Transitioning towards a water-conscious and circular textile industry is a complex undertaking. But it is critical to ensuring that textile production does not further deplete or contaminate freshwater resources and degrade ecosystems and harm the communities that depend on them, particularly in already water-stressed regions, and to build long-term resilience across supply chains. To support this endeavour, this paper recommends the following:
Governments should prioritize diplomatic engagement on water as a shared and traded resource to strengthen cooperation across the value chain on reducing the risks of water scarcity and poor water quality. Trade relationships have an integral role to play in promoting water resilience in textile value chains. Well-designed trade agreements can ensure that social and environmental risks are borne fairly within established and emerging producer countries, and are tackled by consumer markets. Monitoring virtual water flows and using adaptive trade arrangements that respond to changing conditions can help rebalance water risks across the value chain, improving water security within producer regions. Bilateral and multilateral cooperation, supported by national governance, must treat water as a valued and shared resource, the stewardship of which requires fairness across borders. Engaging consumer markets in improving water security across the value chain has the potential to reduce water risk and lift all producing regions to a higher level of sustainability.
Policymakers and trade bodies should embed water stewardship and circularity criteria into trade policy frameworks, with the goal of preventing social and environmental burdens being displaced across borders and into vulnerable regions. Making water security central to the design and implementation of trade policies needs to start with a shared understanding across producer and consumer regions of virtual water trade. This requires increased transparency and clearer definitions of traded goods to ensure that their origins and the specificity of product types are easily known. Applied to the textile sector, tracking the invisible water flows in clothing and other textile goods can strengthen policy design to manage water risks across borders. By embedding water stewardship and circularity standards within trade agreements, import requirements and due diligence frameworks, responsible social and environmental practices can be supported across the value chain – from reducing water depletion and pollution in the production and processing of raw materials, to preventing exports of high volumes of used clothing and textile waste to countries and regions that do not have the infrastructure to manage these.
National governments and regional trade blocs should progressively embed standardized water footprint metrics and incentives into trade agreements to promote transparency along value chains. As susceptibility to water-related stressors can arise at various points in the value chain, monitoring of water footprints can and should be strengthened to address pressing water dependencies. This requires systematically assessing products along the textile value chain through the lens of the water footprint – for instance the green water footprint of cotton and pulpwood cultivation, the blue water footprint of irrigation, fibre production, wet processing and recycling, and the grey water footprint of fertilizers, pesticides and inadequately treated or untreated effluents. Consumers are often unaware of the social and ecological impacts of their choices, and are not well equipped with information to enable more sustainable choices. Embedding water footprints in trade metrics, led by national statistical agencies and trade ministries, can help promote transparency along value chains. Alongside this work, measures to promote better labelling and other communication tools on the water footprints of specific products can help build consumer knowledge and boost demand for more sustainable production. Incorporating water footprints into decision-making should not be seen as a signal for divestment from water-stressed countries; instead, it needs to be a signal for investment in sustainable textile production that can lead to a competitive advantage.
National ministries should cooperate across sectors to ensure water is priced accurately in line with its domestic value, reflecting baseline water stress and appropriate water accounting methods. Valuing green and blue water using domestic policies and investment decisions is pivotal to reflecting the true economic, environmental and social costs of its use, providing accurate price signals in trade, and ensuring that economic beneficiaries internalize water scarcity and pollution pressures incurred in producing regions. Water pricing can also include the ‘polluter pays’ principle that places the responsibility for clean water on the originator of the pollution. Accurate water pricing, equitably applied, provides public revenue to fund improvements in water infrastructure and regulatory enforcement. Pricing structures that encourage water efficiency and pollution reduction can be an essential incentive for the deployment of regenerative agriculture and closed-loop and circular technologies. Consultations with water-intensive sectors can help ‘future-proof’ water pricing by understanding foreseeable impacts to industry from reduced water quality and availability. Water pricing that accurately captures negative externalities, such as the social and environmental impacts of products, can help strengthen price signals to consumers, resulting in higher retail prices for less sustainable products.
International standards bodies, along with regional and national regulators, need to coordinate to fill gaps across regulatory and voluntary mechanisms, strengthen interoperability and incentivize the move to more sustainable, efficient and equitable production. Textiles are a vital pathway for economic development, and countries and institutions active in textiles trade and standards-setting have a crucial role to play in engaging with water-stressed producer regions to ensure incentives support the move to sustainable, efficient and equitable production practices. By working together and coordinating across governments, and enabling public–private consultation, a holistic and coordinated approach can help increase transparency, raise water footprint ‘literacy’, and amplify the positive impacts of sustainable and equitable water management across value chains. Prioritizing enforcement of regulations concerning systems such as zero-liquid discharge and closed-loop recycling can incentivize innovation in production methods that use less water, lower the emissions footprint of textiles and strengthen the circularity of textile waste. Streamlining and encouraging take-up of voluntary standards can lead the way towards strengthening water governance that protects environmental quality and produces social benefits. Through progressive advancements across voluntary and mandatory measures that collectively address all stages of the textile value chain, social and environmental values can be better upheld throughout the life cycle of textiles.
Private sector actors across the textile value chain should support knowledge exchange and invest in innovation, implementation and monitoring of sustainable, efficient and equitable practices. By implementing best practices for agriculture, forestry and manufacturing, through deeper investment in regenerative agriculture, conserving forest ecosystems, closed-loop technologies and circularity, the overall impact of the textile sector can be reduced while meeting growing global demand. This requires the industry to both build on existing knowledge and proactively engage in addressing the gaps. Greater investment is needed, for instance, to accelerate closed-loop processes in the manufacturing of textiles and fibre-to-fibre recycling, as well as innovative chemical processes to reduce reliance on virgin cotton and polyester and lower both water consumption and pollution. Countries that import used textiles, supported by international finance and technology transfer, have the potential to build value-added industries in sustainable production practices, repair, upcycling and recycling that turn today’s waste into tomorrow’s resources and create local employment. Coordination with industry platforms can broker connections across supply chains, and NGOs in producing countries can facilitate trust-based engagement between companies and communities to help ensure more equitable sharing of benefits. Facilitating peer-to-peer exchange of knowledge on regenerative practices, closed-loop technologies and circularity can accelerate their uptake.
Investors must address the water-related risks and impacts of global textile trade, requiring actors across the value chain to disclose localized water metrics and de-risk supply chains by improving transparency and financing best practices. Unmanaged water scarcity poses a material threat to asset valuations, potentially leading to stranded assets, supply-chain disruption and regulatory fines that diminish shareholder value. Nature-related risks can pose considerable macroeconomic impacts, and systematically identifying and monitoring water-related risks and impacts can help implement double-materiality reporting. That is to say, understanding impact materiality (i.e. impact of operations on water resources) and financial materiality (i.e. how resource quality and availability are affecting operations) of water-related risks of the businesses in their portfolio is essential for regulatory compliance, as well as for avoiding financial losses from unmanaged risks and for protecting communities who are dependent on these natural resources. Furthermore, to enhance longer-term resilience, bringing innovative practices such as those outlined in this paper to scale will require continued investment. Investments by financial institutions to de-risk the transitional period can help provide the necessary financial buffer to build a resilient and sustainable textile value chain. Reorienting incentives away from unsustainable extraction of water resources and towards social and ecological outcomes would better reflect the true value of regenerative, circular and closed-loop practices. Embedding de-risking measures is therefore essential to ensuring that supply-chain transitions are both sustainable and just.
A whole-of-value-chain approach – and collective ambition and responsibility – is needed to support a transition towards a sustainable, efficient and equitable textile sector in which water-efficient and non-polluting practices are embedded and upheld. Governments and regional bodies have a role to play in ensuring robust water governance and trade policies that address water-related risks as a vital component of secure supply chains, while investors, companies and their suppliers can improve transparency of virtual water flows. Sustained investment and incentives are needed to drive fundamental shifts in agricultural, forestry and industrial practices for fibre production, the use of closed-loop and wastewater treatment systems, and circularity from textile design to end of life. Consumers can also play a pivotal role on the demand side, provided they have the information they need to help them make better buying decisions. This requires clearer product labelling that provides details of sustainable water use, along with communication campaigns to build consumer awareness of the social and environmental costs – and benefits – of textile goods. This transition from a textile sector that externalizes water costs to one that internalizes responsibility requires these actions to occur together. Such collective water stewardship will ultimately determine whether global demand for textiles can be met while preserving the world’s most precious resource for future generations.
