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Fashion retailer Inditex SA, the parent company of Zara, has committed $50 million to a fund offering low-cost loans to suppliers investing in energy efficiency and cleaner energy solutions. The initiative comes as the fashion industry faces increasing pressure to reduce its carbon emissions, media reports indicate.
The fund, led by the International Finance Corporation (IFC), the World Bank's private-sector arm, is part of a public-private partnership described by Inditex Chief Executive Officer Óscar García Maceiras as the first of its kind. IFC aims to raise $400 million to support small suppliers in transitioning to net-zero business models.
According to United Nations estimates, the textile industry accounts for up to 8% of global greenhouse gas emissions. Many suppliers operate in developing countries that are particularly vulnerable to extreme weather events linked to rising temperatures.
However, access to finance remains a challenge for smaller suppliers seeking to invest in energy-efficient machinery and affordable renewable energy. The fund aims to address this gap by providing lower-cost financing to help these businesses upgrade operations, reduce emissions and adapt to climate-related risks.
Emissions are “connected with all of the processes” contained within the fashion industry’s supply chain, García Maceiras said. “That’s why supporting the transformation of the suppliers; in terms of water consumption, use of chemicals, waste or the implementation of renewable energies, is key.”
The initiative coincides with the COP31 climate summit in Turkey, where countries are discussing a $1.3 trillion climate finance target for developing nations. Turkey, as the host country, launched the Climate Implementation Bridge in September to translate climate commitments into actionable projects.
García Maceiras highlighted the need for collective industry action to address emissions across textile supply chains, noting that suppliers often work with multiple retailers. He said Inditex intends to act as a catalyst for wider industry participation in the fund and encourage other companies to join the initiative.
“This is not an Inditex fund; it’s open to the industry as a whole,” he said. The goal is to “demonstrate that with the involvement of different players within the textile industry, we could reach the objective of the transformation of the whole industry.”
The small and medium-sized suppliers “at the heart of global brand supply chains need access to affordable, appropriately structured financing to stay competitive,” Sarvesh Suri, the IFC’s regional vice president for Asia and the Pacific, said in a statement.
Under the proposed structure, impact investor Social Investment Managers & Advisors LLC will manage the fund, which will extend loans to textile manufacturers as well as the energy companies supplying them, according to a joint statement released on Tuesday. Eligible businesses will also have access to free technical assistance to adopt renewable energy, improve the energy and water efficiency of machinery and reduce chemical consumption.
The fund has also attracted investments from the US-based Global Environment Facility and Apparel Impact Institute, Dutch development bank FMO, French development financier Proparco and British International Investment. Its initial funding round is expected to raise $225 million, with subsequent rounds planned to meet the overall fundraising target.
“The success of the fund and the involvement of relevant institutions could open the door for additional, similar initiatives that could reach a wide range of different suppliers,” García Maceiras said.
The investment builds on over two years of research by Inditex to assess the funding requirements of its suppliers for reducing emissions and limiting their environmental impact. The move forms part of the retailer’s broader strategy to lower its environmental footprint while continuing to expand its business.
“The idea is to reduce the total emissions of the group while maintaining the expected growth that we have been achieving consistently year after year,” García Maceiras said. “By 2030, our aim is to reduce up to 53% of our total emissions. At the end of 2025, we reached 11%.”
