Managing Sustainability Risk In The Fashion Industry & Clothing Sector

November 21, 2017 | Insights,

Ever wondered about the real risk of being hit by a bus, struck by lightning or eaten by a shark? In this month’s Business Leaders’ Forum workshop for delivering sustainability in the clothing sector, this was the starting point for a lively and interactive discussion about risk profiling and management in the supply chain.

In the second of our six-monthly forums for professionals in the clothing sector, business leaders from high street and luxury brands and retailers came together to hear from expert presenters on transparency in the supply chain and specific risks and to explore and profile common sustainability risks in the industry.

Wide Ranging Sustainability Risks In The Fashion Industry

Through collaborative conversation, the group, which included representatives from eight leading UK organisations, profiled five categories of current sustainability risks in the clothing sector, including:

  • Geopolitical
  • Environmental
  • Social and cultural
  • Financial
  • Technological

But, following the presentations, a far wider range of risks were identified. These flagged how a true risk profile needs to incorporate not just the obvious and known risks, but also those that are acknowledged but not quantified or charted.

This exercise established that, to varying degrees in different parts of the clothing sector, issues as diverse as natural hazards, climate change, food wasteenergy, water security, demographic shifts, concentration of production, commodity prices and laws and regulation can pose risks to productivity, efficiency and supply chain resilience, and in many instances are not currently featuring on company risk indexes.

Of course, some risks are not material, and others are not within the brand or retailers’ capability to directly influence. So, having identified the long list of potential risks it was important to carry out a prioritization exercise to rank significant trends and emerging issues for leaders in the sector. Assessment criteria included: economic and financial impact, brand value and business continuity.

RiskHorizon Tool For ESG Screenings And Risk Assessment

The workshop was supported by the proprietary tool, RiskHorizon™. The Anthesis-designed tool has been developed to provide sustainability professional and investors with the decision aids they need to undertake sector-level ESG screenings and assess the materiality of individual risks to assets and investments. It helps organisations to prioritize, manage and monitor areas of their supply chain to meet strategic sourcing objectives and to quantify the financial impact of direct and indirect risks to the continuity and resilience of their operations.

The tool contains information that is specific to the needs of the clothing sector and its complex supply chain, to enable financial quantification of future risk related scenarios across a range of time horizons.

The objective of the forum is to create a knowledge hub on sustainability risk management where peers can share non-competitive information to develop improved performance, efficiency and practices and work collaboratively to find solutions to sustainability challenges that are more difficult to tackle as individual organisations.

For more information on sustainability risk or on the RiskHorizon tool, please get in touch via the form below.

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