Frequent extreme weather events are having a negative
impact on the fashion value chain according to McKinsey & Co’s latest
report with GlobalData's filings data showing an increase in natural disaster
mentions in 2023.
McKinsey & Co’s recent State of Fashion report warned the fashion industry needs to build resilience into its supply chain as climate change makes extreme weather events more frequent. It estimates that extreme weather events could jeopardise $65bn worth of apparel exports by 2030.
The report noted that every part of the
fashion value chain is affected by the climate crisis as so much of the
industry relies on the regions most impacted by extreme weather.
Extreme weather events threaten an estimated
one million jobs across four key countries for apparel – Bangladesh, Cambodia,
Pakistan and Vietnam.
Recent years have seen cotton production
threatened by excessive rainfall and pest invasion in India, monsoons in
Pakistan and drought in Texas.
McKinsey also said that increased
temperatures in Dhaka, Bangladesh is contributing to exhaustion and dehydration
in factory workers. The report estimated that productivity decreases by 1.5%
for every degree that the temperature rises above 25°C.
The summer of 2023 saw Europe’s worst dry
spell in 500 years with ships on Europe’s Rhine River being forced to reduce
the weight of cargo on board to continue their journeys.
Plus, the Panama Canal Authority introduced
water-saving and conservation measures at the start of the 2023 dry season,
reducing its capacity to just 32 vessels a day.
In 2022 ‘extreme weather events’ were
mentioned 169 times in apparel company filings, up from just 14 mentions in
2018. The term has been mentioned 127 times in 2023 so far.
Other key terms often mentioned in apparel
company filings include “climate change,” which was mentioned 141 times in 2022
and “extreme weather”, which was mentioned 145 times in 2022. Both terms have
been mentioned 118 times in 2023 so far.
Natural disasters are also mentioned with
increasing frequency with the term getting 80 mentions in apparel company
filings in 2023 so far, up from just 34 mentions in 2018.
To help mitigate the risk, McKinsey’s report
advised apparel companies to embed “nimble processes” to offset weather-related
pressure on suppliers, inventory and consumers. It warned there might be a
trade-off between risk mitigation and cost, speed and capacity as a result.
Prioritising worker health and safety will
also need to be a priority for manufacturers going forward. The McKinsey report
suggested more frequent breaks, rehydration facilities and proactive
temperature monitoring on factory floors, which could include investments in
fan systems.
In the longer term, the report said the most
important step for the apparel sector in mitigating these risks will be
investing in innovation to reduce fashion’s impact on the planet. Possible
future innovations ranged from lab-grown fibres to ethical product reuse and
recycling and a shift away from the current “make-take-waste” fashion system.
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