Fresh funding for initiative to help investors support sustainable fashion

Laudes Foundation, Brenninkmeijer family's recently-launched philanthropic organisation, has backed a project working to engage investors with sustainable fashion, in a bid to scale up low-carbon, resource-efficient materials and business models across the global sector.

Fresh funding for initiative to help investors support sustainable fashion

The aim is to funnel more investment into projects working to minimise fashion's negative impacts on people and planet. 

Called Planet Tracker and launched by the Investor Watch Group, the project has been working to track the carbon impact of major policy decisions since 2018. 

Now, with the backing of a grant from the Laudes Foundation, which focuses – among other issues – on sustainable fashion supply chains, Planet Tracker will assess environmental risks across the fashion sector’s supply chains and translate them into financial risk. Physical risks, such as deforestation and drought, will be considered, as will transition risks.

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

Planet Tracker estimates that the fashion industry currently generates more than $1.2trn in revenues for investors each year, but is warning that this amount could drop rapidly as the planet warms, and if environmental degradation continues.

Specifically, the organisation is warning that the global textile industry could eat up 26% of the world’s carbon budget by 2050, compared to 2% in 2015 and 10% at present. This trend, coupled with issues such as non-renewable energy in supply chains, microplastic pollution and human rights abuses, will result in an annual profit reduction of 3-4% by 2030, Planet Tracker estimates.

Planet Tracker’s chief executive Robin Millington also believes investors should not take fashion-related revenues for granted if they do not adequately “price in” the value of natural resources.

“Without a broader view of system dynamics influencing the industry… change will happen piecemeal and slowly,” Millington said.

“By identifying financial risks to investors linked to ecological boundaries within the textiles value chain, Textile Tracker aims to stimulate investors to re-allocate funds in ways which influence change in the industry towards more sustainable practices… If the cost of natural capital is factored into financial flows, change will occur far more rapidly as businesses cannot risk the loss of capital or indeed reputation.”

The Laudes Foundation has not publicly disclosed the size of the grant it has offered Planet Tracker.

Cottoning on

The announcement comes amid a busy week for both the climate-related financial disclosures and sustainable fashion spaces.

On the former, the Task Force on Climate-related Financial Disclosures (TCFD) revealed on Wednesday (12 February) that more than 1,000 organisations are supporting its recommendations, including corporates with a combined market cap of $12trn and investors with $138.8trn of assets under management collectively.

On the latter, London Fashion Week is beginning today (14 February) and, for the first time, will feature a “positive fashion” exhibit. The exhibit will spotlight designers and brands working to champion environmental sustainability, craftsmanship and community, and equality and diversity.

Ahead of the event, WWF, in partnership with Pesticide Action Network UK and Solidaridad, has launched its annual Cotton Ranking report. The league table assesses whether 77 big brands are making adequate environmental and social sustainability considerations in their cotton sourcing. Collectively, these brands use more than 10,000 metric tonnes of cotton annually.

While noting that many of the largest firms are progressing towards their 100% sustainable cotton aims – including the likes of Marks & Spencer, H&M, C&A, IKEA and Nike –  the report warns that just as many corporates are lagging behind on action to source sustainably produced cotton at present as there were in 2017.

Companies named as not having started to implement action plans around sustainable cotton sourcing include Amazon, Foot Locker, Giorgio Armani and the recently bankrupted Forever 21.

“Leading British companies are showing international leadership on sourcing cotton that doesn’t damage the environment – but the gap between the best and the rest is simply not good enough,” WWF UK’s executive director of advocacy and campaigns Kate Norgrove said.

“More companies must choose to step up to their responsibilities and make concrete commitments to use more sustainable cotton – because, in 2020, consumers know more and demand more from their favourite brands.”

Sarah George

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