LONDON — Planet Tracker, a nonprofit financial think tank and a watchdog on corporate behavior, on Wednesday said it discovered a lack of attention to water-related risks in the apparel sector following a recent analysis of 3,900 documents, transcripts and filings from apparel-related companies.
The London-based organization claimed in its latest report “Exposing Water Risk” that some 90 percent of the examined documents failed to mention water-related risks, with many barely mentioning it at all.
But more companies are paying attention, as Planet Tracker spotted a notable increase in mentions of water-related risk over the analyzed period, growing from about 2,000 in 2018 to more than 9,000 in 2022.
The report said the majority of disclosures, which most often appear in sustainability reports and annual reports, come from nonluxury brands such as Adidas, Fast Retailing, Gap, Levi Strauss and Victoria’s Secret, followed by luxury companies like Kering, LVMH Moët Hennessy Louis Vuitton and Ralph Lauren, while firms mainly operating as apparel retailers show limited mentions of water-related risks.
Planet Tracker said the overall lack of awareness around water-related risk in the fashion sector will lead to financial exposure for investors and lenders.
Richard Wielechowski, senior investment analyst of textiles at Planet Tracker, said: “The availability of water is increasingly stressed in many parts of the world due to climate change, inefficient use and untreated disposal. This could threaten textile production in key regions, disrupting supply chains.”
The think tank advised investors to push for corporate change and adequately price water impact into investments.
“Planet Tracker calls on investors into the major apparel brands to include water in their investment strategies. Using tools such as the Investor Water Toolkit from Ceres, they should engage with their holdings on water risk,” said the report.
They should push companies to publicly disclose their water use and water risks via a standardized framework such as the CDP to develop a strategy for water risk and start exploring sector transition plans to reduce those risks. They should also support engagement with the textile supply chain to address its use of water and the pollution associated with textile manufacture,” it added.
Last year, Planet Tracker released the report “Under Dressed.” By tracking more than 1,198 environmental, social and corporate governance proposals submitted to retailers’ annual shareholder meetings, it found that textile sustainability issues have all been voted down by shareholders, despite modest strides in the past few years.
In 2022, Planet Tracker also published the report “Lifting the Rug,” which points out that too few apparel firms name extended suppliers in their supply chain.