A grant from the recently launched Laudes Foundation will help non-profit financial think tank Planet Tracker to undertake a detailed analysis of the textile industry and identify potential financial risks for investors.

Currently, the listed equities portion of the fashion industry generates more than US$1.2 trillion in industry revenues, according to Planet Tracker. Yet it notes investors in this sector are not incorporating the true cost of their investments – specifically the environmental impact of the textiles industry,  which can impact shareholder value.

Its new Textile Tracker will identify and analyse these potential financial risks, enabling investors to cost in natural capital factors. Its aim is to align capital markets with sustainable textile production.

"Without a broader view of system dynamics influencing the industry – with a particular focus for this project on understanding the industry's financial and related investment systems – change will happen piecemeal and slowly," says Planet Tracker's CEO Robin Millington. "If the cost of natural capital is factored into financial flows, change will occur far more rapidly as businesses cannot risk loss of capital or indeed reputation. 

"This grant will give us the resources to undertake a detailed analysis of the textiles industry and identify value-at-risk for investors."

The financial value generated by the sector's largest companies do not price in or value the ecological cost of their current practices. Valuing natural capital in the textile industry and relating it to financial risk creates tremendous potential to catalyse a change in investment behaviour, Planet Tracker adds.

"By identifying financial risks to investors linked to ecological boundaries within the textiles value chain, Textile Tracker aims to stimulate investors to re-allocate funds in ways which influence change in the industry towards more sustainable practices," Millington says.

The Laudes Foundation was set up this month to advance the work of the C&A Foundation, with a broadened focus on climate breakdown and inequality.

"We created Laudes Foundation to harness the productive power of the market to value all people and respect nature. This can only be done if investors have access to the right information to make informed decisions," says Leslie Johnston, CEO of Laudes Foundation. "Planet Tracker is a powerful demonstration of how this can be done in an industry – fashion – that generates 10% of global greenhouse gas emissions."