United for Net Zero Public Private Collaboration to Accelerate Industry Decarbonization 2025

CASE STUDY 8 PUMA, International Finance Corporation and Government of Bangladesh decarbonizing tier 1 and tier 2 suppliers Challenge  At the 2015 UN Climate Conference, PUMA committed to setting science-based CO2 reduction targets. In 2018, PUMA co-founded the Fashion Industry Charter for Climate Action, an industry coalition aiming to align the fashion industry’s emissions with the Paris Agreement’s goals. By 2023, the company surpassed its goals seven years ahead of the target year (2030) through an 85% reduction of its own emissions – market-based, including the purchase of reduced emissions certificates (RECs) – and a 65% reduction of supply chain emissions. Recognizing the growing demand for sustainability within the consumer industry, PUMA set more ambitious goals in 2022: a 90% reduction in its own operations and a 33% reduction in Scope 3 emissions by 2030 from a 2017 baseline. Solution  In 2019, PUMA partnered with the International Finance Corporation (IFC), part of the World Bank Group, to launch a supplier financing programme under IFC’s Global Trade Supplier Finance (GTSF). It provides short- term working capital to suppliers with tiered pricing based on their sustainability ratings. The first phase, under the Partnership for Cleaner Textile (PaCT) initiative, focused on energy and water efficiency, and renewable energy in Bangladesh. In 2024, PUMA launched the Decarbonization Programme (CaDP) in Cambodia, targeting four tier 1 and tier 2 factories. PUMA also participated in a 2023 policy dialogue with the Government of Bangladesh, alongside key stakeholders in the fashion sector, to discuss how to jointly implement necessary changes, identify near-term actions to accelerate renewable energy use, support the scaling of renewable energy solutions and connect existing field efforts with best practices. The Government of Bangladesh has committed to accelerating the renewable energy transition, exploring direct power purchase agreements (PPAs) as a solution, going along with further fiscal and tax incentives and tariff upgrades seen as key policy interventions to drive progress. Impact Through the PaCT programme in Bangladesh and other initiatives led by tier 1 and tier 2 suppliers, PUMA reduced its absolute Scope 3 emissions from purchased goods and services by 30% between 2017 and 2023. Source: PUMA. (n.d.). Sustainability: Climate. https://annual-report.puma. com/2023/en/sustainability/climate/index.html. Opportunity 6: Collaborate with governments to shape the policies for value chain decarbonization As Scope 3 represents almost 70% of industrial GHG emissions, companies can take an active role in shaping industrial policies and accelerate the decarbonization of companies within their value chain. Particularly, firms in developing economies and SMEs worldwide are significant players in global supply chain decarbonization but require a just and realistic transition to a low-carbon global value chain. According to the OECD, this involves: –Fair distribution of environmental burdens and energy accessibility during the transition –Sufficient community engagement and involvement in the transition –Compensation for economic losses and remediation of environmental damage after the transition This calls for a strengthened collaboration, both in developed and emerging economies, to increase and amplify climate action throughout value chains. Companies can take an active role in shaping the industrial policies and standards that accelerate value chain decarbonization. Case study 8 shows how a footwear company, PUMA, collaborated with the Government of Bangladesh to support its suppliers’ decarbonization efforts and reduce its Scope 3 emissions. United for Net Zero: Public-Private Collaboration to Accelerate Industry Decarbonization 21