Cotton 2040 ‘Insights to Action’ Masterclass Series: Social Value and Community Vulnerability

The ‘Social Value and Community Vulnerability’ masterclass was the final in a series of six sessions in the Cotton 2040 series co-hosted by WTW and Forum for the Future in October 2022. The sessions cover a range of topics, tailored for brands and retailers, to encourage a shift towards a sustainable, regenerative and climate-resilient cotton sector. The focus of this masterclass was on the importance of understanding key social value and community vulnerability concerns wihin cotton value chains, and making a case for social justice being a central component to successfully adapting to climate risks within the cotton sector.

The masterclass began with words from Ruth Loftus, Senior Private Sector Advisor for WaterAid, an international NGO, focused on water, sanitation and hygiene. Ruth explained that one in ten (771 million) people don’t have access to safe drinking water. Additionally, one in five (1.7 billion) people don’t have access to sanitation and three billion people (40%) do not have somewhere to wash their hands with soap and water. Water, sanitation and hygiene (WASH) intersect at every stage of the apparel supply chain, although needs are particularly perilous – and therefore important – for farmers and garment factory workers.

Investing in WASH interventions creates a ripple effect of healthy, happy and productive people in the workplace, which also supports productivity and ultimately ensures return on investment for ensuring WASH. Results from such interventions include decreased medical costs and quality improvement, demonstrating some of the advantages of prioritising people-focused and reflective solutions in cotton production.

The driver: why does building social value and community resilience matter?

Hannah Cunneen, Principal Manager at Forum for the Future, spoke on the importance of building social value and community resilience into apparel supply chains. Improving social protection and promotion, in addition to environmental and economic resiliency and prosperity across the supply chain, enhances the viability of the whole sector. Over the past three years of the Cotton 2040 initiative, it has been clear that brands and retailers are heavily reliant on cotton producers, of which the sector is predominantly made up of smallholders, to meet cotton volume demands. Often the significant and essential role that they play is overlooked.

The production end of the supply chain is facing an increasingly volatile set of circumstances and vulnerabilities: environmental and economic, but also social. The climate crisis will further exacerbate these vulnerabilities, highlighting a need to think about the intersectionality and interconnectivity of activities, the decisions made, the people who work in the cotton industry, as well as the external threats impacting and exposing the cotton sector. Systemic solutions are required to adapt effectively.

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Without acknowledgement of the social circumstances which underpin the cotton sector, and subsequently meaningful action and design, effective climate adaptation is improbable.”

Hannah Cunneen | Principal Programme Manager, Forum for the Future

The cotton industry is interconnected and interdependent. It is made up of, and reliant on, various stakeholders working in together. However, supply chains are not very transparent, and have grown increasingly complex. Each link in the chain controls its own activities, but has varying degrees of visibility or control over risks that concentrate in other parts of the chain. However, the system is only as resilient as its weakest link. The dialogue, decisions and plans made by some actors - particularly those that are more influential - can impact the decision-making and resilience of those who hold less power. Investing in social aspects at the production end of the value chain is essential to prevent social and ecological harm that could lead to supply disruption, increased costs, or the collapse of cotton production.

The solutions: how can we ensure equity, social value and community resilience?

Hannah then reflected on the previous masterclass topics, explaining how social and community issues related to each. She also presented practical steps to ensure equity, social value and community resilience.

1. Commodities and Supply: Over time, farmers are going to be less likely to consider growing crops such as cotton, as a viable business option. Whole communities and regions may be at risk of either suffering mass crop failures due to fluctuating and compounding climatic events; and economic and social challenges. This poses many challenges, such as large populations of people migrating to more urbanised areas looking for work. In order for the cotton and wider apparel sector to promote socially-centred climate adaptation, it needs to build supply chain equity and resilience for all actors.
2. Transition Risk and Decarbonisation: Transitioning the cotton sector to a more replenishing, regenerative, adaptive and resilient future requires a better understanding of the barriers and opportunities to change. The impacts of the climate crisis are disproportionately impacting the most vulnerable, but so too is the pressure to transition to a greener practice. One pathway to overcome this is to extend compatible and consistent financing options to producers to transition effectively to more regenerative, and low carbon practises. Although decarbonisation is an essential component of the much-needed transition, it is not sufficient. Poor soil health, significant drops in essential biodiversity indicators, such as pollinators; water and pesticide use are also crucial factors, for example. A combination of insetting and offsetting is required to replenish the sector and improve future sectoral prospects for individuals and for apparel businesses.
3. Liability Risk: Being ahead of what is required legally, allows for stabilisation in the sector and the creation of resiliency and value for more people, supporting future business prospects and viability. Pushing for traceability and creating initiatives to target and promote social justice and inclusion, equitable economic engagement and equitable and representative climate adaptation measures will put oneself ahead of regulatory, legislative and consumer-led liabilities.
4. Governance and People: Cross-sectoral representation and dialogue are central to climate adaptation. Effective climate adaptation design ensures that those most impacted have fed into the design of initiatives to drive climate activities and strategies. Similarly, meaningful representation and “seats at the table” in decision-making and governance cement feedback and dialogue flows.
5. Insurance: One tool to mitigate and create resilience against multiple hazards in the cotton and wider apparel industry is through parametric or indemnity crop or economic hardship insurance. However, although insurance can provide relatively immediate financial relief, it does not offer long-term systemic solutions to the sector’s urgent needs. Insurance could be deployed in tandem with initiatives designed to support and de-risk the transition to a more replenishing, equitable cotton sector.