Jakarta – Two new reports from the UN Climate Change’s Fashion Industry Charter for Climate Action have called for innovative financing and market-based approaches to accelerate emissions reductions across the fashion industry, particularly in upstream manufacturing, the UN Climate Change said on its website on Thursday, August 27.
The reports, “Carbon Market Solutions for Decarbonising Fashion” and “Financing Mechanisms to Support Decarbonisation within the Fashion Sector”, examine how carbon markets and sustainable finance can help direct capital toward emissions-intensive parts of the fashion value chain.
“Capital and incentives can be directed to where emissions reductions must occur,” said Matthew Guenther, co-chair of the Fashion Industry Charter for Climate Action Steering Committee, stressing the need to look beyond conventional financing approaches.
The carbon markets report examines tools including internal carbon pricing, insetting, mitigation contributions and carbon removals. It also highlights how emerging carbon pricing and compliance systems, particularly in Southeast Asia, are changing incentives for suppliers.
The second report reviews financing instruments that could support decarbonisation, including green and sustainability-linked loans and bonds, grants, blended finance and energy performance contracts. It also examines collaborative financing models drawn from the fashion and wider manufacturing sectors.
A key finding is that small and medium-sized upstream suppliers, including raw material providers, often struggle to access affordable capital despite accounting for a significant share of emissions. Fragmented supply chains, short-term purchasing practices, limited data and perceptions of high risk continue to hinder investment in renewable energy and low-carbon technologies.
The reports point to greater collaboration among brands, suppliers and financial institutions as a way to overcome these barriers. Proposed approaches include pooled finance, shared verification systems, collective power purchase agreements and supplier-focused decarbonisation programmes.
Brian La Plante, Senior Manager Sustainability at YKK Fastening Products Group, said achieving the industry’s climate goals would require new approaches and greater cooperation across the fashion ecosystem.
The reports were developed by the Fashion Industry Charter for Climate Action with analytical support from the Carbon Trust and input from Charter signatories and other stakeholders.
Their findings are intended to help fashion companies meet their commitment to net-zero emissions by 2050 while improving supply-chain resilience and competitiveness. (nsh)
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