rethink sustainability

    Thread counts: regenerative cotton on the rise in fashion

    Thread counts: regenerative cotton on the rise in fashion

    Every year, approximately 26 million tonnes of cotton are produced globally,1 enough to make 18 t-shirts for every person on Earth. Cotton farming is a sprawling behemoth of an industry, worth around USD 40 billion annually2 and supporting more than 100 million families3, often in the poorest regions.

    As with many of the crops we grow, cotton is cultivated mostly in intensive, monoculture farms which are often created by clearing natural habitats. Cotton is the world’s fourth largest user of pesticides4, which are now known to destroy biodiversity and degrade soils5, reducing their ability to retain water.

    Cotton is also prolifically thirsty. As much as 29,000 litres of water can be needed for each kilogram of harvested cotton, almost ten times the amount needed for other water-intensive crops like rice or sugar cane,6 and many cotton farms turn to nearby rivers to draw the water they need for irrigation, depleting much-needed local freshwater reserves.

    The fashion industry – which uses 64% of the cotton produced each year7 – is coming under growing pressure to reduce its environmental impact. As major brand names set their sights on making fashion more sustainable, clothing longevity, recyclability, toxic dyes and manufacturing emissions are all in the crosshairs. So, too, is cotton.

    The fashion industry – which uses 64% of the cotton produced each year – is coming under growing pressure to reduce its environmental impact

    Restoring Lake Chad

    In the central African nation of Chad, cotton is big business – with up to 25% of Chadians reliant on cotton farming for their livelihoods, few nations are as dependent on the crop. Nearly a century of largescale cotton farming has taken its toll on the environment, however. Between 1963 and 2001, Lake Chad, which supplies water to 30 million people, shrank by 90%8 and it is feared that, on current trends, the lake could disappear altogether within two decades. Highly water-intensive cotton crops, which are often irrigated from rivers that feed Lake Chad, are thought to be partly to blame.

    A twelve-hectare pilot project aims to reinvent the way cotton is grown in the country… by turning conventional monoculture cotton plantations into ‘agroforests’, forest farms where cotton is grown beneath and between native trees

    This year, the first harvest is due from a twelve-hectare pilot project that aims to reinvent the way cotton is grown in the country. In the Logon Occidental region, local farmers are being supported by the Circular Bioeconomy Alliance (CBA) – a global alliance working to build an economy that operates in harmony with nature – and fashion giant LVMH, to turn conventional monoculture cotton plantations into ‘agroforests’, forest farms where cotton is grown beneath and between native trees.

    The project will serve as a “Living Lab”, exploring the potential for cotton to be grown in sympathy with nature, rather than at nature’s expense. By planting trees across their land, it is hoped the farmers will roll back the tide of deforestation, restore soil health and local biodiversity, and reduce the need for fertilisers, pesticides and, crucially, irrigation. For the farmers, the project will also create new income streams, with the trees providing alternative crops such as fruit and nuts that can be sold for food or to the cosmetics industry.

    Marc Palahí, CEO of the CBA and Chief Nature Officer at holistiQ Investment Partners, Lombard Odier Investment Managers, explains: “We wanted to create an action-oriented approach. If there’s no more Lake Chad in twenty years’ time, just imagine the consequences for the population. Living Labs offer an opportunity to experiment, learn, share, and demonstrate that transformation is possible, even in complex situations like Lake Chad.”

    Read also: Supporting the transition towards a nature-based economy | Lombard Odier

     

    The rise of regenerative cotton

    The Chad Living Lab is part of a wider effort by the fashion industry to move towards more sustainable textiles, with much of the push being led by the luxury sector. In 2022, a number of leading brands signed the landmark Manifesto For Regenerative Fashion9, in collaboration with the CBA and the Fashion Taskforce of the Sustainable Markets Initiative, aiming to build a fashion industry that sources materials from healthy, biodiversity-rich landscapes, and to empower the local and indigenous communities that rely on nature for their livelihoods.

    For firms embracing regenerative cotton, the transition is about more than ethical values, it is an acknowledgement that sustainability sells

    Cotton has become a key part of the collective’s efforts. Leading fashion designer Stella McCartney, for instance, is partnering with Turkey-based family-owned cotton producer SOKTAS to support their transition to regenerative cotton cultivation.10 Where the Lake Chad Living Lab is creating agroforests, the SOKTAS project, which has grown from an initial 5 hectares to 90 hectares, uses intercropping – in which cotton plants are grown between other crops such as wheat and sugar beet – to create the conditions that enable chemical inputs to be eliminated and irrigation to be minimised. Meanwhile in Italy, Giorgio Armani, another signatory to the Manifesto, announced the launch of the Apulia Regenerative Cotton Project11, aiming to be among the first cotton agroforestry field experiments in Europe.

    For firms embracing regenerative cotton, the transition is about more than ethical values, it is an acknowledgement that sustainability sells. In 2024, premium denim label Citizens of Humanity launched their own Regenerative Cotton project12, committing to source cotton from regenerative farms while also supporting farmers by providing financial assistance and access to education and scientific advice. Recognising the boost to brand value, Citizens of Humanity launched the project with a major marketing drive, fronted by supermodel and environmental activist Shalom Harlow. 

    Read also: Real nature-based assets, a new form of real estate?

    Shorter supply chains and better traceability

    As brands increasingly put sustainability front and centre, traceability is going to become ever more important. If customers are to have confidence in the products they buy, firms must be able to verify the source of the cotton they use – in globalised and often lengthy supply chains, this can be difficult, however.

    The Lake Chad Living Lab gives an example of how firms are overcoming this by cutting out the middlemen and going straight to the source. As Marc Palahí puts it, “To have an impact we also need to shorten the value chain, which has too many intermediaries, and link local populations more closely to companies.”

    Cutting edge technology also has a role to play. Since September 2022, the United Nations Economic Commission for Europe (UNECE) has been collaborating with Stella McCartney to test how blockchain technology can be used to verify and trace cotton from its source through to its final iteration in a new item of clothing. To date, the technology has been used to follow cotton through the supply chain, linking it to documentary evidence of the farming practices employed during cotton cultivation, including satellite imagery, data on soil carbon capture, and certification of biodiversity monitoring.13

    As degraded monoculture farmlands are transitioned to regenerative agriculture, they will produce nature-positive crops that sell at a premium to buyers looking for secure, climate-resilient supply

    Investing in a nature-based economy

    Regenerative agriculture techniques hold out the hope that cotton and other crops could be grown in such a way that they have a net-positive effect on landscapes, biodiversity, and climate change. In the SOKTAS project in Turkey, for example, testing has shown that the soil carbon content has increased significantly since the farm was transitioned to regenerative agriculture, turning farmland from a carbon source into a potential long-term carbon sink.

    For investors, this demonstrates the potential for a ‘nature premium’ that could be realised by investing in nature-based assets. As degraded monoculture farmlands are transitioned to regenerative agriculture, they will produce nature-positive crops that sell at a premium to buyers looking for secure, climate-resilient supply, and aiming to reduce the environmental impacts of their supply chains. And as biodiversity returns and soils become carbon sinks once again, nature assets could appreciate in value and create new revenue streams.

    Read also: Net Zero Delivery Summit 2024

    As the global community takes action to limit rising global temperatures, agriculture could have a key role to play – the 2023 Intergovernmental Panel on Climate Change report rates agricultural carbon sequestration as one of our best opportunities to reduce net carbon emissions and slow climate change.14 The transition to regeneratively grown cotton provides a snapshot of the wider transition that could transform our global food systems. At Lombard Odier, we believe that the growth of regenerative agriculture could underpin the rise of a sustainable, net-zero, nature-positive economy to replace today’s linear, resource-intensive and highly polluting economic model.

    At the CBA’s Lake Chad Living Lab, Marc Palahí has this bigger picture in mind. “Our economic system has reached its limit,” he explains. “Over the last century, humankind has created an unsustainable world…We need to move from an extractive economy powered by fossil resources that develops at the expense of nature, to a regenerative approach powered by nature that reconnects humanity, nature, and the environment. Building on the actions we have taken to restore Lake Chad, we want to initiate a movement that will transform the entire economy.”


     

    Cotton production worldwide 2023/24 | Statista
    Global Cotton Market Report 2021: Volume by Consumption, Production, Export, Import Countries, Companies, Forecast - ResearchAndMarkets.com | Business Wire
    Cotton sustains more than 100 million families worldwide | UN News
    organic-cotton-production-may-alleviate-the-environmental-impacts-of-intensive-conventional-cotton-production.pdf (cambridge.org)
    Ag pesticides cause harm to soil health, biodiversity (foe.org)
    t3i00rxi8_wwfbookletthirstycrops.pdf (worldwildlife.org)
    ssi-global-market-report-cotton.pdf (iisd.org)
    Regenerative agroforestry for sustainable cotton production and land restoration in Chad - The Circular Bioeconomy Alliance
    Regenerative_Fashion_Manifesto (storyblok.com)
    10 FEATURE How can sustainable agriculture make the fashion industry greener? | Reuters
    11 THE ARMANI GROUP ANNOUNCES THE APULIA REGENERATIVE COTTON PROJECT (storyblok.com)
    12 Regenerative Cotton – Citizens of Humanity
    13 UNECE blockchain pilot for cotton paves the way for more sustainable fashion | UNECE; Stella McCartney × UNECE Blockchain Technology Pilot
    14 How farming could become the ultimate climate-change tool (nature.com); IPCC_AR6_SYR_SPM.pdf

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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