Inditex has committed 50 million dollars (more than 44 million euros) to the first 'blended finance' fund aimed at mobilizing up to 400 million dollars (more than 352 million euros) to transform the supply chain of textiles, apparel, and footwear in emerging markets. The main objective is to support small and medium-sized enterprises (SMEs) in the sector, the company said.
The investment vehicle has been launched by Social Investment Managers & Advisors LLC (SIMA) and the International Finance Corporation (IFC), part of the World Bank Group. This fund seeks to facilitate access to credit for manufacturers in the textile industry and accelerate projects that reduce their environmental footprint.
The anchor partners of the Fund for the Decarbonization of Textile, Apparel, and Footwear Suppliers (D-TAFS, by its English-language acronym) are IFC and Inditex, which will allocate up to 60 million (more than 52.8 million euros) and 50 million dollars (more than 44 million euros), respectively. Alongside them are other institutional investors such as FMO (Netherlands), Proparco (France), British International Investment (United Kingdom), Global Environment Facility (USA), and Apparel Impact Institute (USA).
The fund’s first close is set at 225 million dollars (more than 198 million euros), although new capital-raising rounds are contemplated to add more participants until reaching 400 million dollars (more than 352 million euros).
"Small and medium-sized suppliers are pillars of the supply chains of global brands and need access to affordable financing structured appropriately to maintain their competitiveness. This new fund brings together leading brands, investors, and suppliers around a common solution: mobilizing capital to improve productivity, energy efficiency, and operational resilience, and to contribute to the maintenance of quality jobs," said Sarvesh Suri, IFC’s regional vice president for Asia and the Pacific.
D-TAFS is structured as a blended finance initiative that combines private capital and development funds to provide financing through debt on advantageous terms, tailored to the needs of suppliers in developing countries, with a particular focus on Asia, the Middle East, North Africa, and Latin America. In addition to financial resources, the fund includes technical assistance to support manufacturers in identifying, designing, and executing projects.
"Transforming the textile supply chain requires the industry to work jointly and for manufacturers to have access to both technical knowledge and the financing needed to make investments. At Inditex we are already collaborating with our suppliers to understand the needs of their factories and develop specific transformation plans. D-Tafs can help take the next step: converting the improvements identified into investments and measurable results, enabling the industry’s transformation," said Inditex CEO, Óscar García Maceiras.
To ensure the real impact of the fund, a monitoring mechanism with accountability every four months has been planned, in which reports and evaluations of the environmental results obtained from the measures financed will be produced, with particular attention to the emissions reductions achieved.