Wed, 29 Nov 2023

ITHACA, New York: A recent study by Schroders and Cornell University warns that extreme heat and flooding may result in a staggering $65 billion loss in apparel export earnings from four Asian countries by 2030.

The research focuses on Bangladesh, Cambodia, Pakistan, and Vietnam, where high temperatures make working conditions unbearable and cause factory closures.

The study also scrutinized the supply chains of six undisclosed global apparel brands operating in these countries, revealing that all six would experience significant negative impacts. For one sample brand, this could translate to a 5 percent hit on their annual group operating profits.

These findings serve as a wake-up call to the apparel industry, highlighting the substantial financial costs it faces due to climate-related risks. Investors are also urged to pay attention, as many companies lack transparency regarding their exposure to such risks.

Jason Judd, Executive Director of Cornell Global Labor Institute, emphasized that the industry's focus on emissions and recycling has overshadowed the critical issues of heat and flooding. Understanding these physical climate risks is crucial, yet few companies provide adequate information, and few investors conduct comprehensive assessments.

Angus Bauer, Head of Sustainable Investment Research at Schroders, stated, "There is so little data on this ... There are some [apparel] brands not disclosing the factory locations of their suppliers."

He also called on firms to collaborate with suppliers and policymakers to develop adaptation strategies that consider the welfare of workers.

The study examined different climate scenarios, revealing that the "high heat and flooding" scenario would lead to more "heat stress" among workers and the closure of factories in the four countries. This could result in a $65 billion shortfall in projected earnings between 2025 and 2030 and a loss of 950,000 jobs.

By 2050, the study predicts a 68.6 percent reduction in export earnings and 8.64 million fewer jobs.

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