Funding sustainable style in the Middle East

The global fashion industry is working towards a more sustainable future as companies and consumers increasingly turn their backs on fast fashion practices and opaque supply chains.

Jordan-based Classic Fashion has been a trend setter in the MENA region, embracing sustainable practices as an essential element of reducing waste and preserving resources across the industry globally¹. Classic Fashion accounts for 42% of all garment exports from Jordan, supplying premium garments to leading international fashion brands including Walmart, Under Armour, Adidas, and American Eagle.

Classic Fashion’s products include fabrics made from recycled plastic bottles, and the company is transitioning to solar energy to drive its machinery: currently its own installations produce 13 megawatts (MW) and the company’s goal is for at least 58% of its energy to come from solar. It also reuses 97.2% of its waste water.

This attention to ESG enabled Classic Fashion to take advantage of sustainable financing solutions and official export credit to fund its plans for an integrated garment manufacturing complex in Aqaba, Jordan.

In June 2022, the company signed a US$85 million 7.5-year facility to part finance the development, split between a US$25 million of export finance from the UK government and a US$60m commercial green loan. HSBC was Sole Structuring Bank, Green Loan coordinator, MLA, Lender and Facility Agent on the commercial portion.

The company's aim is for the new facility to achieve a gold or platinum Green Building rating under the US Green Building Council's LEED (Leadership in Energy and Environmental Design) certification system². It will house a production line built to net zero principles across energy production, water recycling and waste management.

Transparent materials

Under the terms of the loan, Classic Fashion undertakes to disclose details about the new facility’s sustainability features and performance. This is in line with the company’s commitment to transparency and an increasingly important part of its engagement with customers.

“If the visibility is not there, it is not possible for a brand or a retailer to make a commitment to sustainability,” said Sanal Kumar, Chairman and Managing Officer of Classic Fashion. “There is a huge positive shift happening in the transfer, transparency, traceability and sustainability of the garment industry, from the mill to the maker to the to the retailer or the brands.”

“Classic Fashion has demonstrated a high level of sustainability awareness and a commitment to enhancing sustainability in its business, as well as in the broader garment manufacturing sector,” said Yan Bechet, Head of General & Retail Corporates, Commercial Banking UAE at HSBC Bank Middle East. “This transaction demonstrates how a responsible company can finance both its ESG ambitions and its growth strategy with dedicated green funding.”