Investment secured for Good Fashion Fund 2.0 to the tune of $60 million by FOUNT.
Good Fashion Fund 2.0 Expands Geographically and Investment Scope
The Good Fashion Fund 2.0, a follow-up to the original Good Fashion Fund, is set to make a significant impact in the global textile and fashion industry. Dutch impact investment firm FOUNT has secured grant funding from the Catalytic Climate Finance Facility (CC Facility) to finance the development of this second fashion fund.
The Good Fashion Fund 2.0 aims to reach a first close of $25m before the end of the year and a final close in 2026. Unlike its predecessor, which was focused primarily on Bangladesh and India, the Good Fashion Fund 2.0 will extend its geographical scope to include Turkey and Vietnam.
The fund will provide non-dilutive and subordinated risk capital, also known as mezzanine financing, to SMEs operating in the textile and fashion supply chains in these countries. Mezzanine financing could allow for increased corporate-level engagement without diluting the suppliers' ownership of the company. In India, mezzanine financing can either be convertible debt or preference shares.
The aim of the Good Fashion Fund 2.0 is to increase financial additionality and unlock more private sector investment in the textile and fashion industry. It seeks to scale climate financing through funding for early-stage and market-ready financial solutions. Part of the aim behind the grant funding for the Good Fashion Fund 2.0 is to test if this type of instrument would be useful.
The fund targets investments that generate positive financial, environmental, and social impact in the textile sector, particularly focusing on the implementation of sustainable production methods. The Good Fashion Fund 2.0 will apply both climate and gender lenses to all investments and promote fair and ethical labor conditions for workers, especially women.
The CC Facility will offer the fund access to its Convergence and CPI investor networks and help with fundraising activities. Additionally, the CC Facility will support strategy refinement for a dedicated technical assistance facility for the fund focused on environmental, social, and regulatory compliance, as well as gender equity.
The Good Fashion Fund 2.0 will continue to promote fair and ethical labor conditions for workers, especially women. It will use tools like the Higg Index to measure environmental impact as part of its due diligence process, emphasizing transparency and accountability in resource use and emissions reduction.
The focus and purpose of the Good Fashion Fund 2.0 are to enable a just transition for the fashion industry by continuing to drive systemic change through impact investment, specifically targeting sustainable and ethical fashion with an emphasis on financing impactful and disruptive production technologies. The fund aims to support the transition of the textile and apparel industry towards a more restorative and regenerative supply chain, building on lessons learned during the first phase of the fund.
In summary, Good Fashion Fund 2.0 is designed to accelerate the transformation of the global textile and apparel industry towards sustainability, ethical practices, and regeneration by mobilizing targeted investment in technology and production innovations in key manufacturing regions.
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