Asia apparel hubs face $65b export hit

Extreme heat, flooding could erase earnings from four Asian countries by 2030

LONDON:

Extreme heat and flooding could erase $65 billion in apparel export earnings from four Asian countries by 2030, as workers struggle under high temperatures and factories close, research from Schroders and Cornell University showed on Wednesday.

The study also mapped out the supply chains of six unidentified global apparel brands operating in the four countries studied – Bangladesh, Cambodia, Pakistan and Vietnam – and found all six would be hit materially. For one sample brand, it could amount to 5% of annual group operating profits.

The findings should act as a wake-up call to both an apparel industry facing significant financial costs, and to investors confronted with sparse information on companies’ exposures, the report’s authors told Reuters.

“Among the suppliers and buyers we talked to, not one had their eye on these two issues (heat and flooding),” said Jason Judd, Executive Director of Cornell Global Labour Institute.

“The climate response by the industry is all about mitigation, about emissions and recycling, and little or nothing with respect to flooding and heat,” Judd said.

Understanding climate-related physical risks to companies in a warming world is critical, but the process is in its infancy with few businesses disclosing enough information and few investors undertaking proper assessments.

“There is so little data on this ... There are some apparel brands not disclosing the factory locations of their suppliers,” said Angus Bauer, Schroders’ Head of Sustainable Investment Research.

Bauer said Schroders, which manages more than 700 billion pounds ($874 billion) in assets, would increase engagement with companies over their disclosures and he called on firms to work with suppliers and policymakers to build adaptation strategies.

Published in The Express Tribune, September 14^th, 2023.

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