Aii, for example, is currently expanding its Deployment Gap Grant program from pilot to full-scale implementation. The program brings brands together to pool capital and help cover the upfront costs suppliers might face when undertaking decarbonization measures, like installing solar-powered heat pumps for thermal energy instead of coal. “The idea is to use shared pools of funding to effectively act as a rebate for suppliers,” says Aii’s Perkins. “This way, everyone has real skin in the game.”
The Fashion Pact, a CEO-led coalition of mostly European fashion companies, is also scaling its Future Supplier Initiative, developed with Aii and professional services firm Guidehouse, and which brings big brands together to help factories secure loans by putting up capital “guarantees” that attract banks and help secure better terms. The project spent its first years developing the loan proposals, and this year, the proposals will be rolled out into real-world funded projects. H&M, Gap Inc., Bestseller, and Ralph Lauren are among the growing participant list, alongside 50 suppliers.
While climate action accelerates, advocacy organizations and suppliers are concerned that the demands to decarbonize are ignoring impacts on workers. Adaptation — which arguably has a much more direct impact on workers — is being overlooked, as are price cuts and other harmful purchasing practices that can lead to layoffs or sped-up production.
Tariffs and economic uncertainty have led some brands to cut prices to factories, even as sustainability demands increase. Any increased costs can lead to cutbacks in other critical areas, such as worker well-being, explains Saqib Sohail, head of engagement at the Microfibre Consortium and former head of social responsibility at Artistic Milliners, a Pakistan-based producer. “What we have seen is added pressure on the suppliers by the retailers and the sourcing teams,” he says, leading to layoffs and other cuts.
The Business and Human Rights Center (BHRC) is urging brands to include worker welfare and just transition commitments in their climate plans. After its Missing Thread report, released in June, it is tracking climate commitments of 65 large fashion companies, including Amazon, Kering, and Adidas, through follow-up surveys, looking at whether brands are backing decarbonization efforts with fair purchasing prices, financial support for decarbonization, and support for collective bargaining, which in turn protects workers. They also look at heat stress commitments.
“A just transition, in practice, requires green requirements to be aligned with fair pricing, longer-term sourcing commitments, and worker voice through freedom of association and collective bargaining, so that climate action does not translate into sped-up production, layoffs, suppressed wages, or unsafe working conditions,” says BHRC labor rights project manager Anithra Varia.
BHRC’s focus groups of garment workers and unions in Bangladesh and Cambodia found that new, more efficient machinery is also more productive, which can lead to layoffs and even higher production targets for workers. Women are often less likely to be trained on these machines. Workers in Bangladesh told researchers that decarbonized factories are important, but should only be called green when they are “also green for workers”.
This more expansive, human-centered view of climate action is perhaps the most ambitious — and urgent — goal the industry will grapple with this year.