Global Fashion Industry Faces $65 Billion Loss Due to Climate Crisis by 2030
Extreme heat and flooding driven by the climate crisis pose a significant threat to the global fashion industry, with four major garment-producing countries risking a potential loss of $65 billion in earnings by 2030, according to a study conducted by Cornell University in collaboration with investment manager Schroders.
Bangladesh, Pakistan, Vietnam, and Cambodia are identified as particularly vulnerable to these climate-related disruptions, with the study projecting a potential 22% drop in earnings from exports and a broader economic impact by the end of the decade. The findings were released on Wednesday.
The study recommends that fashion brands that heavily source from these countries should adapt by adjusting work hours and ensuring workers receive adequate rest and hydration to mitigate the anticipated disruptions.
The adverse effects of extreme weather conditions are expected to slow productivity, resulting in nearly 1 million fewer jobs created across the four countries.
The selection of these Asian countries for the study is based on their significant roles as global industry powerhouses, collectively contributing 18% of global apparel exports and hosting over 10,000 clothing and footwear factories employing more than 10.6 million manufacturing workers.
However, these regions are also acutely susceptible to the effects of the climate crisis. Major garment manufacturing centers such as Dhaka, Phnom Penh, Karachi, Lahore, Ho Chi Minh City, and Hanoi already contend with extreme heat and humidity.
The study highlights the likelihood of significant flooding in these cities, adding that Pakistan, in particular, has experienced extreme weather events, including devastating floods that submerged over one-third of the country last year.
Both Pakistan and Bangladesh have faced heatwaves in recent months, with temperatures soaring above 40°C (104°F) for prolonged periods during the spring and summer.
Using data on coastal and river flooding as well as temperature readings, the research team from Cornell and Schroders projected the potential impact on manufacturing workers under various scenarios.
The estimated cost of $65 billion in losses by 2030 is based on a “business as usual” scenario, assuming no action is taken to address the challenges posed by high heat and flooding. However, the study suggests that proactive measures by factory owners to mitigate heat stress among workers could help avoid some of the projected financial losses.
One scenario presented in the study assumes significant declines in worker productivity due to heat stress, with output decreasing by approximately 1.5% for each 1°C increase in the “wet-bulb globe temperature,” a heat stress measurement.
The authors of the study call upon businesses and regulators to recognize extreme weather events as serious health hazards, advocating for measures such as providing paid leave and the right to suspend work when necessary to protect workers.
Furthermore, the study recommends that fashion brands consider assisting their suppliers in relocating facilities to nearby, lower-risk areas.
The researchers caution against abrupt moves to relocate suppliers entirely, emphasizing the challenges in rebuilding large-scale capacity that brands currently benefit from in South and Southeast Asia.
Jason Judd, the executive director at Cornell’s Global Labor Institute, emphasizes the importance of immediate investments in worker protection, stating, “Climate ‘loss and damage’ for manufacturers and workers are treated by brands as externalities—someone else’s problem. Workers need these investments now because extreme heat standards and flood protections are non-existent.”
The fashion industry now faces a critical choice in how it responds to these impending climate-related challenges, with the well-being of millions of workers hanging in the balance.
