The fashion industry faces a complex mix of physical and transition risks due to climate change. Companies dependent on agricultural commodities like cotton are particularly vulnerable, as changing climatic conditions can disrupt production and increase costs. Carbon pricing could further erode already narrow profit margins, potentially affecting competitiveness and long-term viability. These risks are not evenly distributed across the sector, with global sourcing networks and energy-intensive production systems being especially exposed. If left unaddressed, these challenges could lead to significant financial losses, reduced valuations, and diminished profitability for many businesses in the industry.