If H&M Group is to reach its climate positive target, it is essential to engage the supply chain; suppliers account for around two thirds of the company’s greenhouse gas emissions. Looking for scalable and effective ways to reduce supplier emissions, the partnership set up a cleantech programme in India. If successful, the project will be replicated to other countries.
According to a World Economic Forum Report, supply-chain decarbonization will be a “game changer” for the impact of corporate climate action. “Addressing Scope 3 emissions is fundamental for companies to realize credible climate change commitments. It enables companies in customer facing sectors to use their influence in supply chains to speed and support rapid decarbonization throughout the economy, and it can put pressure on suppliers in regions where governments do not (yet) do so”.
When producing textiles, for processes such as fabric dyeing and printing, large quantities of heat and steam is needed. The boilers used to produce this heat and steam are often powered by coal. Hence, finding more sustainable production methods for suppliers can drastically reduce carbon emissions.
“Since the manufacturing process is not owned by H&M Group, incentives need to be developed for suppliers to implement efficient technologies. The cleantech programme helps suppliers that invest in cleantech to get financial support and to obtain bank loans at better rates”, says Milan Kooijman, climate expert at WWF.
The aim is to develop an all-inclusive programme that offers profitable cleantech solutions to suppliers. If successful, H&M suppliers can, through the programme, significantly reduce emissions and costs over time.
The programme aims to include all types of solutions that can be offered to supplier factories, such as solar PV, lighting, insulation, pumps, fans and efficient engines. Innovative technologies, such as solar concentrators (for heat production) and hydrogen fuel cells, are also considered. However, as with most innovative technologies, considerably subsidizing is needed to make these projects viable as it will be too expensive for a single factory to invest directly. Therefore, a mix of proven technologies with short payback periods are needed together with ways that support factories to invest in mid- and longer-term solutions, including innovative technologies.
When starting up the project, the partnership conducted a business case for energy efficiency and renewable energy measures. As results were positive, the programme could continue.
“Right now we are in the implementation phase. Our main focus is to set up the programme and engage suppliers in India to implement some of the desired measures. The next step will be to scale the project in other parts of India, and potentially also to other countries and companies”, says Milan Kooijman.
How cleantech solutions make textile production more sustainable
Most boilers that produce the heat and steam necessary for garment production run on coal, which causes large emissions. To reduce emissions, two elements need to be considered; the technology producing the heat and the fuel that run the technology. A regular boiler could for example be retrofitted to burn sustainable biomass. In some cases, it is better to replace the entire boiler to achieve higher efficiency. Alternatively, solar concentrators with storage capabilities could cover some of the heat and steam needs, reducing fuel needs of the regular boilers.
The challenges of investing in cleantech
For many suppliers, switching to more sustainable production equipment and processes are costly investments. It is therefore central that technology solutions can reduce production costs, in addition to reducing environmental impacts. Several clean technology solutions available today do reduce costs in the short-term. However, only considering technologies with short payback periods will not likely provide the speed of decarbonization needed for H&M Group’s 2030 and 2040 targets. While the backbone of the programme is for factories to invest in profitable solutions, the partnership also tries to find ways to make larger investments with longer payback periods more attractive. One way of doing so is through offering financial solutions to suppliers, for example via leasing. This will not solve all issues but can help suppliers overcome the initial burden of high upfront investments.
How can the boiler energy use be more sustainable with cleantech solutions?
Boilers are used for heat and steam production. In the process of producing garments high quantities of heat and steam are needed in certain parts of the process. Currently, many of these boilers are powered by coal. Two important elements should therefore be considered, the tech to produce heat and the fuel needed. A regular boiler could for example be retrofitted to burn sustainable biomass, however in some cases it might be better to also replace the boiler to achieve higher efficiency. Alternatively, solar concentrators with storage capabilities could provide some of the heat and steam needs reducing the operational time and fuel needs of the regular boilers.
What are the benefits in investing cleantech?
Realistically, although WWF is working with H&M to reduce emissions and climate impacts, the main drive for factories is cost reduction. To some extent this is good news as there are several clean technology solutions available that can reduce costs even in the short-term. However, only considering technologies with short payback periods will likely not result in the speed of decarbonization that is needed to reach H&M’s of 2030 and 2040 targets. Therefore, although the backbone of the programme is to have these factories investing in profitable solutions, we are also trying to find ways of making larger investments with longer payback periods more attractive. One way of doing so is offering financial solutions to the suppliers, e.g. in the form of leasing. This will not solve all the issues but can help suppliers in overcoming the initial burden of high upfront investments.
