Elevated Risks: The Impact of Extreme Weather on Fashion Supply Chains
Recent findings in a new study, released Cornell University’s Global Labor Institute (GLI) and Schroders, reveals extreme heat and flooding are threatening key apparel production hubs.
This indicates that clothing manufacturers in certain climate-sensitive regions could experience a 22% reduction in export earnings, potentially missing out on £65 billion by 2030. The emphasis is on the need for increased adaptation strategies. Extreme heat and flooding are posing threats to major apparel production centres.
Four pivotal countries in fashion production – Bangladesh, Cambodia, Pakistan, and Vietnam – stand to lose $65 billion in export earnings and nearly 1 million new job opportunities.
The study aimed to assess the climate vulnerability of 32 production hubs, revealing that many are exposed to risks from heat and flooding.
The primary countries studied – Bangladesh, Cambodia, Pakistan, and Vietnam – host around 10,000 clothing and footwear factories and employ over 10.6 million individuals in the sector.
These nations, known for their significant role in apparel and footwear manufacturing, collectively account for 18% of global clothing exports. Their major production cities – Dhaka, Phnom Penh, Karachi and Lahore, Ho Chi Minh and Hanoi – are already grappling with extreme weather conditions. These cities are anticipated to face considerable flooding challenges.
Using projections to assess potential flooding and temperature readings, the research analysed potential future climate impacts. The data was utilised to forecast industry-level impacts for 2030 and 2050, comparing different climate scenarios. The findings indicate a potential loss of 1 million new jobs and £65 billion in export earnings.
By 2050, these projections could escalate, leading to a 65-70% reduction in export earnings and 8-9 million fewer new jobs.
Such scenarios disrupt factory operations, diminish worker efficiency, endanger their health, and pose risks to the fashion sector.
Why Addressing Climate Adaptation Costs is Crucial for the Fashion Business?
A subsequent report examined the climate risks and costs for a selection of global brands. The study revealed that workers and manufacturers could experience significant productivity impacts due to extreme weather. The analysis suggests potential productivity challenges due to heat stress and flood impacts in specific regions, which could significantly affect operating profits.
What’s the Way Forward?
The research aimed to gauge the fashion industry’s vulnerability to extreme weather conditions. It’s evident that the apparel sector needs to incorporate new costs into their financial strategies.
This lays the groundwork for industry players to develop and implement large-scale, effective adaptation strategies.
Such challenges present tangible risks for brands and investors, either through productivity losses or stranded assets. The research underscores the immediate need for action. It’s essential for companies to collaborate with suppliers and other stakeholders to devise appropriate adaptation strategies, considering the impact on workers. Proper adaptation planning could yield positive returns for the sector and complement mitigation efforts.
All stakeholders, including governments, suppliers, workers, brands, and investors, stand to gain from a heightened focus on adaptation.
Understanding the potential impacts of extreme heat and flooding is crucial for analysing company productivity and value. It also offers opportunities for engagement across the value chain.
It’s vital for investors to liaise with clothing companies and stakeholders, as the industry currently places more emphasis on mitigation than adaptation.