Earthsight’s “ Fashion Crimes ” report sounded the alarm bells: European retail giants were accused of using cotton linked to illegal deforestation , land grabbing, human rights violations and corruption in the Brazilian cotton sector. Specifically, H&M and Zara were called out for relying on Better Cotton’s certification process instead of carrying out their own due diligence in the ecologically sensitive Cerrado region.
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Less than two weeks after this report was published, Better Cotton clapped back .
The world’s largest sustainable cotton initiative said that a third-party audit found no breaches of its standards at the certified farms—excluding the questionable agricultural businesses Grupo Horita and SLC Agrícola —tied to Earthsight’s allegations.
But the London-based nonprofit wasn’t satisfied by the scope of Better Cotton’s independent audit, calling the “so-called investigation” so flawed that it’s “almost worthless.” And Earthsight had more digging to do.
Better Cotton was notified two months later that Earthsight intended to release a second output. While the specific content of that output wasn’t shared with Better Cotton, Earthsight reached out on June 6 to allow the organization to comment on and clarify its missteps. In the “spirit of full transparency,” Better Cotton took the opportunity.
Better Cotton’s action update addresses the sustainability scheme’s plans to expand its due diligence process and breaks down the company’s “ mass balance” chain of custody system, among other details. Regarding the Better Cotton Platform (BCP), the group made clear that “members of [its] staff can, at no time, change or manipulate any of the data entered into the system” and, instead, Better Cotton “constantly monitors the transactions entered, and in case of inconsistencies, we can proactively reach out to the respective actor to correct possible errors.”
That is the exact opposite of what Earthsight’s second output claimed.
“In the wake of our exposé of Better Cotton’s abject failure to detect illegal activities and conflicts of interest in cotton supply chains,” the nonprofit said, “Earthsight has now been privy to startling new revelations from one of the scheme’s former employees.”
The whistleblower told Earthsight that some Better Cotton staff in its Swiss and UK-based offices have “manipulated” the scheme’s data on its online platform. Meaning that brands using Better Cotton—including H&M and Zara —may be making sustainability claims based on defective data.
It’s important to know how the BCP works to understand what manipulation has allegedly occurred.
For registered companies—including cotton ginners, yarn producers, garment manufacturers and retailers—the BCP is how 13,000 users document volumes of cotton sourced as “ mass balance ” or “physical” (or traceable) Better Cotton as they pass through the supply chain.
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Better Cotton uses “annual authorized volume” (AAV) codes which are unique numbers generated by Better Cotton for licensed producers that allow gins buying from licensed farmers to enter purchases of seed Better Cotton into the BCP system.
“Access to the BCP allows organizations to participate electronically in the Better Cotton Chain of Custody by recording information about cotton-containing orders sourced as Better Cotton, managing the required documentation and recording information about cotton-containing sales to customers,” the multistakeholder governance group wrote on its website.
However, smaller farmers are organized into groups, Earthsight said, with up to 4,000 sharing a single code. Considering that a group’s AAV informs the amount of physical Better Cotton these farmers are expected to sell during a growing season, it’s unclear how errors can be traced back to specific farms when so many farmers are sharing a single code.
“The problem lies with how those volumes are entered into the platform. Earthsight’s source has revealed that the volumes of physical Better Cotton purchased by thousands of companies each season are not verified, leaving the platform unreliable and potentially full of inaccuracies,” Earthsight said in a statement. “According to our whistleblower, this lack of data verification creates a system vulnerable to data manipulation. It allows ginners to enter greater volumes of physical Better Cotton than they purchase. This leads to discrepancies between the amount projected to be produced and the amount subsequently declared on the platform.”
When this happens, per the source, Better Cotton’s European offices allegedly manipulate those numbers to match, meaning that conventional cotton (grown without any sustainability assurances) is potentially traded as physical Better Cotton.
Furthermore, the former employee alleged that Better Cotton “rarely checks” supply chain companies for compliance with its chain of custody standard, illustrating how Better Cotton should move through the supply chain. Per the ex-employee, many new BCP users only need to complete online training before they begin trading. At the same time, companies using BCP aren’t required to provide invoices or any supporting documents, as the platform cannot hold “large volumes of data,” according to the ex-employee. Not to mention, Better Cotton allegedly doesn’t have the resources to analyze that data. As such, compliance checks only happen when companies appear to be involved in “ suspicious transactions ,” the source said.
As for the source, the issue at hand is that Better Cotton is seemingly more concerned with growth than with ensuring compliance with its own standard. Considering that the initiative’s brand and retail members are charged membership fees as well as volume-based fees linked to how much Better Cotton they purchase, Earthsight argues that there’s a financial incentive for Better Cotton to recruit new members and then have those members purchase tons of cotton.
“In a clear conflict of interest , the same members of staff who recruit and onboard new companies are then tasked with assessing their compliance,” Earthsight said. “The former employee is blunt in affirming that the scheme’s chief operating officer and chief executive officer have been in their roles too long and have become complacent.”
Better Cotton did not immediately respond to Sourcing Journal’s request for comment.
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