Asia apparel hubs, including Pakistan, face $65bn export hit from extreme weather: study

Published September 13, 2023
A family with their belongings wade through rain waters following rains and floods during the monsoon season in Jamshoro on Aug 26, 2022 —Reuters/File
A family with their belongings wade through rain waters following rains and floods during the monsoon season in Jamshoro on Aug 26, 2022 —Reuters/File

Extreme heat and flooding could erase $65 billion in apparel export earnings from four Asian countries by 2030, as workers struggle under high temperatures and factories close, research from Schroders and Cornell University showed on Wednesday.

The study also mapped out the supply chains of six unidentified global apparel brands operating in the four countries studied — Bangladesh, Cambodia, Pakistan and Vietnam — and found all six would be hit materially for one sample brand that could amount to five per cent of annual group operating profits.

The findings should act as a wake-up call to both an apparel industry facing significant financial costs, and to investors confronted with sparse information on companies’ exposures, the report’s authors told Reuters.

“Among the suppliers and the buyers we talked to, not one had their eye on these two issues (heat and flooding),” said Jason Judd, executive director of Cornell Global Labor Institute.

“The climate response by the industry is all about mitigation, about emissions and recycling, and little or nothing with respect to flooding and heat,” Judd said.

Understanding climate-related physical risks to companies in a warming world is critical, but the process is in its infancy with few businesses disclosing enough information and few investors undertaking proper assessments.

“There is so little data on this … There are some brands not disclosing the factory locations of their suppliers,” said Angus Bauer, Schroders’ head of sustainable investment research.

Bauer said Schroders, which manages more than 700 billion pounds ($874 billion) in assets, would increase engagement with companies over their disclosures and he called on firms to work with suppliers and policymakers to build adaptation strategies that consider the impact on workers.

Using projections, the researchers analysed future heat and flooding levels to estimate what would happen under a “climate adaptive” scenario and a “high heat and flooding” scenario.

Under the second, workers would suffer more “heat stress”, with worker output declining as the wet-bulb globe temperature, which measures heat and humidity, rises.

Flooding will also force factories to close in the four countries, which account for 18pc of global apparel exports and employ 10.6 million workers in apparel and footwear factories.

The overall fall in productivity would lead to a $65 billion shortfall in projected earnings between 2025 and 2030 — equivalent to a 22pc decline — and 950,000 fewer jobs being created, the study found.

By 2050, lost export earnings would reach 68.6pc and there would be 8.64 million fewer jobs.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Rushed legislation
Updated 06 Nov, 2024

Rushed legislation

For all its stress on "supremacy of parliament", the ruling coalition has wasted no opportunity to reiterate where its allegiances truly lie.
Jail reform policy
06 Nov, 2024

Jail reform policy

THE state is making a fresh attempt to improve conditions in Pakistan’s penitentiaries by developing a national...
BISP overhaul
06 Nov, 2024

BISP overhaul

IT has emerged that the spouses of over 28,500 Sindh government employees have been illicitly benefiting from BISP....
Smog hazard
Updated 05 Nov, 2024

Smog hazard

The catastrophe unfolding in Lahore is a product of authorities’ repeated failure to recognise environmental impact of rapid urbanisation.
Monetary policy
05 Nov, 2024

Monetary policy

IN an aggressive move, the State Bank on Monday reduced its key policy rate by a hefty 250bps to 15pc. This is the...
Cultural power
05 Nov, 2024

Cultural power

AS vital modes of communication, art and culture have the power to overcome social and international barriers....