Governance

 It is possible for the cotton industry to prepare for climate change's impacts.  It would be wise for the indsutry to evaluate risks and identify priority concerns as well as opportunities to mitigate the most significant risks. An end buyer may want to identify and/or partner with strategic suppliers and local organizations to help strategic sourcing regions develop plans to sustain or adapt to climate change impacts as appropriate.

Climate change impacts

Climate change impacts affecting one segment of the supply chain can ultimately affect all segments of the cotton supply chain and its actors. Small-scale farmers are the most vulnerable supply chain actors, and their ability to adapt to climate change will be vital.  Yet, they are the least equipped to adapt.

Several regions and nodes of the cotton supply chain will be affected by climate change. For example, South and Southeast Asia (e.g., Bangladesh, Cambodia, Vietnam), key garment manufacturing regions for United States (US) apparel companies, are projected to experience greater frequency and intensity of floods and storms. Additionally, the IPCC projects that agricultural productivity will decline in sub-Saharan Africa and India, both of which are significant sources of cotton used in garment manufacturing.

Climate change will directly affect the cotton production stage of the supply chain as a result of changes in temperature, precipitation, and extreme events. Additionally, climate change will pose indirect impacts on the fabric mill, garment manufacturing, and consumer stages of the cotton supply chain through changes in the availability, timing, quality, and demand of water.  All of these impacts will likely be more severe in water stress regions.

Some areas most affected and various resilience-building opportunities for various segments of the chain include:

Questions

What steps are industry members taking to understand and respond to climate change impacts?

Should the cotton industry support knowledge sharing, best practices and technologies to address pending impact of climate change?

Can industry begin to help the most vulnerable develop resilience to climate change?

Water is a basic human right, a critical need for healthy ecosystems and vital to many industries. Society water uses include agriculture, industry and urban services.  Water is important to the cotton industry - from production to processing and product use. Without strong water governance - especially in cotton production and processing regions - the industry can face limited access to this necessary input.

Water governance incorporates systems - political, social, economic, and administrative - to develop and manage water resources and delivery to different members of society.

Agriculture is a major water user and is, therefore, likely to be impacted by potential future changes to water allocation and access. Issues of great importance to the cotton industry include:

 o   Allocation of water resources for application in agriculture and industry (textile processing)

o   Access to efficient water delivery and irrigation systems

o   Effluent quality

o   Pricing

o   Regulations

Different water users may have conflicting interests from others. Water governance allow all involved stakeholders, including citizens and interest groups, communicate their needs, exercise their legal rights and mediate their differences to develop fair and reasonable water programs. A water governance program should include regulations, policies, protocols and monitoring, enforcement and reporting systems.

Water governance programs should also address important but culturally sensitive issues such as transboundary water and women and gender impacts. A strong governance program would guide the decision-making process, regulation creation, and execution, operation, and monitoring of all aspects of a water program - at regional, national and local levels.

It is important to establish the water governance systems and mechanisms in the short-term because it will likely be more difficult and contentious as resources become more scarce, demand increase and lesser reliability of weather patterns (rainfall) due to climate change.

 Questions

Given the importance of water for the production and processing of cotton, should the cotton industry work with governments in key production and processing regions, especially those in water stressed regions, to develop strong water governance programs that ensure equitable allocation to the cotton industry?

As corporate responsibility efforts increasingly focus on supply chains, brands and retailers will need to rely more and more on their suppliers to support their programs and initiatives. Additionally, the elimination of quotas and consolidation in the market provide opportunities to create more vertical supply chains and partnerships.

Successful partnerships can hold many benefits to all parties - retailers are able to utilize a strategic, established supplier for more of their products, suppliers can benefit from longer-term commitments by buyers and more consistent business planning.

Successful partnerships are built on a strong commitment by both parties, lead to positive improvements, and strengthen business relations. Without strong partnerships between suppliers and end buyers, improvement will be limited.

With this said, many companies and suppliers have experienced unsuccessful partnerships due to limited commitment and failure to recognize the other party's needs and limitations. To develop productive partnerships, all parties should respect each others' challenges and risks.  This requires that the details of the partnership be discussed in an open, honest and transparent manner. It is best to engage all potential partners at the onset of partnership strategy design. Through an open and transparent process the parties can mutually agree on areas of focus, roles, and responsibilities of all parties, how best to measure progress, and how to share costs and benefits appropriately.

An additional consideration for the wider cotton industry is how would an increase in established partnerships affect the entities that are left out of these partnerships (e.g. small or medium sized enterprises). The fashion industry requires a wide range of suppliers that can produce ever-changing fashion designs in a timely manner. If strategic partnerships increasing cut these players out of the supplier base, the industry risks their abandonment, thus, limiting the entire industry's nimbleness and speed to market capabilities. A strong governance system and the process are needed to ensure a strong cotton strategy.

Questions

How can the industry develop and disseminate tools and resources that can aid its members develop well governed partnerships, preferably preserving an opportunity to engage non-strategic suppliers?

Are partnerships a good way to begin the efficient flow of certified cotton through the supply chain?

Will the proliferation of partnerships put non-participatory actor at a disadvantage?