| Project Detail |
Scope 3 emissions, or the indirect greenhouse gas emissions that occur across an entire value chain, from raw material extraction to distribution, are among the most extensive and challenging to mitigate. Significantly reducing these emissions is critical to achieving sustainability goals but to date there have been no compelling solutions capable of aggregating sustainability improvements across a diverse and fragmented supply chain.
Almost a third of the worlds emissions come from processes associated with manufacturing and over 80 percent of those emissions are attribute to supply chain activities. Pressure is growing on many companies to make more significant inroads into the carbon emissions from their supply chains. For global corporates this has presented a difficult challenge, as the supply chain activities are associated with the production of their goods and therefore part of their global environmental footprint, but the companies rarely direct own or control the production methods by which the emissions are produced. This challenge has made many multinationals, particularly those in the Manufacturing sector, keen to find innovative and actionable solutions.
In answer to this challenge, IFC proposes to collaborate with GEF and a global, multinational Brand Client to pilot the first Supply Chain Decarbonization Platform to provide long-term, green-linked loans to manufacturers, suppliers or third parties across emerging markets. This initial US$163+ million platform, piloted first in the Textile and Apparel sector where Scope 3 emissions exceeds 95% of the total emissions, will aim to demonstrate a new financing structure capable of catalyzing and aggregating decarbonization investments. Simultaneously, leveraging the aggregated access provided by the financing structure, IFC/GEF will use this opportunity to systematically move participating supplier factories to safer chemical alternatives in production, in line with the GEF-supported conventions and lay the groundwork for safer chemical use to be a necessary eligibility condition of working with Global Brands. This Chemicals & Waste engagement, which will implemented in parallel to the financing structure, will be additional to the expected mercury savings expected to be generated by operational decarbonization upgrades that will be implemented as part of Component 1.
Gender-specific engagement for the Decarbonization Platform will be designed along the strategic pillar of Expanding and Enabling Economic Opportunities for women and will be implemented by through a gender responsive M&E framework that will include gender disaggregated metrics for supplier engagements. IFC will engage through collaboration and coordination with two active gender-based IFC programs currently operating at supplier factories in Textiles and Apparel. These programs are both IFC-run and IFC-staffed and are currently active in the majority of countries included under the Program’s initial pipeline.
Due to the perceived risk associated with the newness of this structure, lack of track record of performance of prospective borrowers under this approach, and their overall lack of comfort with providing a higher level of contribution to suppliers who also serve other brands, GEF resources are critical to derisk the Platform and ensure its success. GEF resources will be complemented by a unique and innovative feature to this platform, a 15 percent first loss guarantee from the Global Brand’s own balance sheet to help mitigate the potential risk of the subprojects that comprise the facility. |
