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Is Fashion Finally Listening To Climate Change?

April 27, 2022
Author: Jasmine Waters

In the world of fashion, brands are often called out for empty environmental promises and lack of ethical action. Climate change may now be taken more seriously thanks to a knock-on financial impact seen by investors. A significant rise in consumer demand, changes in international policy and business threats have all culminated in a growing need to take immediate action. What changes is the industry seeing, and could they finally promote the right kind of change?

What are the current environmental policies?

Companies in the UK must now disclose the financial risk climate change poses to their business operations (as of April 6th), with the US following similar guidelines. While the EU, Singapore and Hong Kong look to join the growing list, businesses now need to be more aware of their environmental impact than ever before. Sadly, none of these changes require companies to take specific action. Instead, there’s an emphasis on broader policy—looking to tackling pollution, waste and labour abuse. While not drilling down into the nitty gritty, the changes could boost efforts for transparency, making it easier for investors to tackle climate impact.

What does this mean for business finances?

The most noticeable knock-on effect is that business may start to hire auditors and consultants to advise on climate and emissions risks. Apparel brands are more likely to fall into a category of physical risk, examining increased instability throughout the supply chain and export sourcing. A second category of transitional risks will assess social policy, targeting regulations and changes in consumer demands. The general feeling is that climate risk is an investment risk. Larger boardrooms could look to hire leaders who seriously take climate change into account, while regulation fluctuations will unveil if brands are sticking to proposed sustainability goals.

The larger implications are still as yet unknown, hoping to empower investors long-term. It is possible financial rewards will come to those companies who are truly forward-thinking, while those who are too slow to act risk losing investment.

Image source: https://www.getskp.com/blogs/news/sk-p-s-guide-to-buying-sustainable-fashion

 

 

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