Ripple Effects - Quantifying Water Risks in the Apparel Supply Chain

Major fashion brands and retailers, including Adidas, Gap, H&M, Inditex, Levi Strauss, Nike, PVH Corp., Ralph Lauren and VF Corp are facing significant physical, regulatory and reputational water-related risks, a new report from Planet Tracker reveals.
With water stress on the rise in key manufacturing regions, the report urges companies and investors to prioritise water risk management for long-term sustainability.
While the direct operations of these companies may seem to have low water-related risks, the report suggests that indirect impacts could pose significant threats to their operations.
Much of the apparel supply chain operates in areas of moderate to high water stress, with the situation projected to worsen in the medium-term, posing risks to sales and margins for brands and retailers.
Financial institutions should consider water-related risks in their investment decisions and engage with companies to disclose water usage and risks while supporting strategies to mitigate these risks, such as setting Science Based Targets for water.