The ‘Insurance’ masterclass was the fifth in a series of six sessions in the Cotton 2040 series co-hosted by WTW and Forum for the Future in October 2022. The sessions cover a range of topics, tailored for brands and retailers, to encourage a shift towards a sustainable, regenerative and climate-resilient cotton sector. The focus of this masterclass was on the ways in which insurance, combined with risk management techniques, can be used to manage supply chain risk.
Climate change will impact all areas of society and the cotton industry is no exception with the top 6 production countries – India, Pakistan, Brazil, China, the US, and Turkey – significantly exposed to climate instability. The textile and apparel industry has a vested interest in better understanding the risks that are embedded in their supply chains, and how to increase resilience to climate shocks.
Managing climate risk requires long-term thinking, and innovative financing solutions, for example, through microinsurance products for small farm holders or rapid-paying parametric insurance products. Building resilience at the source will be imperative to improving long-term resilience to climate shocks. Financing approaches can also be used to incentivise sustainable farming practices, which we will discuss through reference to nature-based risk mitigation.
The driver: why insurance?
Part one of the masterclass explored why the textile and apparel industry should work to better understand the risks that are embedded in cotton supply chains, and how to increase resilience to climate shocks. Physical climate risks have direct impacts on cotton farmers, with knock-on impacts further down the supply chain.
Women in particular, are disproportionately affected by disasters and are less resilient when it comes to preparing for and recovering from them. Building resilience at every link in the supply chain, from farmers and producers to brands and retailers, is imperative to improving long-term resilience to climate shocks. Insurance is one of many tools that can be used to manage climate risk in the supply chain.
The cotton industry faces numerous potential disruptors to its supply chain. Developing and applying techniques like insurance will allow actors to quantify these risks and proactively manage them.”Dr Jamie PollardSenior Associate at WTW Climate and Resilience Hub
As the presenters explained insurance can be applied at different stages of the cotton supply chain: at the producer level, at the company level, and at the industry level.
This is the session recording from Masterclass 5: Insurance held on October 25, 2022. This was the fifth of a six-part “Insights to Action” masterclass series on climate risks to the cotton and wider apparel sector.
