That is the second of a four-part sequence taking a better have a look at how 72 firms in 4 industries — beverage, attire, meals and high-tech — carried out in Ceres’ new Valuing Water Finance Initiative Benchmark report, which assesses how firms are valuing and performing on water as a monetary danger and driving the systemic modifications wanted to guard freshwater methods world wide.
The style trade is a thirsty one — and a lot of the water it makes use of to make the garments we purchase is used to develop cotton. The issue is, by 2040, half of the world’s cotton-growing areas will possible be uncovered to extreme local weather threats — together with water shortage and excessive climate — posing important monetary danger to attire firms.
That’s why, as a part of making their provide chains extra resilient, firms should undertake stronger commitments to deal with how their cotton suppliers use and have an effect on water.
Assessing impacts and dangers
From fallowed fields to rising irrigation prices, the monetary fallout from water-related impacts to cotton and different agricultural commodities is taking part in out throughout the globe. Cotton manufacturing is accelerating these dangers, contributing to air pollution and water shortage. Rising cotton makes use of 16 % to 24 % of the pesticides and as much as 40 % of pesticides utilized to fields globally, contaminants that threaten clear water provides for communities and ecosystems and which can be contributing to the deterioration of aquatic life. With 1 / 4 of all freshwater fish species prone to extinction, that is of specific concern.
By 2040, half of the world’s cotton-growing areas will possible be uncovered to extreme local weather threats — together with water shortage and excessive climate.
As attire gross sales proceed to develop, traders will likely be in search of attire firms that rely closely on cotton to have sturdy targets for lowering their impacts and reliance on water. Water use and air pollution, in addition to the safety of freshwater ecosystems are amongst six areas of focus within the Company Expectations specified by the Ceres Valuing Water Finance Initiative, a worldwide investor-led effort to work with massive firms on tackling water as a monetary danger and making modifications wanted to raised defend water provides.
Our latest benchmark, which assesses the water administration practices of 72 firms — together with 11 massive attire firms — sheds mild on how the attire trade is responding to those water dangers. Many firms are taking constructive steps that different attire firms can comply with.
Use cotton from sustainable sources
Hole Inc., as an illustration, dedicated to sourcing one hundred pc of cotton from extra sustainable sources by 2025. This consists of utilizing organically grown cotton — extra water environment friendly and fewer polluting than conventionally grown cotton — in addition to cotton sourced from farmers transitioning to rising licensed natural cotton. The corporate says extra sustainable sources can also embrace recycled cotton, cotton grown utilizing regenerative agriculture practices — which might enhance soil’s resistance to drought — and cotton licensed by Higher Cotton (previously Higher Cotton Initiative or BCI). As a part of its technique, Hole Inc.’s Banana Republic model dedicated to fund and supply cotton via Motion for Social Development, which trains cotton farmers on changing to natural practices. As of 2022, Hole had achieved 81 % of its extra sustainable sourcing aim.
As a part of making their provide chains extra resilient, firms should undertake stronger commitments to deal with how their cotton suppliers use and have an effect on water.
In 2023, H&M sourced one hundred pc of its cotton from recycled, natural and different extra sustainable sources, together with licensed Higher Cotton, which helped the corporate save 40 billion gallons of water and keep away from utilizing 93,200 kilograms of pesticides. H&M’s use of licensed Higher Cotton additionally helped produce $32 million further revenue for farmers. These steps are a part of H&M’s long-term imaginative and prescient and 2030 imaginative and prescient and roadmap for cotton, which focuses on scaling recycled, regenerative and sustainable cotton manufacturing, and investing in improvements to extend the standard and sturdiness of recycled cotton.
Set water targets for uncooked supplies suppliers
These steps are encouraging, however extra work is required to make sure sustainable water administration methods at attire firms don’t overlook their cotton suppliers.
The attire firms we analyzed in our benchmark primarily focus their water-related provide chain targets on meeting and manufacturing suppliers. Most of these we assessed don’t particularly embrace cotton and different uncooked materials suppliers of their targets for lowering water use and air pollution throughout their worth chains.
Inditex is among the many firms working to deal with this hole. The corporate has set a goal to scale back water consumption in its provide chain 25 % by 2025, together with selling uncooked materials cultivation practices that cut back water consumption.
Attire firms’ work to supply extra sustainable cotton exhibits they acknowledge dangers related to this key commodity. It additionally factors to the potential for higher motion as firms work to satisfy water-related challenges on the tempo and scale wanted to guard their enterprise in addition to the communities and ecosystems impacted by their provide chains.