Apparel group H&M has partnered with one of Southeast Asia's largest banks, DBS Bank, to offer financing solutions to businesses along the supply chain to drive decarbonisation.
The duo has established a joint financing programme that has been developed to provide suppliers with access to finance from DBS and technical support from sustainability consultancy Guidehouse to modernise factories and reduce climate impact.
"Unlike traditional banking solutions that indirectly support such environmentally friendly activities, this programme offers suppliers direct financing on highly favourable terms for specific greenhouse gas emission reduction measures approved by the H&M Group," the company explained in a press release.
"We recognise that our industry is committed to tackling its negative impact on the climate. However, we also recognise that effective climate protection measures require joint financing. For us, sustainability investments are not just a responsible approach, but a strategic necessity for future success," comments Ulrika Leverenz, head of Green Investments at the H&M Group.
Raj Woollen in India has already utilised loan
The first successful transaction has already been completed with manufacturing company Raj Woollen in India, which utilised the loan to install solar panels, energy efficient motors and water saving technologies to conserve resources and reduce carbon emissions.
"This joint project with the H&M Group, Guidehouse and DBS is a successful combination of expert energy assessment, close support in selecting the most suitable technical solutions and an attractive financing model. We are confident that we will achieve the best possible results in our decarbonisation journey and we are grateful for this partnership," said Sumeet Nath, managing partner at Raj Woollen Industries in Panipat, Haryana.
Representatives from H&M Group and DBS will meet at the 28th Conference of the Parties to the UNFCCC (COP 28) in Dubai, starting on Thursday, to share new strategies and discuss best practices and innovative solutions. COP 28 aims to build on past successes and pave the way for future ambition to effectively tackle the global challenge of climate change.
"Accelerating the net zero of supply chains requires rapid scaling of low carbon technologies and new, innovative financing models to drive adoption. The collaborative finance tool is a great example of how we can make a difference for suppliers. DBS is pleased to leverage its extensive network in Asia in partnership with H&M Group to provide access to sustainable finance in a practical way - by directly financing factory upgrades to help suppliers improve their energy efficiency and decarbonise," said Tan Su Shan, group head of Institutional Banking at DBS.