H&M Group Champions Green Investments
The latest IPPC Report found that financial flows are between three and six times lower than levels needed by 2030 to limit warming to below 2°C. Despite this, IPCC Working Group III Co-Chair Priyadarshi Shukla said: “Without taking into account the economic benefits of reduced adaptation costs or avoided climate impacts, global Gross Domestic Product (GDP) would be just a few percentage points lower in 2050 if we take the actions necessary to limit warming to 2°C or below, compared to maintaining current policies,” said Shukla. Accordingly, to close investment gaps we need clear signalling from governments and the international community, including a stronger alignment of public sector finance and policy.
The GFA Monitor platforms the need to transition production to renewable electricity across the fashion value cycle. However, the substitution of fossil fuels with renewable alternatives and the increase of energy efficiency still face a common challenge: financing.
It is crucial that the fashion industry works to close these investment gaps and accelerate investment in renewable energy sources and energy efficiency. One organisation pioneering the way in this area is H&M Group.
Committed to reducing emissions, H&M Group has set an ambitious reduction target of 56% by 2030 and Net-Zero by 2040. To stimulate this transition, H&M Group issued a €500 million sustainability linked bond in early 2021, established a dedicated climate impact budget, and set up a Green Investment Team. With this, H&M Group are already investing in renewable energy and energy efficiency together with their suppliers.
The bond proceeds will be used to finance initiatives that deliver progress against key materials and emissions targets and it is paired with a number of ambitions: increase the share of recycled materials used to 30%, reduce emissions from the Group’s own operations by 20% and reduce absolute Scope 3 emissions from fabric production, garment manufacturing, raw materials and upstream transport by 10% by 2025. Following the launch, the bond attracted significant attention on the market and was 7.6 times oversubscribed within a week. This is indicative of sustainable sentiment across the financial industry.
To ensure the necessary emission reductions are achieved, as of January 1, 2022, H&M Group will no longer onboard new suppliers or supplier factories with on-site coal boilers in their factories into its supply chain.
Exclusively focused on financially supporting projects to reduce H&M Group’s emissions, a Green Investment Team has been established. Utilising its Climate Positive Roadmap tool, the team can forecast future emissions scenarios for its full value chain and calculate the levers for greatest impact reduction, in order to prioritise where to invest.
To speed up the transition away from fossil fuels H&M group are offering financial support to suppliers, aiming to reduce investment costs by 50%. Currently three approved projects in India are forecasted to reduce a total of 80,000 tonnes of greenhouse gases annually, using for example solar thermal technology. Out of this reduction, H&M Group can only claim 15,000 tonnes per year corresponding with the share of H&M Group’s production. This highlights the need for an update of today’s carbon accounting frameworks.