Apparel brands ‘ignoring’ water risks

A new report from thinktank Planet Tracker says that a number of apparel brands are ‘ignoring’ water-related risks.

Rachel Lawler February 01 2024

Planet Tracker analysed 3,900 documents, transcripts and filings from 29 major apparel brands to asses how they manage water-related risks.

The report, Exposing Water Risk, found that 90% of the documents assessed failed to mention water-related risks. Many of the companies tracked were not managing water risks at all.

Most of the mentions of water risks were found in sustainability reports, with 79% of disclosures found in these documents. This was followed by annual reports, with very limited discussion of water risks in transcripts from earnings calls or market events.

Planet Tracker says the report highlights a “significant gap” in disclosure practices around water risks.

However, the analysis does reveal a growing focus on water risks, with mentions of the topic increasing from just 2,000 instances across the documents filed in 2018 up to more than 9,000 mentions in 2022.

Planet Tracker says the increase shows that where water risks are being discussed, the subject is now mentioned more frequently, although there was a notable drop of mentions of the topic in 2021. The report speculated whether this was connected to the impact of the Covid-19 pandemic on the industry.

Value, mass-market fashion disclosing water use

The analysis also shows that value and mass-market apparel brands are more likely to mention water-related risks than luxury brands.

Apparel brands were noted for publicly sharing their water use through the Carbon Disclosure Project’s (CDP) framework including adidas, Inditex, H&M Levi Strauss & Co and Fast Retailing.

Fast Retailing shares its approach to water issues, including risks and targets, through its Integrated Report which serves as the company’s annual report and sustainability report. The company has an AA rating, one of only a small number to achieve this.

H&M Group's water impact lead Shariful Hoque told Just Style: "As a company fully committed to taking leadership and driving water stewardship across our industry, we welcome reporting focused on such a crucial topic and we agree that companies in the fashion industry should talk about water risks. We believe ‘doing’ is equally important as ‘telling’, meaning that transparency should go hand in hand with a robust water strategy showing concrete action and progress."

Hoque added that H&M has been working to reduce its water impacts for more than ten years. He said: "Through our new water strategy for 2023-2030, we are increasing our ambition level by setting further goals and actions that will spread across our full value chain, with a clear focus on water reduction and water quality improvement." 

Adidas, Inditex, Levi Strauss & CO and Fast Retailing did not respond to Just Style's request for comment on Planet Tracker's report.

Ralph Lauren, Hanes Brands Inc and Under Armour are among the brands not currently reporting their water use through the CDP framework. None of these brands had not responded to Just Style’s request for comment at the time of writing.

Water risk metrics

Most of the comments on water-related risks were centred around water consumption. Toxins and contaminants received minimal attention. Planet Tracker emphasised the need for apparel companies to address water risk comprehensively, particularly given that the sector uses significant volumes of water.

Planet Tracker says brands should be looking at several different metrics to have a truly robust approach to managing water risks.

The analysis shows that global sports brand Adidas and Spanish conglomerate Inditex have both set targets on water use efficiency and consumption, but not on pollution, or sustainable raw materials.

In contrast, Swedish apparel group H&M has set targets on water use efficiency, discharge, withdrawals, sustainable raw materials, water pollution reduction and water reuse/recycling.

The most commonly used terms connected to water risk were “risk, policy and reduction”, while terms including “toxin, abstraction and debris” were less frequently mentioned.

The thinktank recommends apparel brands include water risks in investment decisions and urge financial institutions to consider the potential impact on supply chains and consumer pricing. Investors should also support engagement with the textile supply chain to “address its use of water and the pollution associated with textile manufacture”.

The report warns that the availability of water is becoming an increasingly important issue as a result of climate change, inefficient water use and untreated disposal.

Possible threat to supply chains

Planet Tracker’s senior investment analyst Richard Wielechowski commented: “The availability of water is increasingly stressed in many parts of the world due to climate change, inefficient use, and untreated disposal. This could threaten textile production in key regions, disrupting supply chains.”

Hanesbrands, Gap, VF Corp and Kering were highlighted as companies “leading the way in terms of their discussion of water risk” in the report. None of these brands had responded to Just Style's request for comment at the time of writing.

Earlier this year, Gap partnered with Arvind Ltd to announce the inauguration of the Global Water Innovation Centre for Action at Arvind's Santej unit, aimed at transforming water management practices within the global textile and apparel industry.

Planet Tracker encourages investors to make water risk part of their engagement with corporations and ask for data on water use and water impact through reporting standards such as the CDP water questionnaire.

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