Fashion Climate Fund – supplier-led decarbonisation

Apparel suppliers face well-known barriers to decarbonisation – limited capital, technical constraints, and inconsistent access to clean energy solutions. At the same time, much of the pressure to reduce emissions comes from brands, often without a corresponding willingness to share the cost. The Fashion Climate Fund, led by the Apparel Impact Institute (Aii), is designed to tackle these obstacles directly by supporting practical, supplier-driven solutions.

Decarbonisation has to start where emissions are highest – and that means tackling energy use in manufacturing. This fund does that, while also shifting the power balance – giving suppliers the tools and decision-making power to lead the transition on their terms.

Christiane Dolva, Head of Innovation, Research & Demonstration, H&M Foundation

Focus on high-emission suppliers in Asia

Targeting Tier 2 textile manufacturers in India, Bangladesh, China, and Vietnam, the fund supports over 2,000 facilities – particularly those with high emissions and limited access to capital. Through a supplier-led model, manufacturers are engaged in co-designing their decarbonisation journey, supported by technical and financial tools tailored to their regional needs.

This includes localised market research, workshops to align stakeholders, and partnerships with organisations to pilot solutions such as heat pumps and solar thermal systems.

Financing change, not just technology

To address the financial risk of decarbonisation, Aii is deploying blended finance models that help manufacturers access funding. The initiative also prioritises capacity building and transparency through open-data platforms that track progress, identify cost savings, and ensure accountability.

A key element is the Low Carbon Thermal Energy Roadmap – a strategic guide to phasing out fossil-based thermal energy in textile production, which guides investment into thermal energy transitions – a major emissions source in textile production. With 240 facilities already participating and plans to scale up to 2,000 by 2030, the fund demonstrates how coordinated, regional action can deliver measurable climate impact.

A replicable model for the industry

By 2030, the Fashion Climate Fund aims to contribute to reducing emissions by 30–50 million tonnes of CO2, build a model for supplier-led climate action, and secure brand commitments for electrification and cleaner energy use. If successful, the project will provide a scalable blueprint for reducing emissions across the global textile supply chain.