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Climate Change Threatens Asian Clothing Production: Potential $65 Billion Income Loss by 2030

Climate change is casting a shadow over Asia’s clothing production industry, potentially jeopardizing apparel export earnings in four Asian countries by a staggering $65 billion by the year 2030. This alarming revelation comes from a joint study conducted by Schroders, a prominent global asset management firm, and Cornell University. The research underscores the devastating impact of extreme heat and flooding on clothing production, with workers facing increasingly harsh conditions and numerous factories forced to shut down.

The study’s findings shed light on the vulnerability of supply chains for six undisclosed global clothing brands that operate in four key Asian countries: Bangladesh, Cambodia, Pakistan, and Vietnam. These supply chains are expected to face significant disruptions due to the adverse effects of climate change.

The report serves as a wake-up call for the apparel industry, urging stakeholders to recognize the substantial costs associated with climate-related challenges. It also aims to provide investors with a deeper understanding of the operational risks faced by companies in this sector.

Jason Judd, Executive Director of the Cornell Global Labor Institute, emphasized the lack of attention traditionally given to climate challenges within the clothing industry. Historically, the industry has focused primarily on greenhouse gas emissions reduction and recycling, often overlooking the pressing issues of flooding and extreme heat. Judd stressed the urgency of addressing these concerns, given their significant impact on workers and production processes.

Recognizing the risks posed by global warming to businesses is paramount, although this understanding is still in its nascent stages. Few companies provide sufficient information in this regard, and even fewer investors rigorously assess such data. Angus Bauer, Head of Sustainable Investment Research at Schroders, noted the scarcity of information on these critical matters. Some clothing brands refrain from disclosing the locations of their suppliers’ factories. In response, Schroders, managing assets exceeding £700 billion ($874 billion), is committed to advocating for enhanced transparency from companies and collaborating with suppliers and policymakers to develop adaptation strategies that consider the well-being of workers.

As the clothing industry grapples with the consequences of climate change, proactive measures, increased transparency, and sustainable practices are essential to navigate the evolving landscape of global apparel production.

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