The Risks Of Upstream Obfuscation And Over-Prioritising Returns

Visibility into the raw material supply chain gets even murkier

Traditional cotton farming has been notorious for its heavy water and chemical use, as well as its soil-depleting nature – both with the potential to negatively affect local ecosystems. The fibre has also been linked to human rights violations over the years. So brands verifying that their cotton is responsibly sourced is vital for sustainability. But this week Better Cotton, a leading industry body and certification scheme advocating for better standards in cotton farming and practices, was accused of not properly verifying cotton linked to illegal deforestation, human rights abuses, and land grabbing in Brazil. 

This was uncovered after a year-long investigation by the London-based NGO Earthsight. The NGO found that over 800,000 tons of contaminated cotton from Brazil were sent to companies in Asia, where it was processed into clothing items later sold by brands, primarily in Europe, carrying the promise of being a preferential alternative to traditional cotton harvesting. The report, dramatically entitled “Fashion Crimes” has implications industry wide: Better Cotton is used by more than 2,500 brands as an intermediary and label to help improve their sourcing and purchasing practices, but more broadly this story reminds us that trusting independent methods and people is not necessarily a fit substitute for first-party, data-backed transparency.

Reporting on this specific story, Sourcing Journal reveals that there has been a back-and-forth between the two parties: Better Cotton quickly responded to the report saying that a third-party audit found no breaches of its standards at the certified farms (with a few exceptions), with Earthsight then doubling down and putting together a follow up investigation. The NGO then gave Better Cotton a chance to comment on its oversights – which it did, in a post on the 12th of June. But this week, Earthsight received new information from a former employee of the Better Cotton scheme.

The allegations from the whistleblower include Better Cotton staff manipulating data on its online platform; failing to verify the volumes of physical Better Cotton purchased by thousands of companies each season; seldomly checking supply chain companies for compliance with its chain of custody standard; and the existence of conflicts of interest, as the same employees who recruit and onboard new companies are also responsible for assessing their compliance.

While The Interline makes no claim to have verified any of this (the aforementioned reporting is a good source) the accusations levelled are indicative of the way that some brands looking to address sustainability challenges tend towards convenient alternatives to the more intensive efforts needed to conduct verification of responsible sourcing directly. Any trust-based link in an upstream value chain has the potential to become a problematic one.

For the most part, there needs to still be a fundamental change in perspective from brands in realising that responsible sourcing is not an external concern, but a direct responsibility they bear. And achieving meaningful change requires substantial transformation at both the community and governmental levels where cotton is cultivated and sourced. This will be a challenge, to be sure, but it is one that other industry bodies, brands, agencies, and governments are all working to tackle.

Once this accountability is internalised, though, it will be critical for brands to ensure a solid system of collecting, storing and reporting their data. This involves ensuring the accuracy and integrity of the data to prevent tampering and misinformation. Implementing reliable data management practices will not only improve transparency, but also enable brands to demonstrate their commitment to ethical and sustainable sourcing practices – something that is needed industry-wide. This level of diligence is essential for brands to build trust with consumers, stakeholders, and regulatory bodies alike.

While there is no reason to assume that Better Cotton’s practices are mirrored elsewhere, it is becoming clearer that, for sustainability initiatives to count, they must be at least partly backed by the integrity that only comes from first-hand information.

Returns on the rise: the high cost of growth at any cost

Coinciding with British retail sales volume increasing by 2.9% in May (up from a 1.8% fall in April), three businesses have made headlines this week for technology and process initiatives designed to make returning products easier than ever.

Kohl’s expanded its existing returns capabilities and introduced “The Return Drop” across more than 1,100 U.S. locations. In collaboration with Narvar and Inmar Post-Purchase Solutions, the retailer now accepts returns from brands Carhartt, Hanes, and Levi’s at its stores. According to the press release, customers can start the returns process and opt for “Kohl’s Drop Off,” where they receive a Narvar-generated QR code. They can then bring the item along with the QR code to a nearby Kohl’s store, eliminating the need for a box or shipping label to complete the return.

Next up is Happy Returns and Loop, who have teamed up to offer their customers a more pleasant return experience on Shopify brands. Shoppers start the process on Loop’s return portal, choose to drop-off their items at a Return Bar, and receive a QR code generated by Happy Returns. They then bring the items, no  box or label needed, and their QR code to a Return Bar to complete their return.  According to Happy Returns, this helps merchants reduce their return costs by up to 40% and also helps reduce the impact on the planet by reducing cardboard waste. The collaboration will also expand access to Happy Returns’ logistics and returns network, complemented by Loop’s returns software, automation, and analytics solutions, for a wider range of brands.

And lastly, Reverse logistics solution ReturnBear is expanding its operations into the UK market in July. The move aims to support brands in managing cross-border returns from the US, Canada, and now the UK. ReturnBear’s platform gives shippers access to more than 1,000 package-free, label-free return drop-off locations across Canada, as well as regional mail-in returns hubs. As per their website, its end-to-end reverse logistics network “aims to create both convenience for consumers and increased profitability for brands.” 

While prioritising customer experience is always important, this focus on increased sales as a measure of success could prove to be short-sighted; there may be no direct correlation between increased sales in one market and ease of returns in another, but the overall trend remains towards shifting product as the primary lever for success, and then creating the smoothest ramp for then returning much of it. Brands and retailers should, perhaps, instead be giving attention to reducing unnecessary returns through accurate product information, right-sizing production, and refining fit and sizing guides – and then implementing strategies to repurpose or resell returned items sustainably.

Best of The Interline:

This week, we published the first in our series of exclusive executive interviews with key voices in artificial intelligence – originally published in our new AI Report 2024. First up, we spoke to Julie Pont, Heuritech’s Fashion & Creative Director, on how far the deeper applications of AI have already transformed the way people in fashion interact with technology. 

Our Editor-in-Chief asks what the near future holds now that AI is no longer seen in binary terms as a saviour or a threat, but more pragmatically, as a spectrum of solutions? Will the core business models balance out? And will the architecture scale to deliver the transformative applications that users, organisations, and investors are anticipating?