Cotton Supply Chain: organic & fair trade sustainability in the global market

2010 was a record-breaking year for cotton prices in global markets. In this post, Reeve Consulting presents an overview of recent market activity, considers the implications for working and environmental conditions in the supply chain and takes a look at how organic and fair-trade cotton sectors are fairing. We finish with a few suggestions for corporate and governmental purchasers looking to reduce brand risk and improve ethical and sustainable purchasing practices when it comes to cotton goods.


Flickr / kimberlykv

Cotton is the largest non-food crop in the world with over 24.3 million tonnes consumed worldwide annually. Did you know it’s also the largest employer? From farm workers to retail employees, an estimated 1 billion people are involved in the growing, processing and selling stages.

Given the ubiquity of cotton, it’s significant that 2010 was an unprecedented year for the commodity in global markets. The price doubled in a year and broke the $1 (U.S.) per pound level for the first time in 15 years.

Globe and Mail / Bloomberg

Rising prices affects the entire supply chain

A number of factors have been attributed to the sudden price increase, a main one being poor weather conditions in top growing regions, including floods in Pakistan, a severe cold snap in China, crop-killing hailstorms in Texas and, more recently, flooding in Australia. Speculation has played a significant role, as well as export restrictions put in place by India (the second-largest cotton producer) to protect domestic supplies and prices.

Consequently, the clothing sector is feeling the squeeze of both increasing input costs and a weak consumer environment. According to media reports, the prices of jeans, t-shirts and other cotton apparel will likely increase 2 – 15% in 2011.

Clean Clothes Campaign

To avoid passing a price hike to consumers, clothing companies may reduce costs by mixing in less expensive, synthetic fibers or by decreasing pack sizes on smaller bulk products like socks. Of greater concern is that companies will move production to lower wage countries with lower duty tariffs and weaker environmental restrictions. As examples, consider how garment workers demanding a fair minimum wage are currently being treated in Cambodia and Bangladesh. Anticipating such tactics, the Ethical Trade Initiative released a statement in late-September urging retail buyers to factor in the cost of a living wage for workers in their price negotiations with garment suppliers.

Organic cotton prices are linked to conventional cotton prices

A recent edition of Engage, an e-newsletter published by the Organic Exchange, takes a close look at the organic cotton industry. The opening article suggests the extraordinary times experienced by conventional cotton have on the one hand created a beneficial seller’s market. At the same time these conditions have had a potentially damaging impact on the sector by leveling the price of organic and conventional cotton. As the Organic Exchange (OE) puts it:

“Farmers are seeing their carefully tended organic harvest end up in conventional supply chains. Organic cotton procurers are struggling to meet their usual premium commitments (which don’t make sense anymore) and on top of this the lag time for organic buyers to respond to the market is adding a further complication.”

The article concludes that if organic cotton is to be secure in a stable, appropriate value chain it needs protection from the dramatically changing commodity price. This could come in the form of working partnerships that deliver benefit to farmers as well as buyers.

This concept is further covered in a recent article in the World of Organic Agriculture – Statistics and Emerging Trends 2010 journal:

“The sector must address the protection of the farm and fiber business model to ensure farmers and those who work with them receive sufficient returns to maintain investment in farmer development and productivity.”

Protection from the commodity market rollercoaster

A number of programs have attempted to protect cotton from market conditions. Perhaps the best known is the fair trade movement.  We’ve written a number of posts on the Reeve Consulting blog about the new garment certification program unveiled in 2010 by Fair Trade USA. For the first time the full supply chain of a product, not just the agricultural inputs, can receive fair trade certification ensuring workers are paid a fair, living wage for their goods and services. While only a handful of brands have completed the certification process, recent reports indicate more companies are working with Fair Trade USA to acquire certification.

Flickr / kimberlykv

Another example can be found in the recent commitment by Anvil Knitwear to double the production of organic cotton in the U.S. Through the Texas Organic Cotton Marketing Cooperative, Anvil will pay a premium for organic cotton as well as purchase any cotton making a transition to organic at a price close to the premium. The hope is that having a guaranteed buyer will encourage conventional cotton farmers to switch to organic production.

Social Alterations, an online education lab for socially responsible fashion design, has also focused on this issue and recently shared a post outlining approaches undertaken by two other global commodities – coffee and cocoa – that have similarly attempted to address the volatility of global commodity prices.

Purchasing cotton responsibly: ethical and sustainable purchasing considerations

When it comes buying cotton goods, purchasing departments can reduce risk and improve supply chain practices by considering the following:

  • Making a formal commitment to specify and support sustainable forms of cotton in purchasing decisions (e.g. organic, fair trade, ethically sourced)
  • Considering the origins of cotton goods including. More specifically, the working and environmental conditions under which they were made
  • Investing in long-term relationships with suppliers and focusing on continued improvement

To learn more about how our clients and organizations are benefitting from these and other sustainable supply chain practices contact us.

Reeve Consulting published in Canadian Property Management Magazine

Reeve Consulting recently published an article in Canadian Property Management Magazine titled “Spending Sustainably: Municipalities Leverage Purchasing Power for Broader Goals”. The article provides a brief introduction to ethical and sustainable purchasing and takes a closer look at the Municipal Collaboration for Sustainable Purchasing (MCSP) facilitated by Reeve Consulting. The impressive achievements of Shannon Clohosey, Sustainability Projects Manager, and her team at the City of Whitehorse are a focus throughout the piece. Read the full article HERE.

Round Two: Building our Second Environmental and Sustainable Procurement Program for the Winter Olympic Games

Being a part of the bid that brought the Winter Olympic Games to Vancouver in 2010 was a once in a lifetime opportunity – as was getting to work as an expert advisor to the 2010 Vancouver Organizing Committee (VANOC) on the award-winning Buy Smart Program. So it is with great excitement that I undertake the opportunity to apply my experiences a second time by advising the Sochi 2014 Winter Olympic Games on the development of their Environmental and Sustainable Procurement Program.

During a recent fact-finding and project kick-off visit to Moscow I met with members of the Sohci 2014 Executive Team as well as key staff in functional areas such as Procurement, Environment, Sustainability, Licensing, Food & Beverage, Cleaning & Waste, and Marketing. The purpose of these meetings was to confirm the vision for the project and begin the design of a comprehensive environmental and sustainable procurement program. Another main focus was to begin to identify high profile products and services for showcasing a green and sustainable Olympic Games. Potential areas of opportunity include local food, products with minimal packaging and joint ventures with local firms.

My time in Moscow was intense, enjoyable and I met many wonderful people, and overall the experience left me with a number of high-level impressions including the following:

Similarities with VANOC: While Moscow is half a world away from my hometown of Vancouver, I was struck by the similarities between the office of the Sochi Organizing Committee and VANOC. A number of elements felt very familiar including the open plan layout, long working hours, and incredibly dedicated, highly qualified staff. There were also a number of familiar Canadian faces including Dennis Hainault (advising on venue management) and Ron Holton (advising on risk management programming).

Magnitude of the project: Getting ready for the 2014 Olympics is a huge undertaking and includes a $30 billion investment in construction to create a brand new stadiums, hockey rinks, curling rinks, speed skating venue as well as re-building the nearby ski hill and rail line that travels between the mountain venue and Sochi.

Sophistication of project systems: While in Moscow I was introduced to the Enterprise Resource Planning System, a complex project management and procurement system for managing all products and materials purchased. In addition, the Organizing Committee has set up a centralized Project Planning Office that helps to coordinate all internal projects with the overall Master Plan for the Games.

Hope and vision: The environmental and sustainable procurement program is aiming to be a straightforward and practical program with the potential to have a significant impact in key areas such as energy efficiency, packaging and economic opportunities for the surrounding region. The Sochi 2014 Organizing Committee is fortunate to have great staff teams in the Environment and Sustainability Functions – and I’m inspired by their passion to do great things for their country and honored to be a part of a new green movement within the Russian Federation.

I’m looking forward to returning to Moscow in early 2011 to finalize the design of the procurement program. I’m also hopeful that this partnership will continue beyond the program design phase and that Reeve Consulting will have the opportunity to support the ongoing implementation of the project leading up to the 2014 Winter Games.

Fair Trade Certified Apparel Now Available

Flickr / Shared Interest

In early-May Reeve Consulting reported that Fair Trade Certified jeans and t-shirts would be available in the United States this fall. After more than 3-years in the works, Trans Fair USA’s apparel pilot program has certified it’s first cotton garments.

Previously only the agricultural inputs of products, such as cotton, could be Fair Trade Certified in the United States. This new certification for Apparel and Linens is the first social, economic and environmental standard that directly benefits workers at both ends of the supply chain – the farmers who grow the cotton and the workers who sew the garments.

The new standard has two parts:

Obligations of Factories, which includes Fair Trade management systems, core labor standards from ILO Conventions and multi-stakeholder initiatives; and,

Obligations of Buyers, which explains the requirements for US companies interested in using the Fair Trade Certified label on cotton products.

Fair Trade garments for uniforms & corporate team apparel

Flickr / Wonder Mike

While there are many companies still undergoing the certification process, a number of early adopters, Maggie’s Organics, Hae Now and Tompkins Point Apparel, are currently selling Fair Trade Certified apparel (mainly shirts) through their online stores. All companies offer styles that would be suitable additions to uniforms and corporate team apparel, ship to Canada, and offer wholesale discounts for larger orders. We at Reeve Consulting look forward to seeing a broader style selection of Fair Trade apparel emerging over the coming months.

Tim Reeve reports from Moscow: Environmental and Sustainable Purchasing for Sochi 2014

This week Tim Reeve has been in Moscow meeting with key members of the Sochi 2014 Organizing Committee regarding environmental and sustainable purchasing for the upcoming Winter Olympic Games.

Starting with two-days of intense fact finding meetings with functional areas of the Organizing Committee, Tim has spent the week learning about the scope of purchasing within key functions and the link between the Sustainable Management System and sourcing.

Tim reports that throughout his meetings there has been a high level of interest in environmental and sustainable purchasing from senior management, executives and staff. There has also been discussion of ambitious overall programs that would set new standards and benchmarks for sustainability within the Russian Federation. Key areas of opportunity include cleaning and waste, ceremonies, food and beverage, construction and overlay.

Head office of the Sochi 2014 Organizing Committee, located in central Moscow near the Kremlin

Perhaps the most exciting news of the week is that the final Sustainable Management System has been approved by the Organizing Committee Executive.

Building on lessons learned from the successful Buy Smart Program for the Vancouver 2010 Olympics, Reeve Consulting will spend the next several weeks designing policies and procedures to move the Organizing Committee forward on their journey towards a green and sustainable games.

Follow Tim on Twitter @ReeveConsulting for updates on his time with the Sochi 2014 Organizing Committee.

Reeve Consulting Invited to Work with Sochi 2014 Organizing Committee

On the heels of the 2010 Vancouver Winter Olympic’s BuySmart Program’s success, Reeve Consulting has been approached by the Organizing Committee for the 2014 Winter Games in Sochi to help design and build an environmental procurement and sustainable sourcing program.

Flickr / roland

A sustainable purchasing program will enable organizers of the 2014 Winter Games to leverage procurement to meet sustainability objectives including zero waste, carbon neutrality and sustainable economic development of the surrounding Krasnodar district. These targets have been outlined in both an environmental strategy adopted by the advisory committee in 2009 and subsequent environmental procurement policy drafted by Reeve Consulting and adopted by the Sochi 2014 Organizing Committee in June of 2010.

Flickr / maiak.info

Reeve Consulting will be working with executives and senior managers from the Environmental Support and Sustainability departments of the Organizing Committee to build tools, develop procedures and identify high profile purchasing opportunities to support implementation of their sourcing policies.

Tim Reeve will be traveling to Moscow to meet with members of the Organizing Committee in late-November and again in February of 2011. Check back for updates from the field! You can also follow Tim’s trip on Twitter @ReeveConsulting.

Reeve Consulting on Twitter

Reeve Consulting is now on Twitter at @ReeveConsulting.

Our tweets focus on sustainable supply chains, ethical sourcing, product certification programs, greenwashing, corporate social responsibility, Reeve Consulting projects and more.

We’re having a great time in the ‘Twitterverse’ connecting with our clients and colleagues and learning a lot from advocacy and news groups in our sector. We hope you’ll join the conversation and connect with us on Twitter. We’re sharing interesting news and helpful resources for improving your sustainable sourcing efforts.

Reeve Consulting and the Municipal Collaboration for Sustainable Purchasing

Reeve Consulting recently initiated the Municipal Collaboration for Sustainable Purchasing (MCSP). The aim of this project is to leverage the collective experience of municipalities to advance their sustainable purchasing initiatives by sharing ethical and sustainable purchasing (ESP) resources and lessons learned.

The value of ethical and sustainable purchasing for municipalities

Ethical and sustainable purchasing (ESP) is becoming an increasingly important element in the sustainability sections of municipal strategic plans. Few other programs can directly contribute to multiple civic agendas around zero waste, climate leadership, local economic development, strategic sourcing and staff engagement. Among the advantages of an effective ESP program are mitigating legal and brand risks, enhancing the municipal brand as a sustainability leader, reducing costs by selecting products with less waste, energy consumption and product related health risks and building staff engagement around sustainability.

Facilitating ESP with the Municipal Collaboration for Sustainable Purchasing

Recognizing that ESP is a new and evolving field, Reeve Consulting understands that municipalities need access to tools and information to help them make the right decisions. Through regular conference calls, webinars, expert consultations and sharing of electronic tools, we’re facilitating the development of results-oriented ESP programs that make the best use of limited resources.

Specific initiatives undertaken by participating municipalities include reducing municipal waste by demanding products with minimal packaging, reducing carbon emissions by selecting energy efficient certified electronics, and limiting toxins by sourcing green cleaning supplies. At the same time, participating municipalities are considering the social impacts of their procurement by demanding products that meet international labour standards for fair and safe working conditions.

According to Jeff Byrne, Chief Procurement Officer, City of Ottawa, there are many benefits to participating in the MCSP program including increased access to information and lessons learned, developing civic partnership and leadership, and advancing sustainability performance in the public sector. Another active participant in the group, Shannon Clohosey, Sustainability Projects Manager, City of Whitehorse, has said she’s very optimistic about where the MCSP project is going and wants to remain active in 2011.

To date nine Canadian municipalities have joined the MCSP project, which would not be possible without the lead sponsorship support of the City of Saskatoon, City of Edmonton and City of Ottawa. We are also pleased to have additional support from the following participating members: Halifax Regional Municipality, City of London, City of Guelph, Regional Municipality of Wood Buffalo, Town of Olds and City of Whitehorse.

If you’re interested in joining the Municipal Collaboration for Sustainable Purchasing, please contact Tim Reeve, President of Reeve Consulting at 604-763-6829 or tim@reeveconsulting.com.

Cadbury Dairy Milk Goes Fair Trade in Canada

Flickr /xelcise

If you pick-up a Cadbury Dairy Milk bar in Canada these days you may notice some changes to the packaging. Since this summer, Cadbury’s Dairy Milk line has been fair trade certified. The wrappers now include an internationally recognized symbol that assures the sugar and cocoa have been purchased from producers paid a fair wage for their crop. Cadbury’s first fair trade bars were released in the UK and Ireland in 2009 and more recently in Canada, Australia and New Zealand in 2010. According to the Cadbury website, going fair trade will quadruple the sales of fair trade cocoa from Ghana and affect over 40,000 cocoa farmers.

The fair trade marketing campaign:

To accompany the release of its fair trade line, Cadbury has unveiled a marketing campaign that invites people to “see the big fair trade picture”. The campaign features print, billboard and online advertising as well as a redesigned website dedicated to the brand (dairymilk.ca). At the centre of the campaign is a series of murals in Toronto and Montreal designed by a Ghanian artist, each of which focuses on a particular benefit of fair trade. The murals fit together like puzzle pieces to present the “big picture”.  Themes of the murals include “Improving Local Infrastructure”, “Providing Access to Clean Water”, “Improving Local Health Care” and more. Out-of-home advertising also featured a summer street campaign that invited passersby to sign a petition supporting fair trade in Canada.

Is big business good for fair trade?

This move has brought plenty of attention to Cadbury and has some questioning if big business’ increasing interest in fair trade is good for the sector. On the one hand, more corporations moving some of their buying to fair trade could have a large positive impact worldwide. Further, the greater availability of fair trade certified products could raise awareness among consumers. There’s also the hope that other corporations will note their competitors shift and joins suit, for example Hershey’s or Nestle.

But is it enough for Cadbury to convert one of its lines to fair trade designation? If they’re committed to the tenets of the movement, shouldn’t they be buying fair trade inputs for all their products? It’s a good question. A skeptical view of Cadbury’s fair trade Dairy Milk may lead one to conclude its primarily a marketing stunt; an attempt to improve Cadbury’s public image without a full commitment to sustainability.

It’s a start:

At Reeve Consulting we’re not quick to jump to this conclusion. We support incremental change and from experience realize that broader change takes time.  Companies face many challenges in converting their supply chains and in most cases need to start small. An important element for us is that companies acknowledge there are problems beyond those they’re starting with, and that moving forward there’s a plan for these issues to be addressed.

We’re hoping to discuss this further with Cadbury’s Ethical Sourcing Manager this week when we attend the Sustainable Supply Chain Solutions conference in San Francisco. Watch this space for a follow-up post on what we find out. We’ll also be tweeting from the conference at @ReeveConsulting.

Are there too many eco-labels and green ratings?

Flickr / Jeff Keen

This is a good question and one we hear often at Reeve Consulting. In a recent article on GreenBiz.com, Joshua Saunders of GoodGuide tackles this issue and presents some valuable insights.

With over 300 eco-labels in the global marketplace, and more being added each year, manufacturers, businesses and consumers are faced with increasingly complex decisions when it comes to green ratings.

To simplify ecolabel decisions, Saunders suggests an oligopoly of labeling organizations with larger barriers to entry is needed. Essentially a handful of credible certification programs, labels and rating systems to dominate the market. A distinction is made between this and a “one choice” market, with Saunders stressing the importance of competition between ecolabels to fuel transparency, rigor, credibility, service and price.

Greenbiz.com

In fact it seems we’re not far from an ecolabel market dominated by a few suppliers. As Saunders rightly describes, ecolabels are segmented by product category, industry and geography. When purchasing a product, one doesn’t actually choose from 300 ecolabels, but a smaller subset that applies to the product in question.

Saunders also explains that, while more ecolabels are being introduced each year, more consolidation is taking place among the labeling organizations.  An example of this is the recent acquisition of the Canadian certification program TerraChoice by UL. This is exciting news, and we’re interested to learn about the next steps for Terra Choice when we connect with our colleagues Scott McDougall and Angela Griffiths.

Saunders article ends by stating there’s little doubt that the sustainable labeling field is moving towards greater collaboration and consolidation.  That’s good news because ecolabels are becoming an increasingly important tool for corporate and consumer purchasing. Everyone will benefit from more credible labeling and rating systems.

Read Joshua Saunders full article HERE.