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Good Fashion Fund makes new investments in India and Bangladesh 

Published: 11 July 2023

Fund managers Fount have invested in Indian ready-made garment manufacturer Progress Apparels and Bangladeshi cotton yarn and denim fabric producer Sri Kannapiran Mills.

India’s Sri Kannapiran Mills (SKML) is one of the the latest investments of the Good Fashion Fund | SKML

The Good Fashion Fund (GFF) has announced the completion of two new investments, including its first investment in Bangladesh and its second in India.  

The $19m (€17.3m) fund, which is managed by Amsterdam-based impact investment specialists Fount, has invested $1m in Progress Apparels, a Bangladeshi ready-made garment manufacturer producing woven bottoms for international brands and retailers. It has also provided a $2.5m (€2.3m) loan to Sri Kannapiran Mills (SKML), an Indian sustainability-oriented cotton yarn and denim fabric producer. 

Launched in 2017, Progress Apparels is part of PDS, a global fashion infrastructure platform which offers product development, sourcing, manufacturing, and distribution for major brands and retailers across the world. GFF’s investment will be used to fund a modern in-house washing plant at its factory in the capital Dhaka, whose washing, drying and hydro machinery will save on water and chemical usage as compared to conventional machinery.  

SKML, which has been in operation in the southern Indian city of Coimbatore since 1946, will use the loan to invest in the replacement and expansion of key equipment used in spinning and post-spinning processes in two of its spinning factories and in airjet looms and fabric singeing equipment at a denim fabric weaving and processing factory.  

The company, which is strongly focused on sustainability and has received national and international accreditations for its environmental and social welfare standards, will use the investment to scale its production and generate significant operational savings, particularly in the areas of energy consumption and material waste reduction. 

The savings generated by both investments in more efficient equipment are expected to pay back part of the loans and interest over the term of the investment.   

Speaking to Impact Investor, Bernadette Blom, founding partner at Fount, said: “Even after the loans are fully repaid, the companies will continue to benefit from cost savings generated by the more efficient equipment, whilst at the same time increase their revenue by attracting new brands thanks to their improved sustainability credentials.”   

GFF was launched in 2019 by the Laudes Foundation, The Mills Fabrica, a platform for accelerating innovations in sustainability and social impact, and Fashion for Good, a global innovation platform for the fashion. It previously announced a $4.5m loan investment in Pratibha Syntex, a textile and garment producer, in India in 2021. 

Supply chain traceability 

The environmental impact of fashion cannot be understated. According to a fashion industry report published last year, the sector contributes 2% of all global greenhouse gas emissions (some reports have placed it as high as 8%), but the vast majority of these emission (96%) are indirect (in Scope 3), making them difficult to trace and easy to ignore. 

The lack of transparency in what is a long and very fragmented fashion supply chain, also makes other issues such as water usage, chemical pollution, loss of biodiversity and social injustice difficult to monitor and manage.  

Bernadette Blom, Fount

But Blom said that the EU’s Corporate Sustainability Due Diligence Directive, which was given the green light by the European Parliament in June, and which will place mandatory human rights and due diligence requirements on companies, would increase pressure on the fashion industry to improve the transparency of its value chain, leading, it is hoped, to improved social and environmental impacts.   

She said that by bringing the washing plant in-house, Progress Apparels was also promoting supply chain traceability and transparency. 

“GFF’s investment in the in-house washing plant not only generates savings in water and chemical usage compared to conventional machinery, but also promotes supply chain traceability and transparency as washing is no longer outsourced, and the factory is now well capable of monitoring water, energy and chemical usage and the social well-being of its employees,” said Blom. 

GFF expects the investment to reduce water usage by 66% , energy usage by 37% and steam release by 72%. Moving operations in-house will also reduce the carbon footprint associated with transportation. 

Social impact 

A reputation for poor labour conditions has long plagued the fast fashion sector,  and GFF is seeking to address this by including social impact as one of its ‘five goods’ or impact focus areas. Its ‘good lives’ goal includes both fair working conditions and gender equality, which Blom said was a central consideration in the investments in SKML and Progress Apparels.  

 “For each investee we agree on a so-called social action plan, developed jointly with our social advisor, with milestones to be met during the term of our investment to improve the social elements within the manufacturers where needed,” said Blom, adding that as well as agreeing a reporting template and measuring the environmental and social impact on a quarterly basis, GFF’s environmental and social advisors would pay annual visits to each company to monitor progress and review their environmental and social action plans, adjusting KPIs where relevant.  

“For the social KPIs, on top of collecting the quantitative information, we invite our investee companies to share more qualitative information and a narrative on improvements made annually,” she added.   

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