Ep. 96: Traceability across cotton’s supply chain

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Ep. 96: Traceability across cotton’s supply chain

The Textile Innovation Podcast speaks with Alia Malik, chief development officer at Better Cotton, about how traceability can be implemented and improved across the full supply chain.

WTiN
Hello, and welcome to textile innovation hosted by WTIN. My name is Abi, and I'm the Features Editor and your podcast hosts. Each month, we will be joined by a special guest to join me and my colleagues as we deep dive into what's new, what's interesting, and what admissible innovations have hit the market recently. We cover everything on the podcast, from sustainability to startups and the latest research and development. Plus, we quiz the experts in the field about their products and ideas across a huge spectrum that is the textile industry. So no matter what you're interested, WTA and have you covered, and we can connect you to everything you need to know right here my central hub in the UK. In this episode, I am joined by Alia Malik, Chief Development Officer of Better Cotton, we talk about how better costing is helping communities while protecting the environment. We also discuss the company's recent traceability trials in India, and how it is driving traceability initiatives across the whole cotton supply chain. Please, can you explain what Better Cotton is?

Alia Malik
Well, I'd be happy to be here cotton is the world's largest cotton sustainability initiative. We're big. We currently account for about 22% of global coffee that's grown around the world. And we are operational. So we have programmes working with farmers through partners and direct country programmes in 22 countries around the world. And we have provided training and two extension support and capacity strengthening on more sustainable farming practices to more than 2.8 million farmers in the 2021 2020 season. And we work with partners all around the world. We're a big organisation that's working with lots and lots of farmers around the world on improving sustainability practices at the farm level.

WTiN
Amazing. So I'd like to also get to know you and a bit better. Could you tell me about yourself and your history within not only better cotton, but in the wider industry as a whole?

Alia Malik
Sure. So I'm an economist by training. I worked for a number of years in international development and then social enterprise. But my focus has always been on agriculture. And the next is agriculture and livelihoods. I've worked in China in India, Bhutan, Vietnam, Kenya, Malawi, and a few other places. And I, before I came to Better Cotton, I ran a Kenya focused charity, working on land regeneration techniques with subsistence smallholder farmers. And my cotton, it's the ability standard journey really started with Better Cotton six years ago. And in Better Cotton, I've held a few different roles. So far, I came in as the director of programmes, so I was looking after all of the country programmes around the world. And in the last several years, I've been working on data and traceability. So really upgrading our systems, so that we're in a better place to take our big platform and go a bit deeper into the weekend to 2030. And I've just started a new role as the Chief Development Officer at Better Cotton. So that is really about looking at development and about impact. So how we as an organisation are going to evolve in a systems way to do more deeper, where we already are. 

WTiN
Amazing, that sounds really interesting. And so who are the members of betta cotton, and what has been a member entail?

Alia Malik
Bear cotton is a multi stakeholder initiative. And we have membership of retailers and brands from around the world suppliers and manufacturers, NGOs, nonprofits, farmer, producer organisations and arranged associate members. So all different sorts of people are involved is anyone who is really intimately involved in cotton and textile. And our model is really built around the supply and the demand, you can get both elements to promote more sustainable cotton. It's a huge undertaking because cotton has many different points are being processed. It's also foreign, but many different actors around the world. So that's why bringing together really diverse actors has been quite important for us, and our membership really good friends that diversity. But farmers remain at the heart of our mission. And we have really been focusing on demonstrating the progress that the farmers in our network have been making, through introducing more and more sustainability metrics over the years. So being a member means that everything's starting on who you are. But there's sort of rules for everyone.

WTiN
That sounds fantastic, really interesting. And kind of an off that. So read that as a 2022 2023. That's a cool thing counts for 22% of global cotton production, as you mentioned right at the beginning. Could you tell us a bit more about that? And if the company has plans to grow this influence?

Alia Malik
Again, that's a great question. So, since that a cotton was launched, we've really been really prioritised growth, we saw that there was a need for sustainable sourcing to become mainstream, and to be something that was possible, even huge corporations knew 100%. And in order to do that, we had to really work with the whole industry. And then also the farming point of view. Better Cotton has been a continuous improvement standard over this time. So we're not just going out into buying foods, the best producer, we're engaging with producers who are interested in making improvements. And so they can start with us. And then they go on a continuous improvement journey where we look at them year over year, making progress against the metrics that we've set. And, as mentioned, we're reasonably addict treated, you can Jensen 2.8 million farmers. And we are open to continuing to grow, but it's actually not our priority, because our priority is really shifting towards deepening impact, and we don't want to grow in scale at the expense of the impact right now. So a lot of our our push, also in the fundraising that we do has really been to drive funds into deepening impact with our existing big platform. And we want to make sure that, you know, looking ahead, that companies will have the opportunity to use better cotton for working towards science based targets and things like that. And we can demonstrate progress, we'd like to demonstrate more and more as we go.

WTiN
Down fantastic. And going back of that as far as like going back to what you said about traceability. So I want to talk more about that. Because I know it's an integral cog to watch Better Cotton is doing, and ties in what you said about the growth in diving deeper. So firstly, why is it so important? Not only you, but the rest of the cotton industry,

Alia Malik
traceability has become hugely important. When Better Cotton first started, we made a decision to not trace the compliment to go for a mass ballot system, where you look at how much of the cotton is produced, and then how much is is bought by the end customer just for us, the retailer and the brand. And then that then we could spend all of our time and energy working with increasing adoption at the farm, and supporting farmers to move their practices. But the legislative landscape has totally changed in the last five years. It's not a nice to have, it's a need to have situation. And we responded to pressure and inquiries and demand from our membership. Who said we actually require traceability at this stage. We need it to navigate trade legislation. We know that our customers and governments will only want more and more transparency as time goes on. And for us traceability is about the ability to trace a product and also to where it originated, and also to trace it along the journey that it's travelling. And if you look at how the emerging legislation around green green claims is going, it was 100% necessary to know that it's this cotton that you're talking about if you want to make a claim on a product. Without the ability to do this. We saw that better cotton farmers and suppliers in that we're supporting would probably be risk being excluded from certain markets if we couldn't keep up. And so we really started mission for ourselves as better cotton to ensure that small holders also can access tradable, regulated markets, good markets. In the long term. Traceability will actually give us new tools as an organisation because at hardware systems initiative, so we have a standard we do an assurance programme to check farmers performance against standard. We fund continuous improvement on farm practices. We have a claim spraying work with weed because in brands are what they can say monitoring evaluation. You have all these pieces that work together to make our system and now that we've made this huge step change in our chain of custody In the journey of the continent. And we know that in the future, more and more information about the final impact will be required by the market, we see an additional role for ourselves to start to price farmers into that. So it's not just a one way flow of information that it also could be a two way value proposition.

WTiN
That sounds super useful, especially like you said, with the legislation in the last few years, how that has completely changed the game. So that sounds incredible. And so I understand a pilot of better cotton's traceability solution took place in India. And how did this experience inform the system's development?

Alia Malik
Traceability is the sum of many part components. So we're systems organisation, and the way we approach traceability is really from that perspective. So let's think there's the digital side. So there's the technology that's that's keeping and storing the information. There's also the processes side. So what must actors do to keep something separate in a way that makes sense? And that can easily be recorded? And it's also compliant? sighs like, is there any system in place to check that one has been declared an information system, it that the digital and the physical, are twins. So we piloted the different formats of these components in different countries, and one of them was India, as you say. And there we piloted two different digital to custody platforms. So two software's to additive tracers. So two different types of technologies that you check what is what, and our own monitoring and assessment procedure. And then we also tried our draft custody standard. So we tried a lot. And for us, it was a perfect testing ground for this pilot, because it has some of the most complex domestic supply chains in the world. And it's highly fragmented. And so for Better Cotton, you know, we're really about also ensuring level playing fields for small actors, as well as big actors. And India's the home to a lot of diversity and actors eyes, plenty of sliders there. So the pilot gave us some competence that our children custody standard, did work, it was implementable, and it was inclusive in India, and also in Bangladesh, where some of the supply chains sort of looped into at a certain point. And we gained a lot of valuable information, and lessons around how to communicate the requirements to enable the best level of understanding so we can write rules in our chain of custody about how the cotton is processed, and held and what we expect. And then we have, we also undertake training and awareness activities with supply chain actors on exactly what's expected and make sure they understand and interact with those guidance, as the pilot is very helpful on all those fronts, so we have lots of information now.

WTiN
Wow, that yeah, that sounds like a lot.

But amazing. So I know, it's easy, discussing a success, or proven benefits of tech. But could you tell me a bit more about the pilot programme and the results that you've gotten? A you've touched upon it just then. But would you be able to share the results and what the next step is from here?

Alia Malik
In terms, yes. So in terms of the results from those specific pilots, we actually tried those two softwares. And we found that both were actually very good. And the suppliers could use them. I did like using them, and we chosen to get to those two, we'd had a big procurement process to choose them. And as it turned out, the suppliers on balance actually preferred to work with our existing technology because it was more of a familiar. So a big lesson for us because we had assumed the beginning a process that we probably, you know, we've been working with the same supplier for many years. And there are many new actors says we contracted with our supplier. And it actually turned out that what we have in place was fit for purpose. And it was easy to use. And we saw that there were enough new requirements in terms of changes in process for Juno's and spear and that were handling the cotton. That actually there was no need to make a big leap in technology, especially from the platform point of view. And then when we looked at the tracer technologies that was also very interesting, because there's been a lot of buzz around what tracer technologies can do. And we did find that tracer technologies can be useful. But at this stage, especially at the scale that we operate at the There's not yet an obvious application. So in order for us to achieve country of origin traceability, so we know better cotton from India is this and we know where it's going. There's not a strong use case for trace technology that we don't require it now, and probably in the future, if we were used to tracer technology, it would be on a risk base for a randomised way, which is much easier to do with something like a forensic technology rather than something that you're applying to the fibre. But again, the as those technologies continue to develop, I'm sure we're going to see some interesting use cases emerge. Turned out simple was fine.

WTiN
Yeah, that's really interesting. And it's an it's just like, it sounds like that people are used to the technology that they already have. Amazing. So how does better customer traces solution impact on cost? through the supply chain? What challenges? What challenges does it present? And how do you plan to overcome them?

Alia Malik
That's also a really interesting topic. You know, Better Cotton has chosen historically to be a priced neutral, non interfering system. You know, when we meet with retailers and brands supply factors, we always recite the antitrust laws say that we're not here to talk about prices, there's no collusion around the market. And the cotton markets, it's a highly commoditized market, they're very dynamic. And they're subject to many factors that are outside of our control.

And saying that, we do see that traceability does have some impact on prices practically. And some of that is as simple as having somebody can be a symbol of scarcity. And some of it can be as simple as the extra cost to do new things. So the things that drive additional cost in adding traceability are around whether the supplier has to change much in order to do that. So if they're already offering traceable products, and they already have the processes in place to keep things separate, then it doesn't add a huge cost. If the supplier is already using technology systems, and they already manage their inventory digitally, doesn't add huge cost. But if they don't do that, then they have some learning to do. And it also matters around what volumes they're sourcing. So if they're sourcing tonnes of Better Cotton compared to other things, it's reasonably easy to keep it separate. If there's something it's a tiny bit better cotton, to keep it separate is not really economically viable. So that has a big impact. And there's also we saw some interplay with the level of integration between production phases. So vertically integrated production facilities that do all the pieces, all the different major steps, is much easier for them to trace product and to keep things separate know exactly what the hands are not changing, because many times. And as Better Cotton, we really are committed to ensuring that sustainable fibre saleable cotton is available to the market in an affordable manner. And what we've seen in the past is that actually, you know, once you have enough supply, there is no longer big drivers around scarcity. So we think that in the first couple of years, they'll probably be a lot of very intense conversations between suppliers, and retailers and brands about the prices. But we think they're navigable conversations. And there'll be diminishing over time, as traceability increasingly becomes the norm.

WTiN
That's really interesting. Thank you. And so I understand that Chestatee will also enable the creation of an impact marketplace. And could you explain what this would look like and who benefits I feel you've probably already touched upon it, but it's still really interesting to get your insights. Yeah, I'm

Alia Malik
very excited about the elements. I think I have already brought it up a little bit. I'll happily exciting. I think so. I think so. When we step back slightly, having been on the traceability journey, something together a big traceability offering with the colleagues and the team. Because very involved it we we decided that we're we're better cotton, and we've been traceability. Our mission is to help farmers survive and thrive while protecting restoring the environment. So how can we do traceability in a way that's aligned with our mission? And when we looked at it closely, we actually realised we wanted to do the most ambitious version of the traceability project, because we could just do written some rules and tell the actors just to get on with it, figure it out themselves not. But through our system, you know, there were a lot of choices we actually could make around how to offer better cotton in a traceable form. And we decided we wanted to continue to do it through our own operated tracing software. But we wanted to be responsible for the compliance angle, we wanted to write the chain of custody standard, and to make sure that we are connecting meaningfully to our farm programmes. But we weren't totally sure why that phase just felt like things were about to change. And as the industry have demanded more and more information from farmers and more and more impact information from farmers that there should be some way to meaningfully create a flow that goes the other direction that's rewarding farmers for what they're doing. And, and so looking outside more, we could see the industry making very bold commitments, about reducing their emissions, footprints, Net Zero, gender targets, all these amazing things that are going to do that actually really relied on their scope three. So on the farm, which, you know, they might be connected to an actor like us. And we know that to really move the needle, we need to channel more investment into the fields to make that desired impact. And so we're developing an impact marketplace, to connect the industry to the farming communities, and to assist them on delivering the impact needed to mitigate and adapt to toxic climate change. So it's really about, you know, putting the common interests of these two faraway actors aligned in one system. So retailers and brands can invest, as they say they're going to, in reducing their emissions footprint with their supply ships. And, in turn, creating a framework that enables retailers and brand members to reward better cotton farmers for field level progress. So if, for example, an inset is generated, so it's like an offset, but it's inside your supply chain, the retail and brand could claim that they buy it from that farmer. So we want to facilitate that transaction with the idea that that money belongs to the farmer to support and reward, change, practice, change the field. And we're continuing to develop it. And we're consulting quite a lot with the industry. And we're really excited to see what comes the next couple of years.

WTiN
That sounds really exciting. Thank you for going through that. Very excited to see what happens there. We touched on it earlier on as well, but a bit vacuolation surrounding cotton tightening. How will this affect better cost long term? I know you'd mentioned it's right at the start as well, but are there but they got adaptations or measures are there that you potentially need to put in place?

Alia Malik
Yes, it has affected us meaningly meaningfully this point. regulations surrounding cotton have tightened and they're continuing to tighten further, as they're coming from actually many different actors. And they're touching many different areas. So one of the earliest big drivers for us was around the trade legislation in response to the crisis in China, and by the US government. And that legislation meant that all of a sudden, it became mandatory for many markets, North similar EU legislation to understand where the cotton had come from, in order to be eligible to come into the country that affected everyone very meaningfully. And that was probably what clinched the demand by the retailers and brands for us to work on delivering better cotton that is traceable to country of origin. And then more recently, there's been the evolution of the green claims legislation by the European Union. And with that legislation, there's a lot of tightening up of potential drivers of greenwashing, where, you know, people can say this is a very nice product. I've been very virtuous here habit, it's so lovely, and being much more concrete on what can be said based on what is done. And with that in mind, cotton has had to make a big transition in our internal practice. So we have historically been, I mentioned chain of custody with a mass balance. Now moving traceable, with our field level programme, our assurance programme, we've done licencing and licencing is where we and our programme partners are the ones who are performing many of the checks with the farmers about what they comply with the assurance standard. We have some third party checks layer in to make sure that we've got it more or less right and to calibrate, but it's not the main thing. Whereas now we're having to move towards kind of a certification standard. And that means really backing away from Our model of second party checks, which we found had actually really delivered a lot in terms of more rigour turns out that our own team members are a little bit stricter than the auditors that come in from some random company. And also our ability to know exactly what's going on in our fields level programmes. So we're going to move towards third party and certification model, both for the farm and then also for the supply chain. So basically, getting a lot closer to the auditing community in the next chapter, based on that legislation changing. And we also see a lot of opportunity, as I mentioned, from sides, these targets, and the evolving legislation that surrounds the whole landscape of net zero. And so with that in mind, it's causing us to, to proactively create opportunities for our farmers throughout the back marketplace. So it's been having a lot of effect. I can say for sure.

WTiN
And that sounds fantastic. A lot that but it sounds like you're definitely in the right direction. Amazing. So finally, speaking more generally, with statistical topics in mind, what are your expectations for the future of the cost industry?

Alia Malik
It's a big question. Big question. Well, the cotton sector is an interesting sector in so many ways, it's about a global commodity that's traded many times, you know, you have that, you know, like the literature around how a t shirt has travelled the world, you know, something six or seven times before it's reached you. And cotton is also the most mainstream, naturally sourced product that's underpinning the current fashion market. And then the other big fibres are synthetic, or there's something a little bit in between. But cotton has unique characteristics, in terms of its end of life, particularly, it can just degrade back into the ground without causing too much trouble, which is very unusual fashion and textile. And it's something that I think should be increasingly celebrated. But cotton is also a crop that's really about people. It's a driver of lives and livelihoods for 250 million people around the world. So it really touches people in a very intimate way. And as a, as a cash crop, it plays a really important role in family lives and livelihoods as the thing that enables them to buy things like school supplies. So there's a lot of social driver and social connection in cotton, as as a fibre. And I think, if anyone's really serious about sustainability, they need to look at those two different elements, you know that cotton is a natural fibre, and that cotton can be grown sustainably. And it really can support lots of people to improve their lives and livelihoods. So there's a lot of interesting opportunities in cotton. So I feel like there's a lot to think about and a great space for everyone to engage.

And I think with traceability, cotton also starts to gain a little bit of footing again from the synthetic materials. Because those ones have much clearer statistics that you can get from like the impact footprint is much more easily researched. Whereas this one is much more nuanced, very diverse, challenging, but the transparency is moving along, to hopefully meet the demand of the market.

WTiN
Thank you so much. That all sounds made. There's a lot to think about there. And it's gonna be really exciting to see what comes from better cotton in the next few months, a couple of years.

Alia Malik
I will thank you so much for the good questions.

WTiN
Thank you so much for listening. If you have any questions, you can reach out over x formerly Twitter at WTiN comment, or contact me directly at aturner@wtin.com. If you are interested in sponsoring an episode of the podcast, please email sales@wtin.com. Thank you for listening. I will see you next month.