Financing our transition

How we use financing is one way we support projects across different parts of our value chain. Today, much of this work focuses on reducing greenhouse gas emissions in the supply chain and supporting the climate transition. Financing may also support selected initiatives linked to other priorities, such as material sourcing, innovation and resource use. Some financing goes to suppliers, partners and shared industry initiatives, while we also make selected investments within our own business to help develop, test or implement relevant approaches.

Our approach

Our financing approach focuses on projects and pilot technologies that may otherwise be difficult to fund due to longer payback periods, implementation risks, uncertain returns or limited access to suitable financing. This may include, for example, technologies and approaches that are not yet widely deployed in the fashion value chain but may be relevant to reducing emissions or supporting other sustainability priorities where there is a defined opportunity to test their suitability in specific contexts.

Some financing supports investments that can contribute to reducing greenhouse gas emissions across our value chain. Other financing supports the capabilities, infrastructure, partnerships or business models needed to test, develop or implement approaches linked to our sustainability work.

One focus area is the energy-intensive stages of manufacturing, particularly fabric production processes such as dyeing and finishing. This includes improving energy efficiency through measures such as upgrading equipment in fabric mills. It can also include projects that electrify production processes, such as replacing fossil-fuel-based systems that provide steam or other heat used in manufacturing. Electrification can support emissions reductions where it is combined with, or enables a transition to, renewable electricity.

Other examples include materials development, waste management infrastructure, logistics and services that extend product use, including resale, where offered.

Collaboration can help address barriers that individual companies, suppliers or partners may find difficult to overcome alone, including access to capital, technical expertise and the need for coordinated action across shared parts of the value chain.

In 2026, we published a white paper with EY exploring common challenges and potential approaches to financing supply-chain decarbonisation in the fashion industry. For more information, read the paper here.

Some of our financing initiatives

Future Supplier Initiative (FSI)

The Future Supplier Initiative (FSI) brings brands together to help mobilise financing for projects aimed at reducing emissions at shared suppliers producing fabric and finished garments. The initiative builds on the supplier relationships of participating brands and organisations, together with financial institutions and technical partners. It also provides access to technical support for project development and implementation.

H&M Group, BESTSELLER, Gap Inc., Mango, Ralph Lauren, Marks & Spencer and Tchibo are currently developing investment proposals for the first projects at shared suppliers in Bangladesh and India, targeting selected factory-level activities with emissions-reduction potential. The initiative is now working towards first project implementation and exploring opportunities to expand to new regions as more brands join.

Green Fashion Initiative (GFI)

Limited technical expertise, restricted access to finance, high interest rates and uncertain returns on investment are common barriers for suppliers seeking to reduce emissions. Through the Green Fashion Initiative, we provide direct financial support for selected supplier investments, including through guarantees and our network of banking partners.

The programme covers initiatives within the following categories:

• Electrification of energy-intensive processes, such as heat pumps or thermal energy storage or other selected technologies that may need to be tested in specific supplier contexts, where these are intended to replace fossil-fuel-based heat systems and are combined with, or developed alongside, access to renewable electricity.
• Installation of on-site solar panels to enable factories to generate renewable electricity and aimed at reducing the reliance on other energy sources, where local conditions allow.
• Investment in off-site solar or wind facilities intended to increase access to renewable electricity for factories.
• Replacing boilers or changing fuel types where this can reduce reliance on fossil fuels and enable the use of more efficient and renewable alternatives, where available and appropriate for the specific context.
• Energy-efficiency projects where measures identified through on-site audits may require additional support due to longer payback periods or limited electrification options in the relevant market.

Power purchase agreements (PPAs)

We have signed virtual power purchase agreements (PPAs) with renewable energy developers. These agreements are designed to provide long-term price certainty for developers. The electricity generated goes into the local grid, while H&M Group receives the recognised renewable electricity attributes linked to the project.

H&M Group Ventures

Separately, H&M Group Ventures invests in entrepreneur-led companies and provides expertise from the fashion industry. Some investment themes are relevant to our climate and materials priorities, such as technologies that can support emissions reductions, textile-to-textile recycling and services that can extend product use. Examples include Rondo, a startup focused on turning electricity, including renewable electricity, into stored heat using thermal batteries, and Syre, a company focused on textile-to-textile recycling.

Supporting renewable energy development

We also participate in financing approaches that can support renewable energy infrastructure. One example is our letter of intent to explore co-investment in the development of a wind farm in Bangladesh together with BESTSELLER.