Sweden’s H&M Group is investing in Bangladesh’s first offshore wind mission, a utility-scale set up being developed by Copenhagen Infrastructure Companions. Bangladesh is dwelling to many factories that sew the retailer’s clothes.
H&M, together with Danish retailer Bestseller, will co-invest unspecified quantities as a part of a $100 million company pool being organized by Copenhagen Infrastructure Companions and the World Trend Agenda, a nonprofit that encourages vogue manufacturers to undertake climate-friendly enterprise practices. Different corporations are being inspired to affix the mission, which might start operations by 2028.
Trend corporations who’ve pledged an emissions discount of no less than 50 % by 2030 and internet zero by 2050, and that may put no less than $10 million into the mission, are eligible to take part, Ulrika Leverenz, head of inexperienced funding for H&M Group, advised GreenBiz.
“For us, it is a nice instance of how a collaborative strategy on sustainable financing options and coverage work can go hand in hand to beat industry-wide challenges,” mentioned H&M Group CEO Helena Helmersson, when the deal was introduced throughout COP28.
‘A pioneering effort’ within the vogue {industry}
An estimated 70 % of vogue {industry} emissions come from upstream actions, together with manufacturing, and lots of of these operations at present depend on coal, petroleum and fuel for his or her electrical energy, in keeping with World Trend Agenda.
Bangladesh accounts for near 8 % of worldwide clothes exports, making it the third-largest exporter of those items after China and the European Union. The mission, with a deliberate capability of about 500 megawatts, could be the primary utility-scale offshore set up for Bangladesh. It goals to provide 40 % of the nation’s energy by 2041. As soon as accomplished, the set up would minimize the nation’s annual emissions by a projected 725,000 metric tons, in keeping with the developer.
“That is actually a pioneering effort. Whereas it’s change into extra widespread for different industries to take an strategy that’s extra vertically built-in, the style {industry} doesn’t have that very same historical past,” mentioned Nicole Rycroft, founder and government director of Cover Planet, which collaborates with attire corporations on provide chain sustainability technique.
Most vogue corporations have some operational footprint in Bangladesh, mentioned Rycroft. “What’s essential is that this helps coal energy be decommissioned,” she mentioned. “It helps the grid at a bigger degree. It is a provide chain that’s remodeling in real-time.”
H&M is one of many world’s largest “quick vogue” manufacturers, a time period used to explain attire that strikes rapidly from retail to manufacturing to satisfy fast-moving type developments. The corporate reported Scope 3 emissions of 5.65 million metric tons in its newest sustainability report, for 2022. (Scope 3 contains emissions from the corporate’s provide chain.) That was a 3 % discount from 2021. Its objective is to attain a 56 % discount in Scope 3 emissions by 2030, primarily based on a 2019 baseline; as of 2022, it had managed a 7 % minimize.
Copenhagen Infrastructure Companions, primarily based in Denmark, is the most important devoted fund centered on renewable power tasks — particularly wind — in undeveloped “greenfield” areas; to date it has raised about $28.4 billion for these actions.
H&M steps up financing of provide chain sustainability
H&M’s deliberate wind farm funding builds on the corporate’s Inexperienced Trend Initiative, which provides technical help and financing to suppliers who need to cut back their emissions. In late November, the corporate prolonged these efforts with the creation of a financing program in collaboration with Southeast Asia’s largest financial institution, DBS. The useful resource provides loans on favorable phrases to suppliers who need to displace fossil fuels.
H&M has funded 17 tasks as of January 2023, with a possible annual discount of 190,000 metric tons yearly, mentioned Leverenz. About 50,000 metric tons are attributable on to H&M’s manufacturing, she mentioned.
One among H&M’s producers in India, Raj Woollen, labored with H&M in early 2023 to finance the set up of photo voltaic panels, energy-efficient motors and water conservation applied sciences. The mission was “a profitable mixture of knowledgeable power evaluation, shut help in deciding on probably the most appropriate know-how options, and a horny financing mannequin,” mentioned Sumeet Nath, managing companion for Raj Woollen.
One other metric to observe: In 2022, 70 of the corporate’s suppliers used on-site coal boilers, down from 91 in 2021.
Any provider in good standing can apply for H&M financing, Leverenz mentioned. “We consider the provider’s monetary scenario, the innovation degree of the know-how, our enterprise share within the unit, and the provider’s personal want,” she mentioned.
Its two priorities are “large tasks with large suppliers aiming for max impression,” and people looking for to deploy progressive know-how which may initially be dangerous however might present longer-term advantages, Leverenz mentioned.
