We provide long-term debt to SMEs in textile & apparel supply chain
The Good Fashion Fund (GFF) is a pioneering impact fund dedicated to transforming the textile and apparel industry by financing disruptive, sustainable production technologies in Asia. By offering long-term US Dollar-denominated debt and technical support to manufacturers in India, Bangladesh, and Vietnam, GFF drives systemic change towards a circular, regenerative supply chain. Managed by FOUNT in collaboration with Fashion for Good, GFF bridges the gap between innovative solutions and scalable impact. Speaking to Fibre2Fashion, Investment Lead Jayanth Kashyap shares insights into how GFF is bridging finance and innovation to accelerate sustainable transformation across Asia’s textile and apparel manufacturing landscape.
The Good Fashion Fund focuses on driving sustainability in fashion supply chains. What specific criteria do you use to evaluate potential investments?
As an international impact fund, we invest in export-oriented small and medium-sized enterprise (SME) manufacturers in India and Bangladesh across tier 1 to 3 categories in the textile and apparel supply chain. For potential investments, we look at the size and scale of operations (in terms of turnover), type of legal entity, level of value chain integration (stand-alone factories vs vertically integrated), financial track record and overall sustainability strategy and initiatives in place. We seek strong alignment and intentionality to adopt sustainable manufacturing practices across both environmental and social elements. Importantly, we appreciate a professionally run organisation with good governance and systems in place.
How do you balance the need for technological advancements with the financial viability of the businesses you invest in?
We provide long-term debt (dollar based) to manufacturers that have comfortable exposure to export income in equivalent currency so that potential foreign exchange fluctuations are naturally hedged. GFF looks at the economic viability, payback period and overall ROI of the technologies so that it matches with the investment duration of GFF into the company (typically 5 years). Our investment process includes robust pre-investment and due diligence streams such that all aspects of the investment are considered – financial, legal, technical, environmental and social.
How does the fund measure the environmental and social impact of its investments, and what benchmarks do you use?
The Good Fashion Fund (GFF) measures the environmental and social impact of its investments through its proprietary ‘Five Goods’ framework. As a Cascale member and partner of the Fair Wear Foundation, GFF uses the Higg suite of tools—specifically the Facility Environmental Module (FEM) and Facility Social & Labour Module (FSLM)—alongside in-depth social assessments conducted by Fair Wear at the factory level.
Each investment has tailored KPIs and benchmarks based on its specific context. For example, in the case of Sri Kannapiran Mills in Coimbatore, where GFF invested across spinning and weaving facilities, the focus was on performance metrics such as energy consumption and waste reduction. On the social front, all investees are required to implement an Environmental & Social Action Plan (ESAP), developed following due diligence by third-party advisors such as Fair Wear, TÜV Rheinland, or Bureau Veritas.
What are the biggest hurdles you face when investing in sustainable fashion ventures, especially in emerging markets?
Investment readiness is on the lower side due to lack of governance and proper financial management systems. Investors seek detailed information on a company before deciding to invest, so it is important that a company has good middle-line management with clear competencies in corporate finance, secretarial and compliance matters. Compliance levels also vary depending on the state, as each state in India has different regulations and frameworks for the textile industry. For instance, in Tamil Nadu, Zero Liquid Discharge (ZLD) systems are highly prevalent supported by stringent norms by the local pollution control board. Simple items such as completing and filing proper management accounts and audited statements can make a difference in improving investor confidence in the textile industry.
Many small and medium-sized enterprises (SMEs) struggle with financing sustainable solutions. How does the fund help them scale their impact?
The Good Fashion Fund (GFF) acts as an investor partner—not just a financier—offering more than capital by providing hands-on support and guidance. Many SMEs have strong business acumen but may lack the expertise to identify the right technologies or develop effective investment plans to scale sustainably. This challenge is even more pronounced further down the supply chain, particularly in areas like wet processing and yarn production, where SMEs often receive less attention from brands and investors.
GFF works closely with mid-sized manufacturers, connecting them to an extended network of experts and improving their visibility and reputation by aligning with a sustainability-focused investor. In addition to financing, GFF supports environmental and social (E&S) improvement initiatives at the factory level—such as upgrading wage administration systems or enhancing occupational health and safety—ensuring that worker well-being is prioritised alongside technological progress.
What role do partnerships with brands, manufacturers, and policymakers play in your investment strategy?
It is a critical part of our investment strategy. The industry requires several key actors to collaborate to enable a just transition – which we define as taking care of the planet and the people inclusively. Policymakers, nationally in India and internationally in regions like Europe, play an important role in defining boundaries, incentives and penalties for brands, manufacturers and intermediaries to adopt practices and principles that are sustainable. As it stands, brands are nowhere close to 2030 Net Zero or decarbonisation targets and several brands have already missed targets or watered down their goals overall. Ultimately, the vulnerable populations and workers in producing countries like India bear the brunt – on top of dwindling wages, lack of social security and women, especially, are the worse affected. GFF seeks to partner with brands that care and is well positioned to accelerate their sustainability strategies and helping their supply chains become sustainable and circular. But is anyone willing to take the first step beyond pledges?
While consumers are increasingly demanding sustainable fashion, many manufacturers are slow to transition. How does the fund address this gap?
As a demonstration fund, we work with manufacturers who are on the path towards adoption of sustainability so that we can showcase them as ‘front-runners’ in the industry. We hope that such successful investment cases will provide a replicable and scalable model for other manufacturers in the industry to accelerate the adoption. A manufacturer’s conviction in making the transition can be strengthened with close commitment of brands via a partnership model that ensures stable and long-term offtake agreements and prices that incentivises sustainable manufacturing practices. We are working hard on demonstrating this model in the industry.
Can you share any success stories where GFF’s investment has significantly transformed a company’s sustainability practices?
We have made six investments thus far, four in India and two in Bangladesh. Besides these, there are several investments that did not materialise but where the GFF still was able to influence a change in the sustainability practices. In the case of Pratibha Syntex and Sri Kannapiran Mills, we were able to demonstrate significant environmental savings (>50% reduction in energy, water and waste) through the financed equipment while equally we improved the social conditions, policies and approach to worker administration, occupational health & safety. In one our non-investments, we were able to accelerate the transition to a digital wage administration system (from a manual system) within six months after appointing a consultant expert to support the manufacturer at the cost of the fund.
What are the key financial barriers preventing fashion manufacturers from adopting sustainable practices, and how can investment funds help bridge this gap?
SMEs are expected to front a significant portion of an investment and while the remainder may be financed by local banks or financial institutions, cash flows are blocked in the company’s balance sheet. Adoption of sustainable practices also means that investment cost can be quite high in the initial stages depending on the scale and complexity of operations. Cost of borrowing (debt) may be deterrent and could be sometimes for shorter tenures on inflexible terms or securitisation requirements. Equity or quasi equity funding is not typical in the textile industry, so options are limited to debt or debt-like instruments. MSMEs might not have enough assets to collateralise the financing. Funds like the GFF can provide long-term risk capital that is flexible, fairly collateralised and can incentivise positive performance through ‘impact loans’ linked to environmental and social KPIs.
How are evolving global regulations, such as extended producer responsibility (EPR) and carbon taxes, shaping investment decisions in the fashion sector?
Global regulations like the EPR, Corporate Sustainability Due Diligence Directive (CSDDD) etc, which are a part of the larger EU Green Deal have direct implications on brands and the fashion supply chain. With just transition being a key focus, supply chains are expected to reduce their environmental impact and work towards tangible social improvements to continue exporting to regions such as Europe and the US. Decarbonisation strategies, especially in the tier 2 segment, would mean higher investment towards reducing the impact of wet processing and energy intensive operations. These provide important investment opportunities for a fund like the GFF, and technologies/innovations are readily available in the market to enable this transition. Likewise, the energy mix of factories is moving towards higher contribution from renewable energy and moving away from fossil-based energy sources.
Many sustainable investment opportunities lie in developing countries. What are the challenges and opportunities of funding sustainability initiatives in these regions?
International investors like the GFF are bound by foreign investment regulations in developing countries. Such regulations are not consistent and not always clear on the approval process and timelines. For investors, ease of investing in a country is an indication of the relative opportunity or difficulty in funding sustainability. Taxation structures that penalise foreign investments further deteriorate confidence and financial viability of making such impact investments. Investors like the GFF are meant to complement, and not compete, with the local financial actors and schemes present in the market.
Interviewer: Shilpi Panjabi
Published on: 02/04/2025
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
