Suppliers to big companies and brands are under pressure to not only disclose their carbon emissions/footprint but also to take action to reduce them. Typically, those suppliers/vendors are left to their own to find – and fund – those opportunities. However, there are companies who are taking more responsibility for helping their suppliers. ESGToday reported on such an initiative by Sweden’s H&M Group:
“Fashion and design brands company H&M Group announced the launch of a new green loan program aimed at facilitating decarbonization in the fashion sector in partnership with Singapore-based financial services group DBS. Under the new program, H&M’s suppliers will get access to financing from DBS, with ‘highly favorable’ terms to suppliers with specific GHG emission reduction activities. In addition to the financing, suppliers in the program will also receive technical support from sustainability consultant, Guidehouse, to embark on factory upgrades to decrease their climate impact.”
This kind of thing could very well catch on, but how fast is a big question. There are also questions about who will be allowed to “get credit” for program benefits. I wrote about a WalMart program a long time ago that
“… cost savings achieved by suppliers because of sustainability initiatives were to be reflected in price reductions for products sold to the retailer. Suppliers in this scenario won very little because they could not harvest value of the initiatives – all value rested with WalMart. In this case, there was little financial incentive for suppliers to undertake sustainability efforts…”
Even with favorable financing terms from H&M for climate programs, there still has to be an adequate ROI for suppliers. Keeping a big customer (like H&M) happy is part of the ROI, but there probably should be even greater financial incentive to support increasing costs for GHG reductions. That is an important consideration for suppliers as well as other companies considering replicating H&M’s program.
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Photo credit: Mariakray – stock.adobe.com