Net-zero fashion industry presents '$1trn investment opportunity'

Financing the transition towards net-zero emissions within the global fashion industry will present a $1trn (£0.75trn) investment opportunity over the next three decades, according to a new report.

Co-authored by Fashion for Good and the Apparel Impact Institute, the report outlines how seven solutions could help deliver net zero in the fashion industry by 2050, with 47% of CO2 reductions coming from existing solutions, 39% from scaling innovative solutions, and 14% from others.

These include a shift to renewable energy, sustainable materials and processes, accelerating the development of next-generation materials, and phasing out coal, amongst others.

The total cost to implement these solutions and achieve net zero is forecast at $1.04trn, with the majority of this spend allocated to projects that offer an attractive financial and environmental return on investment.

“This report reframes decarbonisation as an investment opportunity rather than a cost,” said Lewis Perkins, president of the Apparel Impact Institute. “These proven, investable solutions require a tremendous amount of capital, and we now need to create the pathways for all forms of financial capital in order to bring them to scale.”

Recent studies estimate that more than 2% of the global greenhouse gas emissions stem from the fashion industry, and bringing these down will be crucial as the world looks to hold global warming at 1.5°C above pre-industrial levels.

Despite more than $35trn of financial capital available globally for good return Environmental, Social, and Governance (ESG) investments – a figure expected to exceed $50trn by 2025 – critical barriers to unlocking the financial capital needed remain.

With input from key industry stakeholders, the report – which is sponsored by HSBC – highlights those barriers and presents examples of financing opportunities.

The financing opportunity is multi-faceted, and will require a committed and coordinated effort by brands, manufacturers, philanthropy, government, and industry organisations.

Philanthropic and government grants represent $50bn, only 5% of the total, but are critical for catalysing industry and financial capital.

“The fashion industry is becoming increasingly aware of its environmental impact and of the need to swiftly transition to net-zero,” said Zoë Knight, managing director and group head of the HSBC Centre of Sustainable Finance.

“This report shows that, while there are challenges to overcome, this transition is possible, and will open up new opportunities for businesses in this sector. Collective action is critical. The financial system must play its part by providing the investment to fund net-zero solutions at scale.”