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PVH introduces financing for high ESG-rated suppliers

Image of PVH Corp companies - Calvin Klein and Tommy Hilfiger
Copyright: © 2020 SOPA Images


  • PVH Corp., the parent company of Calvin Klein and Tommy Hilfiger, has launched a financing program aimed at boosting sustainability efforts among its suppliers. In line with its climate commitments, PVH is encouraging suppliers to establish their own greenhouse gas reduction targets and plans.

  • The company's initiative involves a supply chain financing program that offers improved financing rates to manufacturers based on their sustainability performance.

  • Partnerships with major banks will provide suppliers with competitive access to capital, with rates linked to environmental and social performance metrics. PVH aims to reduce its reliance on standard cotton and virgin polyester, focusing on sustainable materials like hemp.

  • The company has also made progress in water conservation, and it has invested in textile recycling programs. To support the fashion industry's move towards decarbonization, PVH has committed $10 million to the Apparel Impact Institute's Fashion Climate Fund.

Deep Dive:

In an effort to expedite progress in its climate commitments, PVH Corp. is taking innovative steps to motivate suppliers towards tangible action and the formulation of their own sustainability targets.

The parent company of Calvin Klein and Tommy Hilfiger has recently unveiled its annual Corporate Social Responsibility (CSR) report, outlining significant strides it has taken towards addressing climate responsibility in the past year. Notably, PVH carried out its inaugural analysis of climate-risk scenarios and bolstered its carbon accounting capabilities. This enhancement, according to Rick Relinger, Chief Sustainability Officer, was aimed at gaining a more profound comprehension of climate-related risks spanning the company's operations, as well as attaining a more accurate measurement of emissions reduction.

With the recognition that Scope 3 emissions, stemming from facets outside direct control of the supply chain, constitute the predominant portion of the carbon footprint in the apparel sector, PVH took the decision last year to collaborate with its suppliers in order to establish their own goals for reducing greenhouse gas (GHG) emissions. Furthermore, the company worked to develop actionable strategies for attaining these goals. As a part of this initiative, PVH also rolled out a supply chain financing program, entailing improved financing rates for manufacturers who exhibit commendable sustainability performance.

PVH acknowledged that "Scope 3 emissions continued to represent the majority of total emissions, accounting for 97 percent of our GHG footprint for 2022." Building on this understanding, PVH has entered into partnerships with prominent financial institutions including HSBC, Standard Chartered, and DBS. These partnerships will furnish suppliers with competitive access to capital, with the interest rates being contingent upon their performance in the realms of environmental and social responsibility. Suppliers that establish science-based targets and prioritize the provision of safe work environments, equitable compensation, and other benefits will be entitled to more favorable terms. The advancement of suppliers in these areas will be evaluated against PVH's proprietary supply chain benchmarks as well as industry tools such as the Social & Labor Convergence Program and the Higg Facility Environmental Module.

Presently, a noteworthy 89.6 percent of PVH's global suppliers meet the company's minimum requirements for environmentally sustainable sourcing. The company has also exhibited its commitment to the rights of workers by becoming a signatory to the Pakistan Accord, which forges legally binding agreements between brands and trade unions with the aim of enhancing worker safety. In Bangladesh, PVH has launched a $5 million, five-year project dedicated to supporting development programs that will benefit 100,000 women. This initiative builds on PVH's ongoing efforts in regions including Tunisia, Vietnam, India, and Sri Lanka.

PVH is simultaneously pursuing strategies to reduce emissions through the adoption of low-impact design methodologies. The company organized comprehensive training sessions for over 800 of its global design professionals, imparting knowledge about designing and creating products using environmentally preferred materials aligned with the PVH Circular Design Framework. This framework encompasses considerations such as material efficiency, durability, end-of-life potential, and resource conservation.

Employing methodologies such as Textile Exchange’s Preferred Fiber and Materials Matrix, the Sustainable Apparel Coalition’s Material Sustainability Index data, and insights from Fashion for Good, PVH has constructed a comprehensive framework for categorizing materials and fibers as preferred options for sourcing. This approach equips PVH's product development teams with actionable insights to foster increased adoption of materials that have lower environmental impact.

PVH's objectives extend to reducing its dependence on conventional cotton and virgin polyester, with a concurrent emphasis on promoting the utilization of alternative materials like hemp (as evident in the Tommy Jeans line). Impressively, 56 percent of the materials used in the past year were classified as environmentally preferred, a notable increase from the 44 percent achieved in 2021. Notably, cotton is the primary material used across various product lines, with 69 percent conforming to environmentally preferred standards in 2022. Meanwhile, 38 percent of polyester met the company's environmental preference framework, along with 15 percent of viscose and 13 percent of wool.

PVH also embarked on testing and implementing textile recycling programs, leveraging recovered fibers, yarns, and fabrics from its supply chains. The company adopted technology from the Infinited Fiber Company, which transforms cellulosic materials into new fibers. The first commercial shirts utilizing these upcycled materials were released under the Tommy Hilfiger brand in Europe. Moreover, PVH collaborated with textile-to-textile recycling firm Renewcell on a line of products for Tommy Jeans. Additionally, the company joined forces with the Ellen MacArthur Foundation’s Jeans Redesign program, producing 43,000 garments adhering to the organization's guidelines.

Demonstrating its commitment to water conservation, PVH reported achieving its water usage and water body health improvement goals for the regions from which it sources, ahead of schedule by three years. The company effectively curtailed the discharge of 80 percent of hazardous chemicals and microfibers from its wet processing facilities, with the aim of reaching 100 percent by 2025.

To invigorate the decarbonization efforts across the fashion supply chain, PVH has allocated $10 million to the Apparel Impact Institute’s Fashion Climate Fund. This financial commitment is anticipated to facilitate supplier transition towards renewable energy adoption, improved energy efficiency, elimination of coal in manufacturing processes, and the expansion of sustainable material usage.

In evaluating supplier performance, PVH will assess metrics aligned with its environmental aspirations, as well as those related to health, safety, child labor, forced labor, and the presence of harassment and abuse at manufacturing sites.

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