• Investment risk is rising: Schroders warns of increasing financial losses and stranded assets due to climate change, particularly in high-risk sectors like apparel, food, and construction.
• Apparel industry hit hardest: Research shows extreme weather could cut apparel manufacturers’ operating profits by 5% or more and cost key production countries $65B in export earnings by 2030.
• Framework targets resilience: New guidelines push brands to invest in supply chain adaptation, with a focus on worker protection, infrastructure upgrades, and sustainable sourcing.

Schroders, the global active asset manager, has partnered with Cornell University’s Global Labor Institute (GLI) to publish a new stewardship framework designed to help investors and companies navigate growing climate risks.

This guidance focuses on strengthening corporate resilience in sectors vulnerable to extreme heat and flooding, beginning with apparel and expanding to food and construction — to protect long-term investment performance.

“Extreme weather caused by climate change poses financially material risks for many brands and sectors,” said Katie Frame, Active Ownership Manager at Schroders. “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.”

The framework encourages investors to engage companies on core adaptation strategies, including climate risk assessments, supplier support mechanisms, and long-term infrastructure investments. It also emphasizes the importance of financing and capacity building — especially for suppliers in vulnerable regions.

Initial research from Schroders and Cornell GLI found that major apparel manufacturers may face costs equivalent to 5% or more of operating profits due to extreme weather. These losses stem from factory shutdowns, infrastructure breakdowns, and worker health issues caused by rising temperatures and flooding.

“Extreme weather and physical climate risk represent serious health hazards for garment workers which result in material risks for brands,” said Jason Judd, Executive Director of Cornell’s GLI. “Adaptation investments that protect workers and supply chains are urgently needed and must go hand-in-hand with social protection mechanisms.”

Despite the risks, climate resilience remains underdeveloped across much of the apparel industry, where focus tends to lean toward mitigation efforts or relocation over adaptation. According to Schroders and Cornell, this short-term mindset overlooks the strategic value of preparing supply chains for long-term shocks.

Their joint analysis predicts four key apparel-producing countries could lose $65 billion in export earnings by 2030 if adaptation strategies aren’t prioritized.

Schroders has already begun deploying the framework in its engagements with apparel brands and plans broader rollouts in coming quarters. The ultimate goal: safeguarding investor portfolios while building climate-resilient businesses.

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