Published 4 weeks ago.
About a 3 minute read.
Image: Abdullah Shahid
A new report from Planet Tracker analyzed nearly 4K filings from 29 major
apparel brands and found them worryingly dry.
In a recent analysis of 3,900 documents, transcripts and filings from
apparel-related companies, financial think tank Planet
Tracker examined how the management teams of 29
major apparel brands perceive water-related risks.
The analysis, Exposing Water Risk, discovered a striking
lack of attention to water-related risks in the apparel industry. An
overwhelming 90 percent of the examined documents failed to mention
water-related risks, with many companies barely mentioning water-related risk at
all — highlighting a significant gap in disclosure practices.
Despite this, the findings reveal a notable increase in mentions of
water-related risk over the analyzed period — growing from approximately 2,000
in 2018 to more than 9,000 in 2022 — implying that, in the minority of documents
where water-related risk is disclosed, the importance of the issue is being
given its due.
Many stages of apparel manufacturing are significant users of water. As Richard
Senior Investment Analyst (Textiles) at Planet Tracker, points out: "The
availability of water is increasingly stressed in many parts of the world due to
climate change, inefficient use and untreated disposal. This could threaten
textile production in key regions, disrupting supply chains."
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Investors and lenders to the apparel industry are therefore also exposed to this
water-related risk; so, financial institutions should be including this risk in
their investment decisions.
Planet Tracker’s Textiles Tracker investigates the impact that financial
institutions have in funding companies across the Textiles, Apparel & Clothing
sector. Fast fashion has created cheap and abundant clothing globally; but the
natural capital cost has been high — with toxic production practices,
degradation of natural resources, massive and growing
as well as labor
By providing information and analysis on these problems, placing a value on
them, and quantifying the negative impact on profits and investor returns from
current practices and the potential benefits and opportunities from changes,
Textiles Tracker aims to support and stimulate a transition to greater
sustainability in the industry. Textiles Tracker identifies the nodes in the
textiles supply chain that are creating the greatest damage, analyzes their
financial value, provides transparency of ownership; and, through owners and
investors, pressures for change in industry practices.
Exposing Water Risk scanned regulatory filings, investor meeting transcripts,
annual reports, and sustainability reports for extracts focused on water-related
risks. The majority of disclosures come from non-luxury brands, followed by
luxury brands — while companies mainly operating as apparel retailers show
limited mentions of water-related risks.
Sustainability reports and annual reports emerged as the primary platforms for
water-related disclosures, with minimal attention in transcripts from corporate
events — suggesting a lack of focus from investors on this critical issue.
Furthermore, the quality of water-related risk disclosures has remained
relatively flat over the analyzed period.
The report examines the water-related disclosures of 29 of the biggest apparel
brands to determine to what degree corporates and investors are cognizant of the
risks they face from water stress. As a starting point, Planet Tracker examined
whether brands report on water to CDP, as well
as the sort of targets they have set for water management.
Of the 29 brands included in the analysis, 15 report to CDP on their usage of
water — a fairly positive starting point, suggesting that water is something
management teams are thinking about.
Most disclosed information is centered around water consumption, with toxins
receiving minimal attention.
Given that various stages of apparel manufacture are significant consumers of
water, financial institutions, investors and lenders in the apparel industry
face significant exposure to water-related risks. Planet Tracker recommends the
inclusion of water risk in investment decisions, and urges financial
institutions to consider the potential impact on supply chains and consumer
The think tank also advocates that investors push companies to disclose water
use and risks through standardized frameworks such as CDP, and encourages
investor support for engagement with the textile supply chain to address water
usage and pollution associated with textile manufacture.
Published Jan 31, 2024 2pm EST / 11am PST / 7pm GMT / 8pm CET