This month a report was published by CottonConnect on the state of cotton farming in China. The world’s largest and fastest-growing cotton market faces significant production challenges. Overused and polluted soil, China’s emerging water crisis and a changing rural demography are examples of the issues at hand. CottonConnect, a company that aims to make cotton supply chains sustainable, identifies an opportunity in these challenges for creating a more sustainable cotton market in China, both socio-economically and environmentally. For example, China’s politics are currently aimed at incorporating sustainability in its agricultural and textile sectors. In the country’s 12^th Five Year Plan, expectations for a greener and more productive agriculture, as well as better water protection and rural regeneration are laid out. Thus, the report states, “A clear opportunity exists for brands to demonstrate leadership and safeguard their license to operate in China.”

Not limited to China, the international cotton market today faces several challenges. Known as the “thirsty crop”, cotton accounts for 2.6% of the world’s yearly water usage and 8-10% of all pesticides in the world are used on cotton fields. The run-off from these fields causes serious pollution, as well as soil degradation, erosion and depletion. The use of genetically modified organisms (GMOs) makes up about 66% of total global cotton production, leading to concerns about seed diversity, ecological balance and “super weeds”. Besides environmental impact, the cotton industry has often received negative media attention concerning low standard working conditions and child labor.

These challenges need to be addressed to build a prosperous cotton market that is sustainable in the long run. NewForesight drives sustainable market transformations such as this one. In our theory on sustainable market transformations, we discern four stages towards a sustainable market. The cotton sector is currently in the second phase. The second phase is characterized by first movers and competition. So-called first-moving companies start to realize environmental and social responsibility goes beyond immediate self-interest, and also see a competitive advantage if they take on a leading role. Sector leaders such as H&M, C&A and Nike recognize the use of sustainable cotton as a competitive advantage and have already made public commitments to sustainability. They started working towards a sustainable supply chain in collaboration with standards and certifications organizations such as Organic, Fairtrade, Cotton Made in Africa, and BCI (the sector roundtable).

The cotton market is clearly on the move and a more sustainable sector is in sight. The question is now who will come up with the winning formula. There is no shortage of initiatives that are willing to lead the way. For example the aforementioned CottonConnect that works on more sustainable cotton throughout the whole supply chain. The organization operates on a strategic level, developing and building cotton strategies, as well as on an operational level, implementing community investment programs. Another initiative, the Better Cotton Initiative, is a non-profit, multi-stakeholder organization that organizes the efforts of very large stakeholders such as Walmart and Ikea in defining and implementing the production of “Better Cotton”. Also, last year the Organic Cotton Accelerator was launched. This multi-stakeholder initiative aims to work with the entire value chain in a pre-competitive space to find and fund innovative ways to strengthen the chain and increase supply to meet the rising demand for organic cotton.

Initiatives like the ones mentioned above are crucial in taking the next step towards a sustainable sector. We see the cotton market moving towards the third phase of a sustainable market transformation: the Critical Mass phase. In this phase industry realizes that singular projects and programs are not enough to achieve sector sustainability and collaboration is in order to discuss pre-competitive issues. Instead of a single company certifying their production according to a production standard set by a voluntary sustainability standard such as Fairtrade or Organic, multiple companies start working together to change baseline conditions. Leading market brands are coming together to strategize on and implement more sustainable ways of production in collaboration. Multi-stakeholder initiatives such as the Better Cotton Initiative are creating momentum and opening the door for sector-wide strategies that have the power to systematically change the way cotton is produced. NewForesight is looking forward to contributing to this sustainable sector transformation in the making.