INSIGHT by the Planet Tracker
〉The downstream end of the textile supply chain attracts the most funding from major developed market lenders, mostly in the US.
〉Just four US asset managers – BlackRock, Vanguard, Fidelity and State Street – account for over a fifth of all market capitalisation of equity holders for garment production.
〉Institutional investors control less than 25% of the upstream parts of the value chain, with instead, corporates accounting for most investments.
〉Planet Tracker therefore finds brands and investors in developed countries are largely shielded from the environmental harms across the upstream supply chain.
〉Report builds on previous research where Planet Tracker created an interactive dashboard to help investors better understand the textile value chain.
Planet Tracker’s latest research analyses types of funding sources across the textile supply chain, finding that funding from major developed market investors is concentrated in the downstream stages of the textile supply chain. This shields them from the negative harms taking place across the rest of the value chain.
The finding is underscored as just four US asset managers, BlackRock, Vanguard, Fidelity and State Street make up a fifth of all market capitalisation of equity holdings for garment production (the step prior to point of sale).
Conversely, in the early, upstream, stages of the supply chain, large institutional investors and asset managers hold between only a quarter (for raw material manufacturing) and a sixth (for fibre production and fabric manufacturing). Instead, holding companies and larger conglomerates are the major equity owners at these upstream stages.
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The new report, Follow the (Money) Thread, builds on previous research which analysed almost 3,900 companies across the textile supply chain, highlighting poor supply chain visibility and limited direct control of most of the negative environmental impacts of the industry by retail companies and investors.
“We find investors operating in the countries where most textiles are consumed are often shielded from the negative environmental impacts that take place before clothing reaches stores. However, these investors have the power to transform corporate behaviour and drive the move to a sustainable textiles industry.
“Whether it’s through proxy voting or investment decisions, it’s imperative institutional investors and asset managers push brands to take ownership of the environmental harms across value chains”.
–Richard Wielechowski, Senior Investment Analyst (Textiles) at Planet Tracker
The report also reveals that along with large institutional investors being the top equity holders downstream, this end of the supply chain also attracts more loans from international banks, such as JP Morgan, Bank of America and HSBC, likely given challenges around risk due diligence at the manufacturing stages of the value chain.
Planet Tracker calls for the support of the provision of capital where lenders have been less active. Its previous Easy (Un)pickings report demonstrated that even small levels of investment upstream can drive significant improvements in environmental impacts whilst also having a short payback period.
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