HSBC and IUCN join hands to develop low carbon strategy for local apparel industry

• Industry to embrace global mandate of ‘responsible fashion’
• Prothero says transition into greener development imperative for growth and long-term stability
• HSBC has teamed up with Walmart to launch a new programme that offers its global suppliers improved financing rates tied to sustainability performance

By Nishel Fernando 

Sri Lanka’s largest international bank, HSBC Sri Lanka and International Union for Conservation of Nature (IUCN) have joined hands to develop a cohesive low carbon development transition strategy for the local apparel industry.

The strategy aims to drive Sri Lanka’s apparel industry’s transition into a low carbon development to support the industry to embrace the global mandate of ‘responsible fashion’.
“The apparel industry is a critical income earner for Sri Lanka, and supporting its transition into greener development is imperative for the growth and long-term stability of the industry. 
“Currently, there’s no common strategy to reduce negative footprints or a well-defined mechanism to adopt sustainable financing at sector level. We believe that knowledge-based intervention is the best way to ensure change is impactful and sustainable in the long-run,” HSBC Sri Lanka and Maldives CEO Mark Prothero said addressing the launch event of the project in Colombo yesterday. 

IUCN Sri Lanka, Country Representative, Dr. Ananda Mallawatantri highlighted that small and medium-sized players in particular will benefit from such a strategy as they will gain much needed access to finance to implement sustainable initiatives. 

“Brnadix is a company that has been on the very forefront in terms of reducing carbon footprint and in terms of being green and more sustainable. Hence, Brandix is not probably a company we are aiming at. We are really looking at the overall supply chain in Sri Lanka,” Prothero added. 

In addition to green financing, local apparel will also get funding from HSBC’s corporate social responsibility (CSR) initiatives to enhance their sustainability practices, once the strategy is in place.  The global apparel consumption is projected to rise by 63 percent by 2030, which would lead to a 50 percent increase in water consumption, 55 percent increase in greenhouse gas emissions and 28 percent increase in waste creation. 

Hence, Dr. Mallawatantri pointed out that Sri Lanka’s apparel industry needs to adopt sustainable practices in water, energy, chemicals and waste management at a broader level.  During the strategy development process, IUCN Sri Lanka will partner with the Joint Apparel Association Forum (JAAF), National Cleaner Production Centre (NCPC) and the Board of Investment (BOI) to generate and validate information.

In 2017, HSBC pledged US$ 100 billion in sustainable financing and investment to be provided and facilitated by 2025. So far, HSBC has fulfilled US$ 28.5 billion of its commitment.  Speaking to Mirror Business on the sidelines of the launch, HSBC Sri Lanka and Maldives Head of Wholesale Banking, Stuart Rogers revealed that Sri Lankan firms might get access to sustainability-linked loans offered by HSBC in another 1-2 years. 

“Over a period of time, a framework will be built for sustainability-linked loans,” he said. 

HSBC recently teamed up with one of the largest retailers in the world, Walmart, to launch a new programme offering its global suppliers improved financing rates tied to their sustainability performance.

Rogers noted that Sri Lankan manufacturers could benefit from international brands linked to them entering into such partnerships with HSBC. 
“This could be something relevant to Sri Lanka. If a larger brand (buyer) signs up for sustainable financing frameworks, potentially Sri Lankan manufacturers benefit from it, in particular SMEs,” he said. 

HSBC Sri Lanka currently offers green loans for local apparel firms, which are mainly large-scale operations, such as Brandix and MAS. 

Sustainable financing in the apparel and garment sector has the potential to contribute to several UN SDGs, namely, SDG6: Ensure availability and sustainable management of water and sanitation for all; SDG9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation; SDG11: Making cites and human settlements inclusive, safe, resilient and sustainable; and SDG13: Take urgent action to combat climate change and its impacts.