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Retailers Must Address Supply Chain Emissions – Fitch

Apparel is one of the segments of the retail sector most vulnerable to climate risks, according to a report by Fitch Ratings, which has assessed the exposure of global retail companies to long-term climate risks. Responsible for 2% of global emissions, most of the emissions produced by the clothing industry originate from companies’ supply chains during the manufacturing process, it noted. As consumers become more climate-conscious and turn to sustainable brands and second-hand clothing, apparel retailers failing to reduce these emissions will be at heightened financial risk and public scrutiny, Fitch Ratings added. In comparison, food and pure-play online retailing companies are the least vulnerable to transition risks, the report noted, adding that some investment will be needed to shift their transport fleet to electric vehicles and to implement more energy efficient measures in the warehouses. These investments will not significantly affect free cash flow, and demand factors will remain robust through the transition, Fitch Ratings said.  

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