Supply chain strategy | Qa

Positive cotton supply chain change

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Are brands racking up risk?

Brands are beginning to develop some exciting supply chain initiatives, part of a growing trend towards more sustainable cotton, says Patricia Jurewicz speaking to Innovation Forum

What trends are you seeing in terms of human rights and abuses and environmental impacts from cotton supply? 

Something that’s developing right now is that companies are starting to reject cotton from high risk areas such as the Omo Valley in Ethiopia where there is a history of land grabs. H&M recently joined Tchibo in making such a commitment. To fulfil on this undertaking, for their cotton sourcing from Ethiopia both companies will only use cotton affiliated with the Cotton Made in Africa (CMiA) project. 

The human rights activists with concerns about Uzbek cotton still being harvested with forced labour have kept up the drum beat. Also, the US labour department just added India to its cotton list for goods produced with forced or child labour bringing the total number of countries on the cotton and cottonseed list to 19.

Civil society organisations (CSOs) focused on climate change have highlighted the desertification of land where cotton is grown in China. And the draining of the Aral Sea in central Asia to meet the needs of cotton production is featured in a recent television series, Earth: A New Wild, on the US public station PBS.

With all of that said, sustainable cotton initiatives such as the Better Cotton Initiative (BCI), CMiA, Cleaner Cotton, and Fairtrade Cotton have all received increased attention and investment in the last few years.

Are corporate and a buyers still relatively ignorant about these abuses and the potential risks – beyond continuity of supply – to their corporate reputation? 

As the previous examples show, CSOs and media have done a good job of drawing attention to challenges with the world’s cotton supply.

Although domestic products and apparel brands may want to ignore current challenges in the cotton industry, they will only be harming themselves if they pretend the abuses don’t exist. Responsible Sourcing Network (RSN) just released a 2015 addendum to our 2014 Cotton Sourcing Snapshot. Some companies that responded to our survey, such as Sears and Kering, raised their scores – in the case of these businesses ten-fold and four-fold respectively. Two companies that didn’t respond, All-Saints and Urban Outfitters, remained at the bottom of the ranking with scores of zero.

Now it is not only consumers that see the unresponsiveness but investors too. If shareholders do not see companies addressing human rights abuses and environmental destruction, they begin to wonder how companies will address other economic risks.

In addition, future cotton supplies may be greatly diminished due to water scarcity and desertification – issues which cannot be ignored.

Is there change in terms of how brands engage with supply risks in their cotton supply chains?

We are seeing a big trend toward sustainable cotton sources. Several brands have announced goals to move towards or only source sustainable cotton in the not too distant future.

Marks & Spencer’s Plan A states the goal of using 50% sustainable cotton by 2020, H&M recently announced it will strive to only source cotton from sustainable sources by 2020, and Ikea is already on its way to have all of its cotton sustainably produced.

What is meant by “sustainable” sources in this context?

This is a mix of organic, fair trade or recycled cotton, or fibre from programmes such as BCI or CMiA. Most of these programmes work directly with farmers to control both environmental and social impacts.

In addition to participating in programmes that connect the brand directly to the farmer, leading brands are integrating more accountability mechanisms throughout their supply chains. In RSN’s report, Cotton Sourcing Snapshot: A Survey of Corporate Practices to End Forced Labor, the research on 49 brands showed just over 18% of those surveyed are auditing (through self-audits or third party audits) their spinners and/or mills to ensure they are adhering to their codes of conduct or other policies.

Auditing deeper into the supply chain is a trend that is starting to appear. This approach likely is motivated by potential risks as well as the opportunity to have full transparency and accountability from factory to farm.

If a brand buyer wants to eliminate risk from the company’s cotton supply chain, what are the key steps to take? 

There are a number of key things that companies can do.

  • Be aware of where the risks are in your cotton supply chain. A good guide on knowing where to look and how to identify human rights risks is the RSN report, To the Spinner: Forging a Chain to Responsible Cotton Sourcing.
  • Ask your yarn and textile suppliers for the countries of origin of the cotton they are using.
  • Have a public policy, or, when available, sign industry-wide pledges and commitments, against forced labour, child labour, and destructive environmental impacts in cotton sourcing.
  • Create a system to communicate, require adherence, and hold your suppliers accountable to the policy.
  • Spot check your suppliers periodically to see if they are abiding by the policy.
  • Participate in efforts that support the ethical and sustainable growing and harvesting of cotton, and drive transparency and accountability throughout the entire supply chain.

On the flip side, what are the classic errors that you see brands making?

Brands don’t always follow up with the level of due diligence needed to guarantee they are addressing all the risks in their supply chains from manufacturing to the farm. For example, a brand may have a code of conduct but the code does not apply to the yarn spinner or farmer. If it does apply to spinners and farmers, there may not be a required audit to ensure they are abiding by the code. So having a code is not enough, there must be an accountability system established to guarantee adherence to the code.

Brands should not just survey their suppliers and believe whatever information the supplier provides. Cross-checking of information, call-outs of inconsistencies, follow-up for more detailed information, proof of transactions, spot-checks, and other forms of due diligence need to be implemented within a supply chain.

For brands engaging with initiatives such as the Cotton Pledge, what are the big benefits they’ll see?

Benefits to brands include being part of a global effort to end forced labour in the cotton sector of Uzbekistan, having access to materials on how to identify and address risk in their supply chains, having the opportunity to influence the steps the ILO is taking to shift the Uzbek government away from its abusive practices, and receiving up-to-date information on Uzbek harvest activities.

Companies are beginning to do some exciting things in sustainable cotton. What’s caught your eye as a guide to future trends?

The brands that are implementing the most innovation in their cotton supply chains are the same ones that scored highest in the Cotton Sourcing Snapshot survey: Adidas, Marks and Spencer, Ikea and Patagonia.

In addition, two companies that recently improved their snapshot scores are Hanesbrands and Kering. Since Hanesbrands owns its textile mills, it has visibility and control over its cotton sourcing. Kering is rolling out its environmental profit and loss (E P&L) account throughout all 18 of its brands, which will give it more transparency to all of its raw material sourcing. 

C&A Foundation has funded a feasibility study for RSN’s new effort to promote more accountability with spinners and mills, which is currently underway. This initiative is looking to promote an industry-wide verification system with cotton spinning mills to drive the use of ethically-harvested cotton.

Patricia Jurewicz is director of Responsible Sourcing Network and will be participating in Innovation Forum’s responsible cotton souring conference on 16-17 March in London. 

She will be joined by Gina Tricot, Marks & Spencer, Mark’s Work Wearhouse, John Lewis, Nudie Jeans, Lindex, Ikea, Primark, Shell Foundation, Better Cotton Initiative, Textile Exchange, Fair Wear Network, Solidaridad and many more, to discuss sustainable and ethical cotton supply chain engagement and management. Click here [http://innovation-forum.co.uk/sustainable-and-ethical-cotton-sourcing.php] for more details and full agenda: Sustainable and Ethical Cotton Sourcing: how to get it right, and make it pay for your business.

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