As the Cotton 2040 initiative draws to a close in 2023, Forum’s Principal Programme Manager Hannah Cunneen, Principal Sustainability Strategist Yamini Srivastava, and Change Strategist Bhairevi Aiyer reflect on the key takeaways from Cotton 2040’s Masterclass series, co-hosted with our technical partners WTW Climate Resilience Hub.

This blog is part one from a two-part blog series looking at learnings from our ‘Climate Adaptation in the Cotton Sector’ Masterclass series, and what to expect from the cotton sector in 2023 and beyond.

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Cotton production can be associated with significant social, environmental and economic impacts, including inequitably low and insecure incomes of farmers and workers, opaque market forces, over-consumption of water, inappropriate or excessive use of pesticides and fertilisers, and soil depletion.

To build climate adaptation action in order to improve resilience and equity across the value chain, all actors are required to significantly dial up environmental and social sustainability ambitions to better meet the concerning trajectory for the cotton industry. Such a transition will require collaborative action from all  those working across the value chain, but particularly those that hold the most power in the dynamic, starting from the consumers and the brands and retailers setting demands for cotton, leading down through cotton trading, manufacturing tiers and including the production level. The much-needed actions required in order to secure the future viability of the cotton industry cannot be a burden that cotton producers can carry alone, but a responsibility we must all tackle together.

In November 2022, Forum and our technical partners, WTW’s Climate and Resilience Hub, delivered a series of six practical, actionable ‘Masterclasses’ outlining how the climate crisis will impact key stakeholders across the cotton industry’s supply chain, and the key topics brands and retailers should be across in order to support climate adaptation action. 

To offer practical, actionable advice, the masterclasses touched on topics most relevant to brands and retailers, and demonstrated how those topics would likely be further challenged or impacted as a result of the snowballing climate-related environmental and social hazards the industry faces, many of which have been highlighted as a part of our global cotton growing risk analysis. 

Over 250 apparel-focused leaders participated in the Masterclasses, covering six pertinent focal areas: Commodities and Supply Chain Risk, Transition Risk and Decarbonisation, Liability Risk, Governance and People, Insurance, and Social Value and Community Vulnerability. Across these subjects, the headlines we sought to amplify to the audience include:

1. Decarbonisation alone is not enough to address the deep environmental damage and social equity issues in cotton. Poor soil health, significant drops in essential biodiversity indicators, and inadequate water management, and pesticide use also need to be addressed. 
2. What is often glossed over is that beyond emissions, the world has a broken concept of consumption (rather, overconsumption) which is exceeding planetary boundaries.
3. There is a lack of visibility, transparency, communication and collaboration across the cotton value chain, all of which is symptomatic of the often-opaque global supply chain model which underpins the cotton sector. This in turn creates complexities in ascertaining and meeting climate and economic adaptation needs in both food and fibre.
4. Current policies and legislation are not designed to meet the planetary and societal needs in a commensurate way. Meeting current, or even forthcoming, regulations is the bare minimum of what is required in order to stabilise the cotton sector and is almost certainly not enough to transform the industry. 
5. A combination of insetting and offsetting is necessary to replenish cotton production capacities, and improve future sectoral prospects for individuals and for apparel businesses.
6. The climate crisis disproportionately and most significantly impacts those of whom are already the most vulnerable. 
   
7. Cross-sectoral representation and dialogue are undeniably essential in order to meet climate adaptation (and mitigation) targets. Effective climate adaptation design, meaningful representation and “seats at the table” in decision-making and governance valuable cement feedback and dialogue flows.
8. Appropriate financing and de-risking opportunities are integral to unlocking transformative, long-lasting pathways to climate resilience and equity in cotton.

“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

Various polls designed in line with the masterclass topics gauged the perceptions of climate risks from major cotton procurers across the globe. From this, we were able to discern themes relating to current perceptions within the cotton industry, as well as to gauge what climate adaptation efforts are being employed by apparel brands and retailers . 

• The main challenges brands and retailers were facing in order to meet climate adaptation needs were identified as: a lack of transparency in the cotton supply chain, the cost of investing in business and operation transformation, and the lack of clear and consistent (current and forthcoming) standards, frameworks and regulations. 
• The main drivers for the apparel sector to improve climate commitments and action are increased market/consumer demands, regulation, noticeable climate hazards impacts and ongoing instability within supply chains, as well as a sense of ethical duty to act. 
• Nearly 90% of businesses claimed to have a good understanding of how climate risks affect their company and value chain, but are oftentimes experiencing challenges in internally engaging colleagues and shareholders on these issues. This includes making the business case for change. Quantifying and communications support on how current and impending climate risks may affect the business and the return on investment for meaningful climate action would be valuable in achieving broader internal support for commensurate climate adaptation action. 
• Over 90% of businesses agreed that they see value in supporting industry-wide collaboration to co-finance insurance premiums and reduce the exposure of farmers and producers with climate adaptation transitions.  

There is an ongoing, clear call for collaborative climate adaptation action across the cotton sector. In order to ensure viability of cotton, and fibre and food more broadly, the apparel sector cannot further delay setting far more ambitious socially and ecologically-minded adaptation targets and strategies.

Tune into each Masterclass in our Cotton 2040 YouTube playlist.