Pakistani floods wipe out up to 40% of cotton farmers' annual yield

Devastating floods in Pakistan have left cotton farmers facing a dire situation, wiping out up to 40% of their annual yield.

The impact on fashion companies like H&M has been significant, as they struggle to source cotton at the required price and time.

According to Jennie Granström, biodiversity impact lead at H&M Group, "situations like this are becoming increasingly frequent and more intense as the climate crisis accelerates."

This is just one example of how fashion is vulnerable to a wide range of nature-related risks, affecting everything from natural fibers to dyeing and tanning processes.

As a result, sustainability teams have found it easier than ever to make the business case for investing in nature.

Fashion companies are now more aware than ever of the importance of addressing these risks, thanks to high-profile climate change events around the world.

Fashion companies are now acknowledging the importance of addressing nature-related risks, thanks to growing awareness of climate change impacts around the world.

Several major brands have already made significant investments in environmental sustainability, including H&M and Bestseller. H&M has set science-based targets for nature and collaborates with the World Wildlife Fund (WWF) on projects like strengthening ecosystem resilience along India's Satpura-Pench Corridor.

Bestseller is also heavily investing in regenerative agriculture for cotton, an approach that aims to improve soil health and biodiversity while reducing environmental harm. The company has donated $3 million to the Regenerative Fund for Nature, a joint initiative by Kering and Conservation International.

VF Corp, parent company of The North Face, is taking a more forward-thinking approach to scenario planning, which involves considering various possible future outcomes, including those related to climate change. By modeling different scenarios, VF Corp can better prepare for potential disruptions to its supply chains.

For instance, the company has explored a future where snow melts and skiing ceases, making it impossible to sell puffer jackets like those made by The North Face. While this outcome may be unlikely, the process of thinking through such possibilities helps build resilience in the business.

As more companies begin to grasp the potential risks posed by climate change, they are starting to recognize the need for greater investment in nature-related sustainability initiatives. This shift is being driven by growing awareness of the impacts on supply chains and bottom lines.

The challenge now facing many fashion brands is how to make a compelling business case for investing in environmental sustainability when they lack a strong foundation of groundwork built up over time.

To create a compelling business case for environmental sustainability, fashion brands must consider the nuances of their supply chain. This involves evaluating not just the quality and origin of raw materials but also the methods used to cultivate them. For instance, a mass-market brand may opt for average-quality cotton without regard for whether it was grown organically or using conventional farming practices.

In contrast, luxury brands often prioritize provenance and quality, investing heavily in sourcing high-end materials like Mongolian cashmere or British wool. To accurately assess the financial risks associated with environmental degradation, sustainability teams must drill down into every step of the supply chain. This includes examining design, marketing, and procurement strategies to identify areas where costs can be shifted.

To make a business case for change, sustainability professionals need to communicate complex information in a clear and concise manner. They must demonstrate how investing in environmental sustainability can generate cost savings or revenue growth over time. According to Sinclair, this involves creating a simple narrative that explains why adopting sustainable practices will ultimately benefit the company's bottom line.

Sinclair emphasizes that few sustainability professionals have a holistic view of the business, often operating within siloes with different agendas than executives above them. This disconnect can hinder efforts to develop a compelling business case for environmental sustainability. Furthermore, many people involved in sustainability initiatives lack experience in creating business cases, which are fundamentally about explaining how certain actions will drive revenue growth.

A successful business case must be grounded in data and driven by a clear understanding of the company's financial risks and opportunities. This involves identifying specific costs associated with environmental degradation and comparing them to potential savings or revenue generated by adopting sustainable practices. By doing so, companies can make informed decisions about how to allocate resources and prioritize investments.

Ultimately, creating a business case for environmental sustainability requires a deep understanding of the company's operations and financial landscape. It demands that sustainability professionals work closely with executives and other stakeholders to develop a comprehensive narrative that highlights the benefits of adopting sustainable practices.

The challenges of insuring against nature-related risks are significant, according to experts. Insurance companies rely on past data to assess and manage risk, but this approach is becoming increasingly inadequate in the face of climate change.

As climate-related events become more frequent and intense, insurance premiums may not be sufficient to cover the damage, rendering the entire model unsustainable. This is particularly concerning for businesses that are already operating at a thin margin.

Insurance companies struggle to quantify nature-related risks due to their specificity and context-dependent nature. These risks compound exponentially, making it difficult to predict and prepare for them.

Companies that invest in nature-based solutions can potentially contribute to the development of new insurance models by providing data that is currently lacking. This collaboration could help shape more effective risk management strategies.

The expertise of chief scientists at multinational insurance companies suggests that nature-based solutions are gaining recognition as a viable approach to mitigating risks. These solutions offer a lower-cost, longer-lasting alternative to traditional infrastructure.

In the pursuit of executive buy-in for sustainability initiatives, teams must prioritize engaging with their audience and conveying the benefits of adopting sustainable practices.

Effective sustainability teams know how to translate complex environmental issues into language that resonates with their audience at all levels of the business.

This requires a deep understanding of who they are communicating with and what matters most to them, as well as a clear grasp of where the organization currently stands in terms of sustainability knowledge and practices.

A key factor is having the right person pitch the initiative - if it's someone like the chief procurement officer rather than the dedicated sustainability team, it's more likely to be seen as a critical business issue that demands attention.

As Sinclair notes, the goal is to make a compelling case by highlighting specific financial risks associated with failing to adopt sustainable practices, such as costly material sourcing or supply chain disruptions.

According to new research from Biodiversify and Little Blue Research, which surveyed 229 sustainability professionals across over 30 countries, climate resilience has become the primary driver of business leaders' decisions on nature-related initiatives, surpassing compliance concerns.

Meanwhile, more than half of these practitioners say building a solid business case for nature is their biggest challenge.

As companies navigate the complexities of sustainability, a growing number of business leaders are recognizing the value of nature in mitigating risks and driving long-term growth.

For Tony Goldner, CEO of the Taskforce on Nature-Related Financial Disclosures (TNFD), the business case for nature is clear: it's a matter of resilience. He notes that companies often underestimate the costs associated with switching supply chains, particularly when faced with unexpected disruptions.

Investors are increasingly recognizing the potential risks posed by nature-related issues, with 96% now acknowledging these concerns and about 60% listing them among their top three priorities, according to TNFD research.

Companies like Inditex are already incorporating nature into their sustainability strategies, understanding that it's inextricably linked to the materials they use, production processes, product usage, and end-of-life management.