H&M Group is among the lead funders for a new $250 million fund aimed at tackling the impact of climate change and promoting sustainability in the fashion industry.

Apparel Impact Institute (Aii), a non-profit organisation, has launched the Fashion Climate Fund with backing from H&M Group, H&M Foundation, Lululemon, and the Schmidt Family Foundation.

The fashion names are the the fund’s main contributors at this stage, with Aii stating it is also in talks with additional lead partners with the goal of each party committing $10 million over eight years.

According to a recent report by Aii report, 96 per cent of the fashion industry's emissions originate from third-party farms and factories that are shared across the industry, with such locations often deemed too risky for brands, retailers, or traditional sources of capital to make necessary upgrades and overhauls.

The Fashion Climate Fund will address this challenge by providing programmatic funding for supplier interventions across the value chain.

Funding will be directed towards areas including transitioning to renewable electricity, accelerating next-generation materials, scaling sustainable materials, eliminating coal in manufacturing, and improving energy efficiency.

Aii will collaborate with sustainability-focused entities including Textile Exchange and Fashion for Good to address these key challenges.

Lewis Perkins, president of Aii, said: "By aligning industry leaders and climate-focused philanthropists behind scalable solutions, the Fashion Climate Fund opens a pathway for greater collaboration and cross-pollination of solutions, facilitating greater investment and stronger collective action toward the industry goal of halving emissions by 2030.

“We are greatly encouraged by the leadership and decisiveness shown today from these lead partners and honoured to play this role as we open up this first phase of the project finance,” he added.

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