Tell us about AII, the story of its formation, evolution throughout the time.
Apparel Impact Institute is a response to one of the biggest problems facing the fashion industry: decarbonization. AII was founded in 2017, and we hit the ground running to drive sustainability improvements across the supply chains. By 2020, we had already established the Apparel Alliance with our partners, Cascale (formerly the Sustainable Apparel Coalition), Textile Exchange, and ZDHC, to form a connected, end-to-end path to action for the industry. From there, we’ve continued to soar; we published our Roadmap to Net Zero with WRI, launched the Fashion Climate Fund the next year in 2022, and then our first Climate Solutions Portfolio in 2023. Now, we are continuously working to identify, implement, and scale proven solutions to fashion’s emissions problem, and we plan to enable the reduction of 100 million tonnes of CO2e from the apparel and footwear supply chain by 2030 and to ensure our industry reaches net zero by 2050.
In context of Bangladesh, what are your activities so far?
AII has already begun implementing and scaling solutions to greenhouse gas emissions in Bangladesh. One example is the Clean by Design program, which encourages a review of a facility’s energy and water consumption, proposing positive, low-cost activities that reduce energy, water, and financial losses.
Additionally, we’ve identified other key, dynamic solutions to the major environmental impact seen from the apparel and footwear industry, including Solar PV Installation Bangladesh, the Cleaner Production Systems Program, and the Facility Impact Measurement Software. These programs all work to improve supply chain efficiency through decreasing costs and emissions.
Since Bangladesh is a crucial player in the fashion industry, AII hopes to continue establishing partnerships there and decarbonizing the region’s fashion sector.
What are the processes that you follow toward decarbonization?
For decarbonization, the role AII plays is identifying, funding, scaling, and measuring decarbonization to make sure it is done the right way. We work to derisk decarbonization investments for suppliers, facilities, and brands.
In terms of the more technical processes, AII follows certain steps to address energy issues at all points in the supply chain. Ideally, we want to transition energy sources to renewable ones, like solar and wind, but that’s just one piece of the puzzle.
A key step we take is actually decreasing how much energy the system needs. By reducing the overall demand for energy, for example reducing the steam pressure at certain production activities, optimizing the temperature set points, and improving overall energy efficiency, we can reduce the facility’s emissions at source. However, this isn’t where the work stops.
Then, there is opportunity for decarbonization through energy sources. The best type of energy source depends on several variables, which differ between each region. Some hubs are best suited to solar power, others to wind, etc. H&M Group and Bestseller have a really interesting project in Bangladesh, where they are investing in the country’s first offshore wind project to help garment factories transition off fossil fuels.
Do you provide funds in order to improve decarbonization? Who receives these funds?
There are many different types of funders that have a role in financing decarbonization, including private investors, philanthropy, government, and brands and manufacturers. AII is just one player in the larger ecosystem of addressing funding issues to decarbonization.
While we do provide funding to solution providers and innovators, our main role is to identify and unlock funding where it already exists and help derisk decarbonization technology so that suppliers receive the technological support they need to introduce more sustainable processes in their manufacturing operations.
Any case study you want to share that shows the difference?
An example of success in decarbonization is GIZ, a German service provider in the field of international cooperation for sustainable development, who have coordinated with regional stakeholders to enable wide scale solar PV deployment in Bangladesh’s textile and
apparel sector. This solution provider has received three years of funding from AII, more than $600,000, to establish a stakeholder engagement plan, conduct on-site assessments at factories, and provide technical recommendations for implementing solar at the facilities. The work is continuous— with ongoing implementation and reporting support.
We estimate that the project could reduce GHG emissions by almost 8% across all 30 facilities in the program, driving the effort to accelerate solar PV deployment in Bangladesh. Soon, this model will be ready to scale in Bangladesh and beyond, continuing to establish the country as a leader in renewable energy across industries.
Tell us more about your ‘thought leadership’ program.
Our thought leadership program is a place for our partners to find insight on decarbonizing the apparel and footwear sector, provided by AII and with the support of industry experts. We do this by creating and publishing yearly impact reports, as well as guides, blogs, case studies, and more, outlining the most up-to-date information on funding and technology available to decarbonize the fashion industry.
What is the Fashion Climate Fund? Who provides these funds and who are the beneficiaries?
The Fashion Climate Fund brings together capital from several leading global retailers, financial institutions, and climate philanthropists. We have targeted to raise $250 million of funding to unlock $2 billion of catalytic capital available to reduce carbon emissions from the fashion industry. Deployment of this fund helps decarbonize and improve fashion supply chain operations for the long term. AII helps track industry progress to make sure we’re scaling efficient, proven solutions that are best suited for each organization.
Would you please share more detail on “Sustainable Finance”? How would you unlock $2 billion blended capital towards the $1 trillion goal?
Access to finance is a major barrier to reaching net zero, which is why AII provides funding assistance through sustainable finance. We’re unlocking $2 billion by 2030 by building a coalition of brands, financial institutions, and manufacturers. We collectively fund decarbonizing the apparel and footwear industry by identifying a mix of sources that provide blended capital. Our $250 million Fashion Climate Fund is just a fraction of this work, utilizing commitments from brands and philanthropy, while the rest of the needed funding is supported through supplier contributions, financial institutions, and equity investment.
Who are your significant donors that helps running your entire process?
AII is funded by grants from brands and philanthropic organizations, service fees for our technical work, and by key donors adding to our major funding programs, like our Climate Fashion Fund. These donors include our partners HSBC, Target Corporation, PVH Corporation, Lululemon, H&M Group, H&M Foundation, and The Schmidt Family Foundation. Through these partnerships, AII has been able to establish ourselves as a trusted expert in decarbonizing the apparel and footwear sector globally.
Do you work with Bangladesh directly? If yes, please share in detail and if no, do you have any plan about it?
Due to Bangladesh’s role in the fashion industry and supply chain, AII has implemented a number of programs there to support suppliers in decarbonizing their processes, and a key impact program is AII’s Clean by Design Bangladesh. This model works to derisk and reduce known barriers to scaling decarbonization, with 12 associated sites in the country that are expected to save 40,325 tCO2e per year in greenhouse gas emissions and 518,798 GJ per year in energy savings. Decreasing how much energy is used immediately decarbonizes operations, while also making them more cost- and time-efficient. This program is funded through our Climate Solutions Portfolio grants and, in a year, received $88,000 from AII, as well as $72,000 from other funding.
What is your future plan?
AII knows the apparel and footwear industry is facing a crucial moment that will shape our future. That’s why we plan to keep working towards shifting the status-quo of the fashion industry and scaling decarbonization efforts that last. AII is dedicated to using our position to reduce emissions across fashion’s supply chains and make the fashion industry a leader in driving the world towards net zero.
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