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Textiles Tracker – helping investors support sustainable fashion

Project time period

20212023

The fashion industry is huge. According to Statista, the global apparel market is projected to grow in value from USD 1.5 trillion in 2020 to about 2.25 trillion dollars by 2025. Yet, the true cost of investments is not fully incorporated. Specifically, most investors and businesses do not currently price or value the environmental cost of their current practices, primarily because they do not know how these costs relate or convert in financial terms. However, their pressure and support are critical for senior management in companies to prioritize and accelerate transformation.

Water drop on a leaf

To reach a planet positive fashion future we want to encourage large owners and investors with holdings in all parts of the fashion value chain; such as farms, mills, garment factories and retailers, to leverage their influence as owners and push the industry towards more sustainable practices.

To make it happen, we partnered up with non-profit financial think tank Planet Tracker by the Investor Watch Group, whose mission is to align capital markets with planetary boundaries.

Urgent need of addressing natural capital risks

The first result of our collaboration is the report “Will Fashion Dye Another Day?” which looks at water-related financial risks in the textiles sector. The report shines light on risks in business with combined market cap of USD 586billion. This significant value underlines that natural capital risks are not a fringe issue but core to all owners and business.

Planet Tracker’s methodology is open source and can be used by investors to make their own assessment of water-related risks in their portfolios using freely available databases.

$586billion

the combined market cap of the 230 wet processing companies featured in the tracker report.

Providing tools to encourage change

The fashion industry has provided an abundance of fashion globally, but the natural capital cost has been high with toxic production practices, degradation of natural resources, growing waste as well as labour injustice. Still, the investor market does not calculate these environmental issues as risks. We want to change this by translating a planetary footprint into financial risk.

Together with Laudes Foundation, we are co-funding a program under the Planet Tracker umbrella called Textiles Tracker, to support investors and owners to better minimise fashion’s negative impacts on people and planet.

Textiles Tracker will:

  • Find the points in the textiles supply chain that are creating the greatest damage,
  • analyse their financial value,
  • provide transparency of ownership and,
  • through owners and investors, seek to create pressure for change in industry practices.

Valuing natural capital in the textile industry and relating it to financial risk creates potential to catalyse a change in investment behaviour. And by factoring in the cost of natural capital into financial flows, change can happen far more rapidly as businesses cannot risk loss of capital.

Once Planet Tracker’s research is completed, the findings will be shared with investors with holdings in companies across the fashion value chain. Investors will also be given advice on how to measure the environmental risks of their specific portfolios.

Why targeting the fashion industry?

Global investors are also owners and major shareholders in the fashion value chain, and therefore uniquely positioned to create positive change with both speed and scale.

According to Planet Tracker, clothing production globally has doubled since 2000 whilst we use our clothes less times, with up to 73% of produced clothing ending up in landfill annually. Needless to say, the industry’s current sourcing and manufacturing processes are unsustainable.

Without change, business-as-usual dynamics are projected as follows by 2050:

  • Carbon emissions will represent 26% of the global carbon budget (vs 2% in 2015).
  • Non-renewable energy inputs into the supply chain (oil, coal) will increase to 300m tonnes per year (vs. 98m in 2015).
  • Microplastic fibres entering the ocean will accumulate to 22m tonnes (the equivalent of four billion polyester t-shirts entering the ocean each year until 2050).

Many aspects of the textiles supply chain have potentially large risks if natural capital is not properly costed into financial valuations – from the design that drives the choices of raw materials and dyes, to processing and manufacturing, through to disposal and waste management.

By understanding the fashion industry’s investment systems and quantifying financial flows at risk, the hypothesis is that change will occur far more rapidly as businesses cannot risk loss of capital or indeed reputation which has a knock-on impact on financial flows.

Project Specifics

  • Total Donation: 6.9 million SEK
  • Program Period: 20212023
  • Countries: Global
  • Focus Areas: Constructive Activism
  • Partners: Planet Tracker

Planet Tracker is a non-profit financial think tank aligning capital markets with planetary boundaries. Together with Laudes Foundation, we are co-funding a program called Textiles Tracker to support and stimulate a transition to greater sustainability in the fashion industry.