Sustainable finance

Overcoming the industry’s financial barriers

Our sustainable finance strategy

Aii is committed to unlocking $2B by 2030 towards the $1T total that the industry needs

We’ve built a coalition of brands, financial institutions, and manufacturers to collectively fund the decarbonization of the supply chain through a mix of capital sources. This effort includes our $250M Fashion Climate Fund, which provides catalytic capital in the form of grants and subsidies for early- to mid-stage projects. In parallel, we are advancing a broader strategy to unlock blended capital, which provides suppliers with the attractive finance packages needed to make climate-improvement investments commercially viable.

IT WILL TAKE $1 TRILLION IN INVESTMENT FOR THE APPAREL AND FOOTWEAR INDUSTRY To DECARBONIZE

Financing is one of the biggest barriers to progress. Traditional funding structures aren’t working fast enough or equitably enough for suppliers. If we’re going to meet our 2030 targets, we can’t rely on business as usual. We need innovative models that align the industry, philanthropy, and financial institutions to catalyze innovation and scale..

EXAMPLE APPLICATION OF FINANCIAL ASSISTANCE

Access to finance remains a major challenge for suppliers looking to invest in reaching net zero. Aii deploys grants to solutions with a data-backed path to significant carbon reductions, intended to help them reach scale quickly and attract commercial funding.. We know that billions in capital expenditures will be required to upgrade manufacturing facilities, and many suppliers struggle to access affordable financing. That is why we are building a portfolio of financial tools and working to connect suppliers with the financing options that fit their needs.

Example application of financial assistance

Breaking down the $1 Trillion

Reaching net zero will require a variety of stakeholders and solutions. We believe that not all solutions are created equal, and we’re committed to scaling those with the greatest potential impact on carbon emissions. Our portfolio delivers a more favorable cost-per-tonne of carbon reduction than many other solutions on the market.

Funder distribution

Program cost

Types of funders that contribute to the $1 Trillion investment

Bank debt, bonds, and loan funds (Debt investment)

Venture capital and private equity (equity investment)

Government, development banks and philanthrophy (debt, equity and grants)

Brands and manufacturers (debt, equity and grants)

Sustainability premiums

Types of Funders. Source: Aii and FFG analysis (2021)

Program cost per tonne of reduction of CO2e over useful life

*cc&s = Carbon Capture and Storage

Source: Kenneth Gillingham and James H. Stock. “The cost of Reducing Greenhouse Gas Emissions.” 
Journal of Economic perspectives 32, no. 4 (Fall 2018) 53-72.

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Frequently asked questions

Where are you located?

Our headquarters are in California, USA; however, we are a global organization with staff distributed throughout North America, Europe, and Asia.

How are you funded? Are you a membership organization?

Aii is funded in part by grants from brands and philanthropic organizations and in part by service fees for our technical work. We are not a membership organization.

How does Aii work with other organizations in this space?

Aii is an independent entity that partners with various membership associations and NGOs. We are dedicated to avoiding duplications and redundancies in our work.

How do you track carbon?

Aii takes an initial baseline of a facility's energy consumption and GHG emissions before implementing a project. After the project is complete, another measurement is taken and the difference between the before and after measurements is calculated with adjustments for changes in production volume and other factors. Finally, each project has an estimated useful life, which is used to forecast the total GHG reduction over the life of the project.

How can I speak to someone from Aii directly?

We’d love to hear from you! If you have any questions or are interested in working with us, please reach out by clicking “Contact Us” at the bottom of this page. An Aii team member will get in touch as soon as possible.

What is Apparel Impact Institute?

Apparel Impact Institute (Aii) is a 501(c)(3) nonprofit collective founded in 2017. Aii identifies, funds, and scales proven quality solutions to accelerate positive impact in the apparel and footwear industry.

How can I stay up-to-date with what is happening at Aii?

The best way to stay informed is to sign up for our newsletter and follow us on LinkedIn or Instagram.

How did you come up with $2 billion total?

This is a conservative estimate coming from our experience with programs like Clean by Design, as well as the findings in our joint report with Fashion for Good, "Unlocking the Trillion-Dollar Fashion Decarbonisation Opportunity". Based on the ratios of form of asset class applied to the solutions in the report, we expect $100 million in philanthropy combined with $150 million in industry contributions (together, the $250 million Fashion Climate Fund) will drive $150 million in supplier contributions; $400 million in venture capital and private equity; and $1.2 billion in bank debt, bonds, and loan funds for supplier capital investments, resulting in a total of $2 billion.

Is Aii creating a framework for carbon tracking that the industry can use for their ESG reporting?

Aii’s climate-reduction programs are aligned with the existing carbon reporting methodologies and frameworks established by the industry. Aii also participates in industry groups that are actively working to advance these frameworks.

See all FAQs

HELP US CREATE SYSTEMIC CHANGE IN THE INDUSTRY

Contact us to learn more about our strategy and how you can get involved, or learn how we’re raising and deploying grants through the Fashion Climate Fund.

Let's connect Fashion Climate Fund page