Extreme heat and flooding are threatening key apparel hubs in Bangladesh, Cambodia, Pakistan and Vietnam, and will put over $65 billion worth of export earnings at risk by 2030.
This is according to research by Cornell University’s Global Labor Institute (GLI) and global asset management firm Schroders.
Angus Bauer, head of Sustainable Investment Research at Schroders said, “This research highlights the urgent need for action. Investors must begin to engage with apparel companies and their stakeholders to ensure they start to measure and address the significant challenges of physical climate impacts on workers and business models. Furthermore, apparel companies must look to partner with suppliers, and work with peers, worker organisations and policy makers to design suitable adaptation strategies that consider the impact on workers. Adaptation planning could have positive returns on investment for the industry and is a critical addition to mitigation efforts.”
Researchers looked at the climate vulnerable apparel industries in Bangladesh, Cambodia, Pakistan and Vietnam, which collectively represent 18% of global apparel exports, house approximately 10,000 apparel and footwear factories and employ 10.6 million workers.
Using projections, researchers analysed future heat and flooding levels and then used the data to estimate industry-level outcomes for 2030 and 2050 by comparing a climate adaptive scenario with a high heat and flooding scenario.
The high heat and flooding scenario shows:
- A $65bn shortfall in projected earnings between 2025 and 2030 (representing a 22% decline in export earnings); and
- Over 950,000 fewer new jobs would be created, representing a 7% decline.
These projections rise significantly for 2050, representing a 68.6% in foregone export earnings and 8.64 million fewer jobs.
Jason Judd, executive director of Cornell GLI commented, “The apparel industry and regulators have mostly framed their climate responses around mitigation issues – emissions, water usage, and recycled fabrics. They are ignoring the climate issues that are dramatically and directly affecting suppliers and their workers now. The Global North’s climate nightmares are already in evidence in Bangladesh, Pakistan, Cambodia and elsewhere. Life, let alone work, will become very difficult in these and many other hotspots that apparel brands and retailers depend on for production.”
Beyond the four production centres
The analysis also notes that flooding and heat risks are a widespread issue for apparel production and researchers have identified several other production centres that are vulnerable including Colombo (Sri Lanka), Managua (Nicaragua), Chittagong (Bangladesh), Port Louis (Mauritius), Yangon (Myanmar), Delhi, Bangkok and the Dongguan-Guangdong-Shenzhen regions of China.
The analysis notes that investment and transition finance strategies for the apparel industry must write new costs into their plans.
Judd added, “Climate ‘loss and damage’ for manufacturers and workers are treated by brands as externalities – someone else’s problem.”
He added, “Workers need these investments now because extreme heat standards and flood protections are non-existent, or the systems are easy to game. And, in order to deal with the day-to-day costs of climate breakdown, workers need social protection systems in place and living wages. And ultimately, regulators and brands need to treat heat and flood events as health hazards.”
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