Schroders, in partnership with Cornell University’s Global Labor Institute, has launched a new framework to help investors engage with companies facing growing risks from climate change.
The framework is designed to support engagement with firms around the climate risks they face and sets out steps companies can take to assess risks and improve resilience.
Schroders is already using the framework in the apparel sector and plans to expand it to areas like food and construction.
Research with Cornell found that climate-related disruptions could cost some manufacturers more than 5 per cent of their operating profits. Yet many businesses remain focused on cutting emissions rather than adapting to physical risks.
According to Schroders, the framework encourages long-term thinking, supports suppliers, strengthens supply chains, and helps companies better prepare for the realities of a changing climate.
Schroders active ownership manager Katie Frame says: “Extreme weather caused by climate change poses financially material risks for many brands and sectors. As a result of climate change, we expect to see an increased impact on investment returns and client outcomes, specifically through increased revenue losses and stranded asset risk. Despite a changing global regulatory landscape, these risks should move companies towards building supply chains that are adaptive, resilient and sustainable in the long-term.”
Cornell University Global Labor Institute executive director Jason Judd says: “Extreme weather and physical climate risk represent serious health hazards for garment workers which result in material risks for brands. Adaptation investments that protect workers and supply chains are urgently needed and must go hand-in-hand with social protection mechanisms. These are critical for allowing the fashion industry – which sources in many of the world’s most climate-vulnerable countries – to adapt to physical climate risk and ensure workers and supply chains are future-fit.”
