Kelly Fisher, HSBC U.S. Head of Corporate Sustainability | Photo courtesy of HSBC
As of Thursday, October 20, 2022
Both Levi’s and HSBC have histories that go back 150 years, but that hasn’t stopped either from being pioneers in building a sustainable future.
The two companies recently announced their commitment to a partnership that allows Levi’s suppliers to reap financial rewards from environmentally progressive practices. At the end of its first fiscal year, HSBC’s Sustainable Supply Chain Financing program has dispensed $142 million to 21 Levi’s suppliers.
The California Apparel News spoke with HSBC U.S. Head of Corporate Sustainability Kelly Fisher to learn the details of the program and what it foreshadows for the apparel industry as a whole.
CAN: Why is this partnership with Levi’s important?
KF: The apparel industry is one of the biggest focuses right now from a sustainability perspective as its supply chain has the second-biggest footprint in the world. With a company like Levi’s, your supply chain is 70 to 90 percent of your footprint. So the industry has a chance to come together and do some really innovative things to tackle the impact they’re having on the planet right now.
HSBC is the world’s largest trade bank, and the aha moment for me was that we wouldn’t achieve our sustainability goals without financing—access to capital, investment dollars and blended finance that comes from philanthropic investment.
CAN: Looking at the apparel industry from your perspective as a bank, where do you see the inefficiencies?
KF: Usually in the apparel supply chain it’s at the point where the raw materials come in and the garments are being assembled. That’s where a lot of waste happens and where in certain countries a lot of energy like coal is used.
What’s needed is for apparel companies to put in place a code of conduct with sustainability self-assessments. So it’s like, “You’re here, and we’d like you to hit these goals.” But there have to be other ways buyers can incentivize the change they’re asking for. Levi’s has been a pioneer in this, saying, “Could we give a better rate or quicker payment to suppliers in the top tier that are really doing the hard work of moving to renewable energy, using less water, treating the workers better?” So this partnership has us taking the Levi’s way by giving suppliers access to a better interest rate and quicker payments to incentivize the improvements that Levi’s is seeking in the supply chain. We’re showing suppliers that we’re willing to invest in them because we believe they’re making important changes.
CAN: At the risk of sounding flippant, what’s in it for you as a bank? Is this almost pro bono?
KF: I’m laughing because in fact we’re known for our pro-bono efforts around the world. And our CEO has audaciously said that he wants HSBC to be the first bank to prove that an environmentally sustainable balance sheet is a profitable balance sheet. Like a lot of companies, we’ve made a net-zero carbon-emissions commitment by 2050, but to back it up we’re putting a trillion dollars of financing out there to our clients to help them get there as well.
CAN: Playing devil’s advocate, are you simply creating an industry with all this? After all, that’s what capitalism does.
KF: I’m glad you asked. Helping our clients transition means we’re not creating a new industry but helping existing companies get to where we all need to be. And we are very serious in how we look at what we’re financing and use outside sources to help verify.
CAN: There’s a certain irony built into this whole topic since this is the fashion industry, and fashion by definition is based on obsolescence. Is unsustainability simply the nature of this beast?
KF: It’s an excellent question, and I equate it to driving a car, since I worked for Toyota before coming to HSBC. Humans will always need transportation to get from point A to point B; the question that really matters is how we get there. Likewise, we’re always going to need to clothe ourselves, and I think the excitement and artistry behind the identity we create by what we put on our body is wonderful and gives people a lot of joy.
What I think you’re going to see is more thought into why we make the purchase decisions we do, more attention to how the garments are made and how long you hang on to them before you dispose of them. And Levi’s is hitting on every one of those elements. They look at where they pull the cotton—are they able to use recycled material?—how garments are made and even the end of life. They’re pioneers in “bring back your denim: We’ll repair it or reuse it” and are poised to be real leaders for a circular economy in the apparel sector.