UN Climate Change News, 27 August 2026 - Two new reports from UN Climate Change's Fashion Industry Charter for Climate Action examine how market‑based approaches and sustainable finance tools can unlock capital for emissions reductions across the fashion industry, with a focus on upstream manufacturing in major production countries.
"These reports build on earlier work identifying the structural barriers to supply chain decarbonisation by examining how capital and incentives can be directed to where emissions reductions must occur," said Matthew Guenther, co-chair of the Fashion Industry Charter for Climate Action Steering Committee. "They invite the industry to reflect more deeply on whether our current market and commercial models are capable of delivering our climate ambitions. Overcoming these challenges will require collaboration, shared responsibility and a willingness to think beyond conventional financing approaches."
Together, the two publications - Carbon Market Solutions for Decarbonising Fashion and Financing Mechanisms to Support Decarbonisation within the Fashion Sector - address complementary sides of the same challenge.
The carbon markets report explores how mechanisms such as internal carbon pricing, insetting, mitigation contributions and carbon removals can support value chain decarbonisation when aligned with credible carbon market standards and a clear plan for deep emission reductions. . It also highlights how emerging carbon pricing and compliance systems, particularly in Southeast Asia, are reshaping incentives and opportunities for suppliers.
The financing mechanisms report focuses on how capital can be mobilized to support decarbonisation in the industry. Drawing on case studies from fashion and other manufacturing sectors, it reviews financial instruments including green and sustainability‑linked loans and bonds, grants, blended finance, energy performance contracts and collaborative models, assessing where they work best and what limits scale.
A central finding across both reports is that small and medium-sized upstream suppliers, such as raw material providers, , face structural barriers to accessing affordable capital, even though emissions are largely concentrated in upstream stages of the value chain. Fragmented supply chains, short‑term purchasing practices, limited data and high perceived risk continue to constrain investment in clean energy and low‑carbon technologies.
The reports also highlight the importance of collaboration between brands, suppliers, financial institutions and industry initiatives to overcome fragmentation. Examples include pooled finance mechanisms, shared verification systems, collective power purchase agreements and supplier‑focused decarbonization initiatives help reduce costs and accelerate adoption of low‑carbon solutions.
Brian La Plante, Senior Manager Sustainability, of YKK Fastening Products Group, involved in drafting the reports, elaborated: "These reports provide a valuable resource for brands, suppliers, financial institutions, and policy makers seeking mechanisms to finance emissions reduction within the fashion value chain. Exploring both conventional financing tools as well as novel approaches such as the use of carbon markets the reports offer a comprehensive guide on mechanisms that can help 'unlock' decarbonization financing. To achieve the fashion industry's climate goals is going to require 'out of the box' thinking and having all the actors across the fashion ecosystem working together to reduce financing barriers and share the risk."
The reports were developed by the Fashion Industry Charter for Climate Action, with analytical support from the Carbon Trust and input from Charter signatories and stakeholders across regions.
The findings are intended to support signatories in delivering on their commitment to achieve net‑zero emissions by 2050, in line with efforts to limit warming to 1.5°C, while strengthening supply chain resilience and competitiveness.
About the Fashion Industry Charter for Climate Action
Launched in 2018 and convened by UN Climate Change, the Charter brings together brands, manufacturers and stakeholders to drive climate action, including commitments on renewable energy, phasing out coal and scaling low‑impact materials.
Download the full reports
- Carbon Market Solutions for Decarbonising Fashion
- Financing Mechanisms to Support Decarbonisation within the Fashion Sector
Visit the Fashion Industry Charter for Climate Action website to learn more.
