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Fashion retailers have spent years worrying about supply chain expenses, from cotton prices and shipping costs to tariffs and the reliability of factories.<\/p>\n
However, industry experts now claim a less visible threat is moving up the supply-chain agenda: whether there will be enough water to make the clothes in the first place.<\/p>\n
The global fashion industry produces an estimated 80 to 150 billion items of clothing each year, and a single cotton T-shirt has a water footprint of about 2,700 litres, according to an EU textile study. While figures vary, British charity retailer Oxfam estimates that the entire fashion industry uses at least about 93 billion cubic metres of water a year.<\/p>\n
Ollie Carpenter, who leads analytics at climate risk intelligence firm Resilience, says the industry has reached a point where water can no longer be treated simply as a sustainability concern, but also a financial one.<\/p>\n
\u201cWe\u2019ve seen a tipping point recently where water\u2019s suddenly become this existential threat,\u201d he says. \u201cWater stress and water security is actually challenging the viability of their supply chains.\u201d<\/p>\n
What is water stress?<\/h2>\n
For fashion, water stress occurs when there is an insufficient water of the right quality, in the right place, at the right time for growing raw materials and operating factories.<\/p>\n
In cotton farming, for example, the water can be \u201cgreen water\u201d, rainfall, or \u201cblue water\u201d, drawn from surface or groundwater sources for irrigation.<\/p>\n
Once cotton reaches the industrial part of the supply chain, the requirements change. Washing, dyeing and other wet-processing operations require water of an appropriate quality, often supplied through wells or municipal systems, making location critical.<\/p>\n
\u201cIt\u2019s not a fungible resource,\u201d Ollie says. \u201cThey\u2019re very location specific. They\u2019ve got factories and water stressed areas.\u201d<\/p>\n Water stress has become a global issues for the industry, as fashion\u2019s supply chain is unusually fragmented: A retailer may have a relationship with a textile mill or garment factory without having complete visibility of the farm producing the cotton several stages upstream.<\/p>\n Cotton is particularly exposed. It is grown in major sourcing regions including the US, China and India, while textiles and garment production are heavily concentrated in parts of South Asia.<\/p>\n Research published this year found that global cotton-growing areas have experienced a significant increase in the probability of combined drought and heat events, with such events associated with cotton yield failures.<\/p>\n For example, the US Department of Agriculture said cotton planting in 2025 was projected to fall to its lowest level since 2015, while drought had already affected production in the Southwest during the preceding three years.<\/p>\n In Pakistan, meanwhile, recent flooding has demonstrated the other side of the climate problem: disruption to cotton-growing areas can feed directly into textile supply. Reuters reported in September 2025 that damage to crops was threatening the country\u2019s textile industry because of potential cotton shortages.<\/strong><\/p>\n For a retailer, water stress becomes a commercial question, when faced with shortages that can reduce the availability of cotton or other raw materials. It can interrupt spinning, dyeing or finishing, force manufacturers to compete for scarcer supplies, increasing prices and if production is delayed, the impact can eventually reach the shop floor in the form of missed deliveries, unavailable products or lost sales.<\/p>\n \u201cIn the short term it\u2019s about supply volatility, and ultimately that translates to cost,\u201d Carpenter says. \u201cThere is availability of product on the market, but they\u2019re going to have to pay a premium for it.\u201d<\/p>\n That premium can become particularly important in fashion, where margins are already under pressure and buying decisions are often made months before a collection reaches customers. But the vulnerability is not restricted to cotton farming. Carpenter points to spinning and dyeing as particularly water-intensive parts of the industrial supply chain.<\/p>\n \u201cIn the dyeing and wet processing in the textile supply chain, those processes are water intensive, kind of universally,\u201d he says.<\/p>\n Water stress can therefore hit at several points simultaneously: the crop, the mill and the factory. It also creates a difficult calculation for brands deciding whether to invest in more sustainable materials. Carpenter says one US fashion brand Resilience works with has been rapidly increasing its use of preferred fibres, partly because of their lower carbon footprint and partly because they can make the supply chain more resilient.<\/p>\n \u201cTypically, regenerative cotton is more resilient to water stress than your conventional cotton,\u201d he says.<\/p>\n The investments can run into millions of pounds at corporate level, Carpenter says, with companies initially testing alternative supply before scaling it up.<\/p>\n Water availability could eventually become another factor in the long-running debate over where fashion should manufacture, but Carpenter warns there is no obvious new low-water-cost destination waiting to replace Asia.<\/p>\n \u201cI don\u2019t think there\u2019s a silver bullet in terms of, you know, go and find your sourcing strategy here,\u201d Carpenter says. Instead, he expects a combination of diversification and investment in existing suppliers.<\/p>\n South Asia is an example; India and Bangladesh are major textile and garment manufacturing centres, but the region is also exposed to heat and water stress. Moving production closer to Europe, potentially to Turkey, may make sense for other reasons, including geopolitics and nearshoring, but Carpenter cautions against treating Turkey as a straightforward answer to water risk.<\/p>\n Brands may know their tier-one suppliers, the mills, textile producers and finishing plants that deal directly with them, while having less visibility several stages further back. The answer, Carpenter argues, is to start by mapping that exposure.<\/p>\n \u201cScreen and prioritise where your risks are,\u201d he says. That means identifying manufacturing sites and agricultural dependencies in water-stressed basins, and then putting a financial value on the exposure.<\/p>\n \u201cWhat is the cost of that?\u201d he asks. \u201cHow does that exposure translate to potential financial risk? So, what\u2019s the revenue value attributed to that factory, and what might you stand to lose if you can\u2019t operate?\u201d<\/p>\n Carpenter says adaption could mean investing in water-efficient production, recycling water, changing agricultural practices, diversifying suppliers or supporting more resilient forms of cotton production.<\/p>\n There are already examples of textile manufacturers attempting to reduce their dependence on fresh water. Carpenter points to circularity initiatives in northern India where water is recycled through textile-processing operations.<\/p>\n Carpenter also believes water stress could eventually challenge the economics of ultra-fast fashion, where products and trends move through the supply chain at extraordinary speed.<\/p>\n In periods of volatility, he says, the model could face pressure from the need for more expensive or more secure supplies.<\/p>\n At the same time, demand for more sustainable apparel is growing. Resilience\u2019s modelling suggests sustainable apparel could account for between 13% and 40% of the market, depending on the market and assumptions used, with that share expected to increase.<\/p>\n That leaves retailers facing a difficult balancing act: consumers may want more sustainable products, but particularly in fast fashion, they remain highly price sensitive. For brands, then, water can no longer sit solely within the sustainability department.<\/p>\n Carpenter\u2019s advice is to look beyond the next six months and towards the years in which today\u2019s investment decisions will determine whether a supply chain remains viable.<\/p>\n \u201cIn a more volatile world with a hotter world and more supply chain disruption, you can protect your earnings value at risk,\u201d he says.<\/p>\n \u201cYou\u2019re going to have to make multi-year investments in a resilient supply chain.\u201d<\/p>\n![\"\"](\"https:\/\/www.retailgazette.co.uk\/wp-content\/uploads\/2026\/09\/shutterstock_2517335747-300x200.jpg\")
Why is water now a financial risk?<\/h2>\n
Will clothes-making areas change?<\/h2>\n
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