That is the second of a four-part sequence taking a more in-depth take a look at how 72 corporations in 4 industries — beverage, attire, meals and high-tech — carried out in Ceres’ new Valuing Water Finance Initiative Benchmark report, which assesses how corporations are valuing and appearing on water as a monetary danger and driving the systemic adjustments wanted to guard freshwater techniques all over the world.

The style trade is a thirsty one — and a lot of the water it makes use of to make the garments we purchase is used to develop cotton. The issue is, by 2040, half of the world’s cotton-growing areas will possible be uncovered to extreme local weather threats — together with water shortage and excessive climate — posing vital monetary danger to attire corporations. 

That’s why, as a part of making their provide chains extra resilient, corporations should undertake stronger commitments to handle how their cotton suppliers use and have an effect on water. 

Assessing impacts and dangers

From fallowed fields to rising irrigation prices, the monetary fallout from water-related impacts to cotton and different agricultural commodities is enjoying out throughout the globe. Cotton manufacturing is accelerating these dangers, contributing to air pollution and water shortage. Rising cotton makes use of 16 % to 24 % of the pesticides and as much as 40 % of pesticides utilized to fields globally, contaminants that threaten clear water provides for communities and ecosystems and which can be contributing to the deterioration of aquatic life. With 1 / 4 of all freshwater fish species liable to extinction, that is of explicit concern.

By 2040, half of the world’s cotton-growing areas will possible be uncovered to extreme local weather threats — together with water shortage and excessive climate.

As attire gross sales proceed to develop, traders might be in search of attire corporations that rely closely on cotton to have sturdy targets for decreasing their impacts and reliance on water. Water use and air pollution, in addition to the safety of freshwater ecosystems are amongst six areas of focus within the Company Expectations specified by the Ceres Valuing Water Finance Initiative, a world investor-led effort to work with giant corporations on tackling water as a monetary danger and making adjustments wanted to higher defend water provides.

Our latest benchmark, which assesses the water administration practices of 72 corporations — together with 11 giant attire corporations — sheds gentle on how the attire trade is responding to those water dangers. Many corporations are taking constructive steps that different attire corporations can observe. 

Use cotton from sustainable sources

Hole Inc., for example, dedicated to sourcing one hundred pc of cotton from extra sustainable sources by 2025. This contains utilizing organically grown cotton — extra water environment friendly and fewer polluting than conventionally grown cotton — in addition to cotton sourced from farmers transitioning to rising licensed natural cotton. The corporate says extra sustainable sources can also embrace recycled cotton, cotton grown utilizing regenerative agriculture practices — which might enhance soil’s resistance to drought — and cotton licensed by Higher Cotton (previously Higher Cotton Initiative or BCI). As a part of its technique, Hole Inc.’s Banana Republic model dedicated to fund and supply cotton via Motion for Social Development, which trains cotton farmers on changing to natural practices. As of 2022, Hole had achieved 81 % of its extra sustainable sourcing aim. 

As a part of making their provide chains extra resilient, corporations should undertake stronger commitments to handle how their cotton suppliers use and have an effect on water.

In 2023, H&M sourced one hundred pc of its cotton from recycled, natural and different extra sustainable sources, together with licensed Higher Cotton, which helped the corporate save 40 billion gallons of water and keep away from utilizing 93,200 kilograms of pesticides. H&M’s use of licensed Higher Cotton additionally helped produce $32 million extra revenue for farmers. These steps are a part of H&M’s long-term imaginative and prescient and 2030 imaginative and prescient and roadmap for cotton, which focuses on scaling recycled, regenerative and sustainable cotton manufacturing, and investing in improvements to extend the standard and sturdiness of recycled cotton.

Set water targets for uncooked supplies suppliers

These steps are encouraging, however extra work is required to make sure sustainable water administration methods at attire corporations don’t overlook their cotton suppliers. 

The attire corporations we analyzed in our benchmark primarily focus their water-related provide chain targets on meeting and manufacturing suppliers. Most of these we assessed don’t particularly embrace cotton and different uncooked materials suppliers of their targets for decreasing water use and air pollution throughout their worth chains. 

Inditex is among the many corporations working to handle this hole. The corporate has set a goal to scale back water consumption in its provide chain 25 % by 2025, together with selling uncooked materials cultivation practices that scale back water consumption. 

Attire corporations’ work to supply extra sustainable cotton exhibits they acknowledge dangers related to this key commodity. It additionally factors to the potential for larger motion as corporations work to satisfy water-related challenges on the tempo and scale wanted to guard their enterprise in addition to the communities and ecosystems impacted by their provide chains.