To reach a planet positive fashion future we wanted to encourage large owners and investors with holdings in all parts of the fashion value chain; such as farms, mills, garment factories and retailers, to leverage their influence as owners and push the industry towards more sustainable practices.
To make it happen, we partnered up with non-profit financial think tank Planet Tracker by the Investor Watch Group, whose mission is to align capital markets with planetary boundaries.
Urgent need of addressing natural capital risks
The first result of our collaboration, the report “Will Fashion Dye Another Day?”, looked at water-related financial risks in the textiles sector. The report shined light on risks in business with combined market cap of USD 586 billion. This significant value underlines that natural capital risks are not a fringe issue but core to all owners and business.
Planet Tracker’s methodology is open source and can be used by investors to make their own assessment of water-related risks in their portfolios using freely available databases.
$586billion
the combined market cap of the 230 wet processing companies featured in the tracker report.
Providing tools to encourage change
The fashion industry has provided an abundance of fashion globally, but the natural capital cost has been high with toxic production practices, degradation of natural resources, growing waste as well as labour injustice. Still, the investor market does not calculate these environmental issues as risks. We want to change this by translating a planetary footprint into financial risk.
Together with Laudes Foundation, we were co-funding a program under the Planet Tracker umbrella called Textiles Tracker, to support investors and owners to better minimise fashion’s negative impacts on people and planet.
Textiles Tracker:
- Finded the points in the textiles supply chain that are creating the greatest damage,
- analysed their financial value,
- provided transparency of ownership and,
- through owners and investors, sought to create pressure for change in industry practices.
Valuing natural capital in the textile industry and relating it to financial risk creates potential to catalyse a change in investment behaviour. And by factoring in the cost of natural capital into financial flows, change can happen far more rapidly as businesses cannot risk loss of capital.
The findings of Planet Tracker’s research are shared with investors with holdings in companies across the textile and fashion value chain. Investors are also advised on how to measure the environmental risks of their specific portfolios.
Why targeting the fashion industry?
Global investors are also owners and major shareholders in the fashion value chain, and therefore uniquely positioned to create positive change with both speed and scale.
According to Planet Tracker, clothing production globally has doubled since 2000 whilst we use our clothes less times, with up to 73% of produced clothing ending up in landfill annually. Needless to say, the industry’s current sourcing and manufacturing processes are unsustainable.
Without change, business-as-usual dynamics are projected as follows by 2050:
- Carbon emissions will represent 26% of the global carbon budget (vs 2% in 2015).
- Non-renewable energy inputs into the supply chain (oil, coal) will increase to 300m tonnes per year (vs. 98m in 2015).
- Microplastic fibres entering the ocean will accumulate to 22m tonnes (the equivalent of four billion polyester t-shirts entering the ocean each year until 2050).
Many aspects of the textiles supply chain have potentially large risks if natural capital is not properly costed into financial valuations – from the design that drives the choices of raw materials and dyes, to processing and manufacturing, through to disposal and waste management.
By understanding the fashion industry’s investment systems and quantifying financial flows at risk, the hypothesis is that change will occur far more rapidly as businesses cannot risk loss of capital or indeed reputation which has a knock-on impact on financial flows.
