Jun 25, 2025 (MarketLine via COMTEX) --
Fashion is waking up to the painful truth that climate change isnaEUR(TM)t just an environmental issue, itaEUR(TM)s a commercial one, writes Scott Kelly, SVP Environmental Analytics at Risilience.
Nowhere is that more apparent than in the supply chains that feed the industryaEUR(TM)s insatiable demand for materials, manufacturing, and speed.
From flooded cotton fields in Pakistan to heat-stressed factories in Bangladesh, the impacts are no longer theoretical. TheyaEUR(TM)re affecting production, pricing, and profits. Yet while fashion brands tout their recycled fabrics and carbon pledges, many still ignore the structural fragility that makes their global operations uniquely vulnerable aEUR" their own supply chain.
Climate risk isnaEUR(TM)t hypothetical aEUR" itaEUR(TM)s already affecting marginsRisilience analysis shows that emissions from the apparel sector are projected to rise by 50% under a business-as-usual scenario and fall by 70% under a net zero 2050 pathway. But the emissions curve is only half the picture. Climate-related risks intensify under every scenario.
Volatile yields in key raw materials like cotton and leather add further disruption. Even in a net zero scenario, up to 27% of enterprise earnings value is at risk, driven by escalating carbon prices aEUR" ae50 ($57.35) per tonne CO2e can raise apparel costs by 6% per garment, shifts in consumer demand, reputational damage, litigation, and asset stranding. In short, climate-related risks are no longer a long-term concern. ItaEUR(TM)s a financial reality that is already affecting margins.
A system built for speed, not stabilityFashionaEUR(TM)s global supply chain was optimised for cost and efficiency aEUR" not resilience. But those efficiency gains came with hidden risks. Sourcing often relies on a small number of suppliers, with limited redundancy and a just-in-time mindset. That worked in a stable world. It doesnaEUR(TM)t work in a volatile and warming one.
Garment workers from Dhaka, Hanoi, Ho Chi Minh City, Phnom Penh and Karachi are already facing unsafe temperatures. The number of days where wet-bulb temperatures, determined by wrapping a thermometer in a cloth saturated with water, were above 30.5AC have increased by 42%. ThataEUR(TM)s a threshold where the International Labour Organisation decides physical labour becomes dangerous and a temperature that causes productivity to plummet. At high temperatures, absenteeism rises and factories miss shipments. A study by the London School of Economics (LSE) showed that labour productivity in Bangladesh would drop by 46% under 3AC of warming. A
Cotton, once the sectoraEUR(TM)s dependable backbone, has become increasingly unreliable. In 2022, simultaneous crop failures in Texas and Pakistan sent global prices surging, exposing the fragility of raw material supply which cost the sector over $2bn in lost revenue. Recent wildfires forced port closures in Greece and disrupted key trucking routes in California. Elsewhere, climate-induced power outages have shuttered factories and paralysed distribution centres. Now, rising water stress in textile heartlands like India and China threaten to deepen disruptions over longer timeframes. Climate risks are not just amplifying; theyaEUR(TM)re compounding across every link in the supply chain.
The invisible threat: Scope 3 emissions and transition riskRoughly 95% of fashionaEUR(TM)s emissions come from its supply chain - Scope 3 emissions. Yet most brands still fail to report or develop a plan to act. According to the Sustainable Apparel Coalition, only 23% of fashion companies disclose emissions from purchased goods and services.
This represents a critical blind spot for corporate risk management. Transition risks aEUR" from tightening regulation to investor scrutiny aEUR" will increasingly focus on Scope 3 exposure. Firms that ignore it today are opening themselves to compliance failure tomorrow.
Embedding resilience not just reporting itLeading companies are embedding climate risk into corporate strategy.
Mapping factory-level exposureAto floods, droughts, and extreme heat
Modelling carbon pricing scenariosAfor each sourcing region
Investing in supplier adaptation from raised production floors to ventilation upgrades
Diversifying production and reducing over-dependence on high-risk geographies
Engaging suppliers and building clauses into contracts to mitigate future risks and support the development of a net zero transition plan.
Forward-thinking companies are taking action by co-investing in climate and nature solutions, now. TheyaEUR(TM)re helping suppliers finance upgrades, collecting geospatial risk data, and preparing for what climate change will do to the business.
Waste, circularity and the material mirageFor all the industryaEUR(TM)s rhetoric on circularity, the numbers tell a different story. Globally, less than 1% of textile fibres are recycled back into new garments aEUR" a figure that has barely shifted in over a decade. The bulk of recycled content comes not from old clothes, but from PET (polyethylene terephthalate) bottles, contributing just 7.9% of total fibre needs.AMeanwhile, fossil-based synthetics still account for nearly 60% of global fibre production, and that share is projected to rise.A
In the absence of climate-integrated lifecycle assessments and supply chain-level risk analysis, many so-called sustainability actions amount to swapping one poor material or action for another. This isnaEUR(TM)t a solution, itaEUR(TM)s simply substitution. Circularity applied without full climate context is incomplete.
The data dividendRisilience analysis has revealed hidden hotspots in fashion supply chains. Flood-prone ports, water-stressed dyeing mills and factories nearing dangerous heat thresholds are not theoretical issues; theyaEUR(TM)re climate risks waiting to materialise.
We have the data. We have the tools. When done well, climate risk analysis can inform sourcing, enhance investor confidence, meet regulatory expectations, and protect profitability. In a climate-stressed world,Avisibility drives value.
Resilience is the new runwayFor too long, sustainability has been framed as a marketing add-on, disconnected from core commercial strategy. That era is ending. Climate risk is reshaping the economics of global sourcing. ItaEUR(TM)s altering the availability, cost, and credibility of materials. ItaEUR(TM)s rewriting the rules on transparency, carbon, and compliance. And itaEUR(TM)s exposing brands that manage climate through pledges rather than plans.
The fashion businesses that endure will be those that embed climate resilience into their foundations factoring it into boardroom decisions, supplier contracts, product design, and capital allocation. That means modelling physical and transition risks across supply chains. It means asking not just: aEURoewhat is this made from?aEUR, but aEURoewhat is this vulnerable to?aEUR And it means putting credible data at the centre of procurement, pricing, and investor engagement.
Taking these steps isnaEUR(TM)t about climate altruism aEUR" itaEUR(TM)s about commercial foresight. As margins tighten and risks multiply, resilience will deliver a competitive advantage.A
About the author Dr. Scott Kelly heads the Model Development Team at sustainability intelligence firm Risilience. He is responsible for the full scope of product related R&D activity including modelling, data science, data acquisition and corporate finance.
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