Decarbonization Initiatives” events.

Here, key industry figures discussed how innovative finance mechanisms can accelerate the transition to a net-zero fashion industry.

“Under the theme of time, there is a burning platform to drive change and take good intentions and drive that into impact,” said Peter Charles, Chief Supply Chain Officer of Tapestry, during his opening remarks.

Payal Luthra, Global Apparel and Textiles Lead at the WWF, echoed this sentiment, said, “We’re seeing positive developments with sustainability-linked bonds, but we need more companies engaged, and we need to move faster. Collective financing is crucial because it channels funds to the right projects.”

The discussion also highlighted the Fashion Pact’s Unlock Program and the Future Supplier Initiative.

The Unlock Program, a nonprofit financial mechanism designed to decarbonize cotton production, shared initial findings from its pilot phase, which involved 25 brands, including J. Crew Group and House of Baukjen.

“We had a deliberately kind of quite small pilot; we wanted to test a number of approaches and methodologies and work with a range of partners in two geographies—India and the United States—to make sure that it’s a really broad church, that it works for lots of different types of farmers under different schemes and programs,” said Laila Petrie, founder of sustainability consultancy 2050 and project lead for Unlock.

“The pilot phase has now concluded, and we have some really good initial results. Even more importantly, we’ve really learned how to scale that system so that we can be very ambitious about global enrollment.”

For 2024, Unlock claims to enroll 10,000 farmers and ambitiously scale up to help 90,000 farmers transition to lower-climate-impact-cotton.

Meanwhile, the Future Supplier Initiative offers both technical and financial support to decarbonize supply chains. Betsy Blaisdell, Director of Supply Chain Decarbonization at Guidehouse, explained that the initiative identifies supply chain hotspots and funds mitigation efforts through low-interest loans.

These loans, often just below or above risk-free rates, enables suppliers to finance decarbonization measures at competitive terms, compared to commercial loans.

Ultimately, the industry must embrace investment in unfamiliar , groundbreaking opportunities. “We’ve tackled the low-hanging fruit, but true innovations is now complex and unfamiliar,” Petrie noted. “We need to support projects that may seem risky but are necessary for meaningful change.”

Quoting “Nelson Mandela, Eva von Alvensleben, Executive Director and Secretary General of the Fashion Pact, closed the event by saying, “It always seem impossible until it’s done. Let’s find comfort in our unity and collaborate for a sustainable future.”

Held on Sep.25 at Tapestry’s global headquarters, the session, titled “Rethinking the Financial Burden of Transition: What are the Fashion Sector’s Responsibilities, Options, Incentives and Levers?” served a platform for sustainability and finance stakeholders to consider supply chain decarbonization – deeming increased corporate financial engagement necessary for substantial change at scale.

When the future of humanity is at stake, we should collaborate,” Paul Polman, co-founder and co-chair of the Fashion Pact said.

“When people come together collectively – I’ve seen it over and over again – they become more courageous.”

Payal Luthra, global apparel and textiles lead of WWF, mentioned the positive movements in sustainability linked bonds and emphasized the necessity for more companies to get involved and move faster.

She also stressed the significant role that collective financing can play in funneling funds to the right projects.

The discussion on decarbonization also included references to the Fashion Pact’s Unlock Program and the Future Supplier Initiative.

The Unlock Program, a non-for-profit collective financial mechanism aimed at decarbonizing cotton production, shared the initial results from its pilot phase.

The program saw participation from 25 brands, including the J. Crew Group and House of Baukjen.

According to Betsy Blaisdell, director of supply chain decarbonized at Guidehouse, the Future Supplier Initiative, on the other hand, serves as a way to reduce carbon emissions in your supply chain by providing both technical and financial support.

She said that once these areas are identified, Guidehouse provides financial support through low-interest rate loans that are slightly below or above the risk-free rate for lending. This allows suppliers to competitively finance these measures compared to commercial rates.

However, the industry as a whole needs to become more open to investing in opportunities that may seem unfamiliar.

“We’ve done the low-hanging fruit; we have done all the familiar stuff, and all those projects are really important, but actually true innovation now is complicated and slightly weird looking,” Petrie said.

“We need to get comfortable with financially supporting things that we don’t feel are familiar and safe. I think if we can start to do that as an industry and as a sustainability space, we’ll be in an amazing position to start to make change happen.”

“To quote Nelson Mandela, it always seems impossible until it’s done,” Eva von Alvensleben, executive director and secretary general of the Fashion Pact, said during the event’s closing remarks. “So, let’s collaborate together. Let’s feel comfort in this unity.”