As China’s Shein pledges a labor overhaul ahead of its U.S. IPO, fast fashion giant H&M Group, in partnership with Southeast Asia’s largest bank, DBS, has launched a novel green loan program aimed at accelerating the decarbonization of its supply chains.
Can fast fashion shake off its bad rap? The fast fashion market valued at more than $100 billion as of last year, is expected to near $200 billion by 2027. The booming industry is a leading contributor to global warming; fashion produces about ten percent of global emissions. The fast fashion industry is also tied to a number of other issues including wastewater, microplastic pollution, landfill waste, and labor issues.
Secondhand platforms like Vestiaire Collective and the brick-and-mortar chain Crossroads have taken a hardline stance against fast fashion items, encouraging consumers to shop investment pieces that will instead last longer and reduce landfill waste. Consumers, particularly younger demographics, are moving toward resale and away from new fast fashion items. But key players in the industry show no signs of slowing down. And some are even pushing ahead with eco efforts and workers’ rights commitments. But are they really moving the needle?
H&M green loans
At the forthcoming 28th Conference of the Parties of the UNFCCC (COP 28), which convenes global leaders and experts to address climate change, H&M Group and DBS will participate to discuss what the clothing giant says is a groundbreaking green loan program.
“Accelerating net zero for supply chains requires the rapid scaling of low-carbon technologies and new, innovative financing models to drive adoption,” Tan Su Shan, Group Head of Institutional Banking at DBS, said in a statement. “The collaborative finance tool is a prime example of how we can create impact for suppliers. DBS is excited to be harnessing our extensive network in Asia, in partnership with H&M Group, to provide access to sustainable financing in a practical way – by directly funding factory upgrades to help suppliers improve their energy efficiency and decarbonise.”
H&M Group, which manages more than 4,800 stores globally, has made notable efforts such as investing in organic textiles, and says it aims to achieve net-zero greenhouse gas emissions by 2040, reduce its absolute water consumption, secure wastewater quality, and “contribute to the global goal to have a positive impact on nature.”
“H&M Group has been engaged in climate mitigation for years and we continuously push ourselves to demonstrate climate leadership within our industry,” said Ulrika Leverenz, Head of Green Investment at H&M Group. “We see that our industry is committed to tackle its negative climate impact. But we also see that impactful climate action requires collaborative financing. For us, sustainability investments are not only a responsible approach but a strategic necessity for future success.”
As part of its net-zero Green Fashion Initiative, H&M says the new collaborative finance tool offers suppliers financing and technical support to implement energy-efficient upgrades and reduce their carbon footprint.
The program’s first successful transaction supported Raj Woollen Industries in India. This collaboration enabled Raj Woollen to install solar panels, energy-efficient motors, and water conservation technologies. “Raj Woollen is committed to its sustainability and environmental initiatives, and one key goal is to reduce the impact of our manufacturing processes on the environment,” said Sumeet Nath from Raj Woollen Industries.
“This joint project with H&M Group, Guidehouse, and DBS has been a successful combination of expert energy assessment, close support in selecting the most suitable technology solutions, and an attractive financing model. We are confident that this will ensure the highest possible results in our decarbonisation journey, and we are grateful for this partnership,” Nath said.
The news comes as Shein, the Chinese behemoth that made more than $24 billion last year, reportedly filed for its IPO. The Singapore-based online retailer, now the largest online fashion retailer in the world, could launch its shares in the coming year, sources told Reuters. Shein has named Goldman Sachs, JPMorgan, and Morgan Stanley as lead underwriters on the offering.
Despite Shein’s meteoric rise, it has received significant criticisms over the years including allegations of using forced labor, violating labor laws, environmental damage, and appropriating designs from independent creators. Recently, it partnered with fellow fast fashion label Forever 21 — a collaboration that also earned pushback.
Currently, Shein is the subject of an investigation by the House Select Committee on the Chinese Communist Party, focusing on its connections to Beijing. This scrutiny has extended to demands from several lawmakers, including 16 Republican attorneys general, urging the Securities and Exchange Commission (SEC) to verify the absence of forced labor in Shein’s supply chain prior to permitting its entry into the U.S. stock market.
In a recent CNBC interview, Marcelo Claure, Shein’s newly appointed group vice chair and former CEO of SoftBank, stated that the company is actively engaging with lawmakers to clarify its operations. Claure asserted, “there’s no such thing as forced labor” in the Shein factories he visited. However, Shein has admitted to discovering instances of forced labor within its supply chain and has conveyed its commitment to addressing these issues, although it has yet to publish details on correcting the problem.
Related on Ethos: