(Bloomberg) — Garment factories in India supplying customers like Fast Retailing Co.’s Uniqlo, Marks & Spencer Plc and Tesco Plc are suffering productivity losses of as much as 10% as a result of the nation’s extreme heat, according to a new report.
Research at 10 facilities in four regions found high temperatures are impacting product quality, delivery reliability and contributing to higher employee absenteeism during the peak summer months, the study published Tuesday by the NYU Stern Center for Business and Human Rights found.
Many suppliers are “just about keeping their heads above water” by implementing makeshift fixes to handle heat extremes, said Lucy Siers, senior research scientist at the NYU Stern Center and lead author of the report. “The tipping point is when a delivery deadline is missed and suppliers are no longer able to insulate their buyers.”
Large areas of the nation have suffered through heat waves this year with temperatures routinely above 45C (113F), and a high of 48.2C recorded in a town in Uttar Pradesh last month.
The report’s findings show the specific vulnerability of India’s $39 billion apparel export industry, which employs 45 million people — 70% of whom are women — with many working in hot and humid conditions. Factory managers reported that severe temperatures are causing sweat stains on fabric, dust contamination, stitching errors, and forced production halts, according to interviews conducted by the researchers.
Lost working hours from extreme heat across all sectors could put as much as 4.5% of India’s GDP at risk by 2030, the equivalent of roughly $150 billion to $250 billion, the World Bank estimates.
Researchers also identified gaps in the monitoring of conditions at suppliers’ facilities by global retailers and fashion brands. While nearly all customers surveyed acknowledged the risks of extreme heat to production, only 35% required suppliers to track factory temperatures. “You can’t manage a risk that you don’t measure,” Siers said.
Half of the companies surveyed confirmed they hadn’t asked manufacturers if extreme heat has disrupted output, and a further 12.5% were unsure if they had made such inquiries.
To protect their supply chains, the customers should set enforceable heat standards, mandate factory temperature tracking, and overhaul rigid purchasing practices to accommodate climate-linked delays without financial penalties, the report said. Customers should also do more to share the costs of factory cooling and ventilation upgrades.
“Brands that source from heat-exposed regions have both a business interest and a responsibility to act,” said Michael Posner, director of the NYU Stern Center.
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