Recent promises from retailers to ban cotton from Uzbekistan, because of concerns about forced child labour, raise deep questions about the wider role of business

 

Recent promises from retailers to ban cotton from Uzbekistan, because of concerns about forced child labour, raise deep questions about the wider role of business

For almost three years after Ethical Corporation highlighted the use of child labour in the Uzbek cotton industry – back in March 2005 – companies did little to tackle the problem. Clothing retailers did not seem aware that raw material sourcing was an ethical and operational risk.

Some 100 million rural households around the world are involved in cotton production and the supply industry is worth $32 billion a year. The finished garments industry is more than ten times that size, according to the Environmental Justice Foundation.

Regular reports published since 2005, from the EJF and the International Crisis Group, have expressed deep concern about the social and environmental impact of Uzbek cotton.

The Ethical Trading Initiative, a UK multi-stakeholder initiative to raise retailer supply chain labour standards, had also expressed some concern. Last year it invited the EJF to brief its members, including Tesco and other high street retailers, on the ethics of Uzbek cotton. Companies made aware of the situation generally expressed their concern, but often emphasised the complexity of cotton tracing from source to garment.

Then, towards the end of last year, as ethical consumerism and security of global corporate supply chains came to the fore in the media, the BBC gave the topic wide coverage in a televised investigation into Uzbek cotton.

Brands reacted fast. Finland’s Marimekko, and Estonia’s Krenholm were the first to announce a boycott in November 2007.

Change of heart

Despite telling Ethical Corporation in October 2007 that tracking cotton from Uzbekistan was incredibly hard to do, a number of companies suddenly decided it was not that hard after all.

In mid-January this year, Tesco, keen to steal an ethical march on competitors such as Marks & Spencer, Sainsbury’s and Asda, decided it would ban all cotton sourced from Uzbekistan for its clothing range, homeware and corporate purchases, after consultation with the EJF.

Others followed suit. M&S, having previously told Ethical Corporation it was phasing out Uzbek cotton, but had found it hard to track, then said it would mandate that suppliers stop using it in the near future. Keen to avoid being upstaged by Tesco, the company said it decided on a ban “at the start of this year”. And, unconfirmed reports suggest that Plexus Cotton is ceasing trade in Uzbek supplies.

Hennes & Mauritz, the Swedish fashion chain, also says it will no longer allow Uzbek cotton in its supply chain. In early February, Debenhams, the UK department store group, said it would follow suit. Another UK retailer, Matalan, has also signed up to the boycott.

The ETI says it now wants its members to “introduce a ban on cotton from Uzbekistan for the part of their supply chain that they can trace back to source”.

So, finally, score one for the campaigners. But a few key questions remain. In a world where time-poor consumers and busy companies often want simple answers to complex global questions, cotton presents some really thorny ethical issues.

What next?

For example, if we are now seeing a trend for retailers to demand that suppliers phase out Uzbek cotton, what about, say, cotton from Tajikistan or Turkmenistan, where poor labour standards also exist?

One UK retailer told the EJF in 2007 that its supply chain was “fine”, since its suppliers buy Turkmen cotton. Turkmenistan, while less repressive and violent than gangster-run Uzbekistan, is still a very nasty place to be for the poor, and shows no interest in international labour standards.

“The difference with Uzbekistan cotton is that the child labour involved in cotton production is forced labour organised by the government, not children helping their parents by working in the family farm,” says Abi Rushton, Tesco’s head of ethical and sustainable sourcing.

However, the International Crisis Group, a research organisation, believes that Tajik college students are also forced into cotton fields on “work placements”. Andrew Stroehlein, director of media and information at the ICG, says: “All the three cotton producing states in the region [Uzbekistan, Turkmenistan and Tajikistan] are guilty of driving students into the fields to pick cotton.” This may not always be child labour, but many people would categorise it as forced.

Organic and fair-trade cotton, produced with much better labour standards and certification, will not be able to fill the gap left by Uzbek cotton. According to the Fair Trade Foundation, fair-trade cotton represents less than 1 per cent of global cotton flows.

Organic Exchange, a US non-governmental organisation, estimates that organic cotton production more than doubled from 25,000 tonnes in the 2004-05 crop year to 60,000 tonnes in 2006-07. The global organic retail cotton market was probably worth about $2 billion in 2007, reckons Organic Exchange. Compared with the $32 billion of the non-certified cotton, it is not much.

To complicate matters, supply chain security and factory jobs may be at stake in one of the poorest countries. According to news agency reports, Bangladesh buys 65 per cent of its total annual demand of 2.7 million bales of cotton from Uzbekistan. Factory owners are reported to be worried about the competitiveness of their garment exports, which are worth over $9 billion, or 75 per cent, of Bangladesh’s annual export income. According to the ETI, some 20 million people in the country are dependent on the garment industry for jobs.

Questions remain

Will big brands pay more for clothes made with non-Uzbek cotton? A spokesman for M&S says it’s too early to tell, highlighting the company’s “partnerships” approach with suppliers, using technical experts to assist in getting shot of Uzbek cotton. But whether using non-Uzbek cotton will cost more is debatable. While the costs of cotton are variable, it seems that Uzbek cotton can in fact cost more but is attractive to buyers because it comes in bulk form, unavailable from other nations.

The ETI is asking its members, M&S and Tesco among them, to continue sourcing from Bangladesh, but also asks that they work with their suppliers to absorb any cost impacts of the move to ban Uzbek cotton.

Retailers signing up to the western boycott of Uzbek cotton may be relieved to hear that tracing cotton back down the supply chain is realistic, in the opinion of Tim Wilson, chief executive of the consultancy Historic Futures. His firm sells commodity tracing services to large companies such as Tesco. He says: “Technically – yes it’s possible.” But he adds that tracing may “require some changes to data management processes”.

Some experts, quoted in an industry paper on cotton tracing seen by Ethical Corporation, appear to disagree. Substantial resources will be needed, says at least one group, and a good tracking system will rely completely on the integrity of the data put into it along the supply chain. If data is incorrect, deliberately or otherwise, or middle men unwilling to supply it, how might the integrity of the information be guaranteed?

The required data on cotton supply already exists in corporate supply chains, says Wilson, “but may not be managed in an appropriate way”. Abi Rushton of Tesco Clothing says that to assure the company that Uzbek cotton is being quickly phased out, suppliers will be asked to “include the certificate of origin for cotton in their style files, which will be checked through our normal technical audit process”.

In the long term, says Rushton, Tesco is looking at a web-based system “to give full supply chain traceability and therefore transparency”. Training was set to begin with “key suppliers” in Bangladesh, the main market for Uzbek cotton, in late January, after which Tesco plans to “roll out the system phase by phase, based on risk levels”.

Sean Ansett, a former Gap corporate responsibility executive and now a consultant, says tracing non-certified cotton can be technically difficult, despite paper trails or electronic systems. “If it’s not organic or fair trade it can be very difficult since cotton is mixed with different grades for quality and blending purposes,” he says.

Indeed, the supply chain can be complex: farmers sell to ginners, who sell to yarn spinners. In turn spinners sell to fabric mills, which pass on cloth to clothing factories to cut and sew it before it is shipped to retailers and, finally, sold to consumers. According to industry documents seen by Ethical Corporation, it is what happens when the cotton reaches the yarn spinners (who commonly break up and blend bales) that often determines its traceability.

Wilson says: “If traceability is the technical discipline, transparency is its cultural cousin. It is not about whether it is possible to manage and exchange data between trading partners in a chain, but about how the actors feel about doing so. Some will feel threatened by disclosing information on sourcing, worried that it may undermine their commercial model. Others will see it as an opportunity to differentiate themselves in the market.”

Tesco says that switching from Uzbek to other cotton fibre, such as that from the US, Australia and India, is unlikely to cost suppliers more. The company estimates it will take two to three months for suppliers to use up existing supplies. Suppliers will have to tell Tesco which country the cotton is sourced from in all their clothing and home products.

Continental Clothing, a much smaller company, aims to label all its T-shirts with the country of origin of the cotton to assure customers worried about where it has come from.

What difference can it make?

A broader concern is what difference such changes in sourcing patterns might make to child labour in Uzbekistan, and to Uzbek cotton exports in general. It is not obvious how boycotts might tangibly contribute to the improvement of the lives of farmers and workers. If the intention of a boycott is to make the Uzbek government reform, but it does not, then conditions on the ground for farmers might worsen as economic hardship bites. Or, as some predict, the government may simply just sell its cotton elsewhere, to the growing markets of Russia and China. Another twist is that some central Asian industry sources are claiming that Uzbek cotton boycotts are being pushed by Russian influences, keen to hurt Uzbeki industry for political purposes.

So if a boycott can have, at best, a limited impact, what responsibility do brands still sourcing from Uzbekistan have to deal with continuing child labour issues? Should they, for example, take on a more political role and lobby governments and international institutions to bring pressure on Uzbekistan to prevent child labour?

Some large oil and mining companies are beginning to realise that unless they can help to improve governance in the regions in which they operate, corporate responsibility policies can only have a limited impact.

In 2007 Nike said it would begin using its technical centre in Vietnam to help train suppliers on being better all-round businesses, but the company shies away from the idea of engaging more widely in technical capacity-building initiatives among non-suppliers. However, in recent years some large retail brands have taken steps to engage in governance issues, largely by participating in joint labour-focused factory initiatives in places such as Cambodia and Central America and lobbying governments to raise labour standards in indigenous factories that supply them.

Members of the ETI have done this in Bangladesh in recent years, and Nike’s chief executive, Mark Parker, has asked the Pakistani government to raise labour standards to help secure further corporate investment from his firm.

Whether retail brands are prepared to contribute to any capacity-building or lobbying beyond these current narrow issues remains to be seen. It appears unlikely. A forthcoming study from the Ethical Corporation Institute, conducted over three years, shows very little activity in this wider capacity-building for better governance from firms outside the extractive sector.

The ETI suggests: “For the rest of the cotton supply, a broader lobbying strategy is needed so that retailers can put collective pressure on the Uzbekistan government to put an end to the grave human rights abuses that are occurring in the country.”

Will ETI members take this suggestion seriously? While NGO Save the Children is currently active in Uzbekistan, very few other international NGOs have serious operations in the country. Despite more than a decade of early activity by large companies, the political role of big firms to contribute to “doing good” overall, as well as self-serve, is only just beginning to be discussed.

Western NGOs are often accused by repressive regimes of acting as front groups for their governments’ policies. Business managers will not want their companies seen in the same light. An Uzbek cotton boycott may well be as far as it goes.

Critics object

The International Cotton Advisory Committee, based in Washington DC, denies most claims of Uzbek cotton child labour. But executive director Terry Townsend says, in a letter dated November 2007, that he has “recommended to the government of Uzbekistan that your call for Unicef and the ILO to provide the international community with an ‘objective and honest report’ on the issue of forced child labour in cotton production in Uzbekistan should be accepted enthusiastically and that every courtesy and assistance to investigators be provided”. As of February 2008, Townsend said he had not had a response from the Uzbek government.

Helping suppliers adapt?

So what should brands do to help suppliers remove Uzbek cotton from their supply chains?

Tesco is a little vague. The company says it will be “working with suppliers individually to understand their backward supply chain” and will help them in identifying “key areas of risk”. The company’s offices in Bangladesh are “doing a lot of work with Bangladeshi suppliers and their raw material suppliers to explain our position and provide support”, according to Abi Rushton, head of ethical and sustainable sourcing at Tesco.

Tesco has been involved in forums with suppliers where, the company says, “suppliers have begun to help each other understand supply routes and explore alternatives to Uzbek cotton”. But garment suppliers essentially compete on price and quality, so collaboration could be limited.

The largest organic cotton programmes

Organic and Fairtrade cotton is immediately traceable by business as a result of the automatic paper trail generated by its certification. So which firms buy the most?

Top five buyers of organic cotton by fibre volume, 2007

1. Wal-Mart/Sam’s Club
2. Nike
3. Woolworth’s South Africa
4. Co-op Switzerland
5. C&A
Fibre use by top five companies = 48 per cent of total organic and Fairtrade cotton.
Source: Organic Exchange Organic Cotton Market Report: Preliminary Highlights 2007



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