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Aii: ‘Stage is Set’ for Fashion’s Collective Climate Action

For the Apparel Impact Institute (Aii), everything boils down to numbers.

Certainly, the multistakeholder organization, whose tentpole initiative, Clean by Design, has transitioned hundreds of mills in countries worldwide to greener, more efficient practices, cannot function without them. It’s data, after all, that underpins the Sustainable Apparel Coalition spinoff’s ability to identify, fund and scale projects that reduce the fashion industry’s prodigious impact. And it’s data that demonstrates whether its efforts are headed with sufficient speed in the right direction.

On Monday, Aii’s latest impact report summed up 2022 with some new figures. Over the past year, 380 facilities serving nearly 30 brands completed one of the San Francisco-based group’s programs, whether Clean by Design, its carbon tech benchmarking assessment or its carbon target setting. (Another 220 facilities were actively participating in at least one of these.) Together, graduates of its initiatives staved off 56,346 metric tons of greenhouse gas emissions, equivalent to taking 12,127 cars off the road. They also saved enough water to fill 714 Olympic-sized swimming pools and as much energy as would keep 3,504 washing machines chugging for a year.

Also expanding in 2022 was Aii’s reach, which increased from 19 regions worldwide to 28. Today, it covers a wide swath of the planet, including Bangladesh, mainland China, Guatemala, Egypt, India, Mexico, Pakistan, Sri Lanka, Taiwan, Turkey and Vietnam, all of which required localized tweaks to “activate” the organization’s solutions.

“We’ve always kind of known that it can’t be top-down; it almost has to be bringing the right resources to a region and letting them make them uniquely their own to solve for the problems,” said Aii president Lewis Perkins. “Because their problems are also slightly different.”

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Overall, factories made more than $8 million in investments, reaping $4.8 million in savings in return. To put it another way, the average facility shelled out more than $501,000 to recoup nearly $300,000.

To be sure, decarbonization doesn’t come cheap, particularly at the outset. According to Aii’s research, it will cost the fashion industry $1 trillion to fully decarbonize its supply chain by 2030. In June, the organization announced the launch of the Fashion Climate Fund, a $250 million collaborative that is rallying funds from donors such as H&M Group, the H&M Foundation, Lululemon, PVH Corp., Target and The Schmidt Family Foundation to “unlock” $2 billion in blended capital to help the sector meet its goal of halving carbon emissions by 2030. As 2023 kicked into gear, Aii opened its inaugural call for submissions for the Climate Solutions Portfolio, which will dole out grants from the fund.

Things are only going to ramp up now that the “stage is set” for industry engagement and collective action, Perkins said. Now comes the bridging of the gap between aspiration and execution, something that watchdog groups, from to the NewClimate Institute, say is stymying measurable progress. Aii and the World Resources Institute (WRI) estimate that the apparel industry generated 1 gigaton of CO₂ equivalent in 2019, or roughly 2 percent of that year’s global greenhouse gas emissions.

“The story of Aii, and the industry as a whole, is that 2022 was a big increase year in programmatic engagement, adoption and resourcing,” Perkins said. “From my perspective, the big story is there’s growth happening and actual climate action within Scope 3 of the supply chain.” It’s Scope 3, where a brand or retailer’s indirect operations reside, after all, where as much as 90 percent of a supply chain’s emissions are generated.

One point of pride is that the organization managed to expand its program coverage from two carbon-reduction interventions, as identified by Aii and WRI in their 2021 “Roadmap to Net Zero” report, to five, meaning that it’s tackling not only energy efficiency and energy but also maximizing material efficiency, scaling sustainable materials and practices, and eliminating coal in manufacturing.

Historically, Aii has homed in on low-hanging fruit to “whet the appetite” of users involved, said Kurt Kipka, its chief impact officer. Over time, however, it has seen manufacturers shift those efforts from an “almost purely cost-savings standpoint” to a “more strategic path,” which paved the way for other opportunities.

“The groundwork that we laid with a couple of interventions that we started with really did pay dividends for us as we look to expand that work, both with manufacturers and brands that we’ve worked with historically, but also new brands and manufacturers who are just getting started, [while] recognizing that everyone is coming at this challenge from a different perspective but can also benefit from aligned language consistent tools and resources,” he said.

But make no mistake, cost-effectiveness is still a key consideration for its initiatives, which ring up to $17 per metric ton of CO₂ equivalent reduced compared with an average of $67 per metric ton for alternative, external decarbonization strategies such as solar thermal and offshore wind.

“I don’t think that’s the only metric that you can look at when you’re thinking about a solution,” said Ryan Gaines, Aii’s chief financial officer. “But as we get into reviewing those other solutions that are out there, it’s an important benchmark to think about which ones are going to be the most cost-effective and at least to implement first. I think eventually you have to go deeper and deeper into the hard-to-reach and more expensive-to-reach carbon, but at least it helps us to start to prioritize with the limited funding that is available today.”

As 2023 barrels forward, Aii is in “build mode” around the financial unlock that it hopes the Fashion Climate Fund will accelerate.

“And so bringing more partners not just from the philanthropic or the brand engagement, but also the banks that we’re talking to and the other financial institutions that will participate in a lot of the loan models that we hoped to create,” Perkins said. “For us, it’s about building out that level of resource where we’re really starting to look at that sort of pre-seed pilot model scale approach that we’ve been pitching through our programs all along.”

For Kipka, this is the year Aii will be diversifying its projects and partners through the Climate Solutions Portfolio. So far, it has received more than 100 applications, which an advisory council comprising experts such as environmental scientist Linda Greer, Textile Exchange Climate+ director Beth Jensen and Lululemon director of product sustainability and environment Crispin Wong is reviewing.

“I have a lot of hope, as I’m reaching the end of that review process that we’ve landed on a really strong subset of the applications,” he said. “But there’s still so much room for growth, and if anything keeps me up at night, it’s that we might just miss something that might slip through the cracks. But those are the types of things that our advisory council is going to continue to dig into revisiting those criteria, making them more focused, and even framing our ask more succinctly based on key categories of filling that innovation gap.”