Inditex Group, owner of leading fashion brands such as Zara, Massimo Dutti and Stradivarius, is backing a new fund that aims to mobilise up to $400 million to decarbonise small and medium-sized textile, apparel and footwear manufacturers in emerging markets. The Decarbonization of Textile, Apparel & Footwear Suppliers (D-TAFS) Fund will provide financing for projects ranging from renewable energy installations and machinery upgrades to water conservation and wastewater treatment. Conceived by the International Finance Corporation (IFC), a member of the World Bank Group, the fund is managed by impact investment firm Social Investment Managers & Advisors (SIMA).
Inditex and IFC are among the fund’s largest investors, with contributions of $50 million and $60 million, respectively. Other backers include FMO (the Netherlands), Proparco (France), British International Investment (UK), the Global Environment Facility (GEF) and the Apparel Impact Institute. The fund expects to raise $225 million at its first close, with further fundraising planned to reach its $400 million target in subsequent rounds.
The fund targets Asia, the Middle East, North Africa and Latin America
The initiative targets small and medium-sized enterprises (SMEs), which often lack the capital needed to modernise production technologies or transition to renewable energy. The fund will provide loans directly to factories, as well as to energy service providers and developers working with them. Eligible projects include renewable energy systems, machinery upgrades, boiler improvements, water reuse, wastewater treatment and better chemical management. The fund will focus on manufacturers across Asia, the Middle East, North Africa and Latin America.
The World Bank’s new D-TAFS fund focuses on providing long-term loans directly to manufacturers and energy developers to finance cleaner production at factory level. In addition to supporting this fund to finance fashion’s sustainable transformation, Inditex launched a separate €50 million venture capital fund in 2024 to support start-ups developing lower-impact materials and technologies.
Inditex, which aims to reduce its total emissions by up to 53% by 2030, highlighted the importance of collaboration in transforming the textile supply chain. The group’s CEO, Óscar García Maceiras, said: “The transformation of the textile supply chain requires the industry to work together and for manufacturers to have access to both the technical knowledge and the financing needed to make these investments.”
It is noted that the environmental impact of the fashion industry is largely generated during textile production rather than at the retail stage. Growing awareness of the industry’s carbon footprint, increasingly associated with fashion brands in the eyes of end consumers, has also raised attention to the issue. Despite brands having specific agreements with these supplier companies, they do not directly manage their operations. Addressing this gap and rising emissions will require prioritising the modernisation of supply chains to reduce their environmental impact.
The fund will not only provide financing for projects but also offer technical advisory support to businesses. This is expected to help ensure that the financial assistance translates into tangible environmental results.