Here’s why fashion retailers need to know where their cotton comes from – The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology
This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Author: Alia Malik, Senior Director, Data and Traceability, Better Cotton
- Fashion retailers often don’t know where their cotton comes from, as it is shipped and processed in bulk.
- Shoppers care about where their clothes come from and are increasingly demanding higher standards.
- Better Cotton brings together a group of major industry players to think about how to better trace the origin of the cotton they use.
Ask a fashion retailer where the cotton in their clothes comes from and most give up: they just don’t know. “We buy through intermediaries”; “The cotton fibers are mixed”; “The mechanisms for tracking individual farms simply don’t exist.”
The reasons they give for not knowing are legion and, in most cases, perfectly genuine. Along with ubiquitous commodities like crude oil, soybeans, and wheat, cotton is one of the most traded commodities in the world. As with these other high-volume commodities, they are shipped in bulk, processed in bulk, and sold in bulk.
What is traceability and why is it a growing problem?
Shoppers care about where their clothes come from and act with their wallets. Just look at the growing sales of organic labeled cotton. The fact that this is the only market segment that remains physically separate once the cotton leaves the farm, and therefore traceable (although with some question marks), is no coincidence.
Lawmakers are also starting to wake up. The European Commission, for example, is currently considering a large proposal this would require companies to significantly tighten due diligence requirements in their supply chains. In the same vein, US Customs authorities are now putting stricter transparency conditions on cotton imports from high-risk countries.
Why does the cotton sector not open up about the origin of its products?
It’s a question that retailers and other key industry players are asking themselves. The vast majority of players in the cotton industry now admit that traceability is no longer a “welfare”. Our recent survey of suppliers in the Best Cotton network found that more than 8 in 10 (84%) view data on the origin of the cotton they buy as a “business need to know”. And yet, today, only around 15% of apparel companies claim to have complete information about the raw materials that go into their products, according to recent KPMG research.
The sticking point is the functioning of the market. To reduce costs and increase efficiency, the production of individual cotton growers is consolidated with the production of other growers almost as soon as it leaves the farm. It is not impossible to keep it separate or to use emerging technologies to digitally mark raw cotton, but the time and cost to do so are considerable.
Nor does the cotton go directly from the farm to the retailer. There are multiple intermediary actors, from ginners, traders and spinners to fabric mills, sewers and, eventually, the brands themselves. Again, introducing checks and controls at each stage may be feasible, but expensive and technically difficult.
Finally, there are legitimate questions about intellectual property to consider. Yarn and fabric producers often rely on several different types of cotton to achieve the specific blend they are looking for. The net result is that the cotton in a garment is most likely to come from many farms, possibly multiple countries.
What are we doing to meet these challenges?
It is possible for us to meet these challenges, even if no one claims that they are easy. But neither are they insurmountable, especially given the rapid pace of technological innovation in this space. Hence our decision at Better Cotton to bring together a group of leading industry players to examine what a viable traceability solution might look like – and how we can go about creating it collectively.
The group, which includes retailers and brands such as Bestseller, Marks & Spencer and Zalando, examines every step of the sourcing process, from existing chain of custody systems to emerging methods of managing and sharing origin data. some products.
A complete overhaul like this takes time. In some cases, the potential disruptions will drive many retailers out of the market. In other cases, the technological solutions are not yet ready for large-scale use. In some cases, actors are not ready for change.
All of these issues aside, there is the issue of physical segregation to consider. Currently, Better Cotton promotes a volume tracking system similar to the green energy market. This allows retailers and brands to purchase credits that guarantee approved farmers the benefits, and that the equivalent amount of Better Cotton is drawn into the supply chain, but does not necessarily mean that the specific cotton they are buying comes from farms that participate in the Better Cotton programme.
To achieve the level of traceability that customers and regulators are beginning to demand, it may well be necessary to introduce mechanisms to physically separate cotton from licensed farms. This will add rigidity to exchanges and reduce the possibility of mixing and mixing. Our top priority is therefore to find ways to make this work in a way that meets consumer expectations (in terms of traceability) and farmers’ needs (in terms of a well-functioning market).
Fortunately, we are not starting from scratch. Better Cotton already tracks cotton from farm to gin and can draw on a wealth of trade and processing information that is already flowing through our existing better cotton platform.
What impact could this have?
Consumer confidence is the great benefit of a cotton supply chain in which raw materials can be traced with ease and accuracy. With the original data in hand, the nearly 300 brands currently sourcing through Better Cotton can also speak with more credibility about their sustainability efforts. But farmers should also benefit. A robust and accessible traceability system will allow producers who meet Better Cotton standards to enter increasingly regulated international value chains. Otherwise, they risk being left behind.
What is the World Economic Forum doing on climate change?
Climate change is an urgent threat requiring decisive action. Communities around the world are already experiencing heightened climate impacts, from droughts to floods to rising seas. The World Economic Forum’s Global Risks Report continues to rank these environmental threats high on the list.
To limit the global temperature increase to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policymakers and civil society advance short-term and long-term global climate actions in line with the goals of the Paris Agreement on climate change.
The World Economic Forum Climate Initiative supports scaling up and accelerating global climate action through public and private sector collaboration. The Initiative is working on several work streams to develop and implement inclusive and ambitious solutions.
This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions for the transition to a low-carbon, climate-resilient economy. CEOs use their position and influence with policymakers and corporate partners to accelerate the transition and realize the economic benefits of a more secure climate.
contact us to be involved.
Better information about individual farmers will also better reward farmers who improve the sustainability of their farms through opportunities such as preferential financing, bonuses and other forms of tailored support. Connecting Better Cotton producers to international carbon credit markets – in recognition of their Emission rate reduced by 19% – is a good example.
Much remains to be done, but the wheels of change are turning. We plan to launch a series of pilot projects in key markets this year, with a full roll-out of an improved traceability system by the end of next year. Traceability is not going away. In fact, transparency requirements throughout the cotton supply chain will only get tougher. We don’t have all the answers right now, but we will. Not knowing is no longer an option.