This move is part of a broader initiative by fast fashion companies to make their production processes more environmentally friendly.
H&M has begun investor calls, and a debut green bond offering of around €500 million ($843 million) for eight years is expected to follow. The funds raised from this bond will be directed towards financing and refinancing various projects that prioritize sustainability, including the use of recycled materials, renewable energy sources, and sustainable water management.
Fast fashion brands have faced criticism in recent years due to the environmental impact of their business models. The constant production of new styles has led to increased carbon emissions and generated significant clothing waste. H&M, for instance, has recognized the potential negative impact on its business if consumers favor products and services from companies known for their sustainability efforts.
To address these concerns, H&M is not the only fashion brand to turn to green financing. Brands like Burberry and Mango have also tied their borrowing to green commitments, demonstrating their commitment to sustainability.
Resale initiatives have emerged as a strategy to reduce carbon and water footprints, but they have yet to significantly contribute to fashion brands’ profits. In its recent earnings report, H&M experienced a slowdown in revenue growth as shoppers turned to alternatives in a competitive market.
The green bond issuance for H&M is being managed by bookrunners such as BNP Paribas SA, ING Groep SA, JPMorgan Chase Co., SEB AB, and UniCredit SpA. This move reflects H&M’s commitment to improving its environmental practices and making its business more sustainable.
