DBS partners Future Supplier Initiative to decarbonise fashion sector

DBS has partnered the Future Supplier Initiative to offer a collective financing model to support apparel suppliers’ decarbonisation, the bank announced on Thursday (Jun 13). 

The initiative aims to reduce financial risks and responsibilities of transitioning to renewable energy sources in Tier 1 and Tier 2 garment and textile factories. 

Tier 1 factories directly supply fashion brands with the final product, while Tier 2 factories supply Tier 1 factories with resources to manufacture the product.

Facilitated by The Fashion Pact, the partnership also features Apparel Impact Institute and Guidehouse.

To reduce the cost for suppliers, the initiative will work with fashion brands to decrease the cost of capital for loans that can accelerate decarbonisation. It will also offer technical support to help suppliers identify and implement low-carbon technologies and solutions. 

Currently, about 99 per cent of total fashion brand emissions occur along the supply chain. 

Electrification and renewable energy solutions, such as adopting energy-efficient technologies and transitioning to renewable energy sources, are often accompanied by lengthy payback periods. This can span decades and deters suppliers from adopting these solutions. 

With a brand-agnostic mechanism, the initiative will develop and finance projects to support both brands and suppliers to meet their science-based targets and stay within the 1.5 degree trajectory, DBS said. 

The initiative, supported by Bestseller, Gap, H&M Group and Mango, will begin with a programme in Bangladesh, and intends to expand into other key apparel manufacturing regions including Vietnam, India, China, Italy and Turkey.

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This builds on the success of a programme in November 2023, when DBS partnered H&M Group and Guidehouse to work with a manufacturer in India. Its factory operations achieved 50 per cent emissions reductions. 

Tan Su Shan, DBS’ group head of institutional banking, noted that the initiative will “offer practical help by directly funding factory upgrades to help suppliers improve their energy efficiency and reduce their carbon footprints”.