Reports of forced labor are driving brands to abandon Chinese cotton

Fortune. 18 July 2021

Below is an article published by Fortune. Photo:AFP.

Early last year, amid mounting reports of forced labor and human rights abuses in China’s Xinjiang Uyghur Autonomous Region (XUAR), U.S. outdoor apparel maker Patagonia resolved to stop sourcing cotton from China. From April 2020 on, the brand’s global suppliers had to vet and eliminate any links to the world’s largest cotton producer. The decision wasn’t easy. China accounts for roughly 20% of global cotton supply, and Xinjiang produces some of the highest-grade cotton in the world.

“We had to walk away from business partners, we had to redesign styles to fit the substitute cotton, and we had to do away with styles that we could no longer make because the quality of cotton was no longer available,” says Wendy Savage, director of social responsibility and traceability at Patagonia, which declined to say what products it had discontinued. 

Patagonia isn’t alone. 

U.S. retailer L.L.Bean pledged to eliminate Chinese cotton from its supply chain by the end of this year, citing “extremely troubling” reports about Xinjiang. 

Victoria’s Secret parent company L Brands has committed to eliminating Chinese cotton from its supply chains, too. L Brands told Fortune it used tools provided by supply chain analytics firm Sourcemap to map most of its apparel supply chain in 2019 and cross-referenced its suppliers against a list of companies prohibited by U.S. sanctions related to Xinjiang.

“In 2020, we started conducting chain of custody audits on cotton products to ensure cotton fiber does not come from China and will continue to conduct these audits to ensure cotton fiber is from an approved country,” an L Brands representative said.

California-based women’s-wear maker Reformation—which launched in Los Angeles in 2010 and bills itself as a sustainable fashion brand—is another retailer that’s stopped using cotton from China because it couldn’t guarantee cotton sourced elsewhere in China hadn’t been mixed with stock grown in Xinjiang. The XUAR produces over 85% of China’s cotton crop.

“Unfortunately, it’s not even as simple as just saying that you’re not going to source within the XUAR. The opaque nature of supply chains in the region means it really has to be the entire country,” says Kathleen Talbot, Reformation’s chief sustainability officer and vice president of operations.

U.S. fashion brands and retailers are facing an unprecedented supply chain crisis over Xinjiang, but few are willing to talk about it for fear of disrupting their operations in China. Beijing fervently denies allegations of human rights abuses in Xinjiang and tacitly threatens companies that speak against it. Fortune asked more than two dozen apparel companies how they’ve responded to reports of human rights abuses in Xinjiang. Only Patagonia and Reformation—which earn little to no revenue in China—made representatives available for interviews. But regulatory action has forced all apparel companies that do business in the U.S. to address the possibility that their cotton supply is corrupted by forced labor, whether they speak publicly about it or not.

In January, U.S. Customs and Border Protection implemented a seizure order on all goods containing cotton sourced from the XUAR, citing “the Chinese government’s exploitation of modern slavery.” The Worker Rights Consortium, an independent labor rights organization, estimates the seizure order will disqualify $20 billion of apparel sales in the U.S. per year—about 5% of the total $368 billion U.S. clothing and footwear market.

To release a seized shipment, importers must prove the goods are free of Xinjiang-sourced cotton. But that seemingly straightforward requirement has exposed a hidden truth about the fashion industry: Few brands know for sure where their cotton comes from.