Cotton is one of the world’s most important natural fibres. It’s used in clothes, beauty products, home furnishings and insulation. It’s a renewable resource, but can it really be grown sustainably? Find out what Triodos Research’ viewpoint is and how it impacts the Triodos Sustainable Investment Universe.

As the most commonly grown non-food plant in the world, cotton production accounts for two and a half per cent of arable land, and provides income for more than 250 million people worldwide. But how sustainable is it? Water usage in production, for example, is high. According to WWF, the cotton used in one pair of jeans requires 8,500 litres to grow. And Nike tells in its latest Corporate Responsibility report that 73% of the water needed to create its products is used at the beginning of the value chain, in the raw materials stage. This is mainly because cotton is a water-intensive crop. It accounts for 87% of all water used in the raw materials stage. But it’s not water alone that’s a concern. The high use of pesticides, fertilizers and the use of genetic modification also bring into question just how sustainable current production methods are.

Organic supply can’t yet meet demand

Organic cotton is grown without synthetic agricultural chemicals such as pesticides and fertilizers and doesn’t use genetic modification. However organic cotton comprises less than one per cent of global cotton production. Whilst consumer awareness is growing and demand for organic cotton is increasing, the production levels can’t keep up. One of the main barriers for growers to switch to organic farming is that it requires a three-year waiting period to achieve organic certification and long-term purchase agreements are rare. As a result, a commitment to source 100% organic is too big a challenge for companies with global reach.

Investing in companies with commitment

Companies in the Triodos Sustainable Investment Universe that use cotton in their products are aware of the issues and are taking steps to improve the sustainability of their supply chain. For instance, Inditex, one of the largest fashion retail groups in the world, placed more than 3.5 million 100 per cent certified ecological cotton garments on the market in 2013. And Adidas, H&M and Nike have all committed to source 100 per cent more sustainable cotton within four to six years from now. That means either using certified organic cotton or cotton that has been grown according to the Better Cotton Initiative’s (BCI) management practices and standards.

Less is more

BCI aims to reduce the environmental impact of cotton production and to improve livelihoods and economic development in cotton producing areas. It means that farmers use less pesticide, less fertilizer and have less water overruns. And the initiative appears to be working. BCI reported that in 2012 in Pakistan more than 75,000 farmers using the BCI standards brought their use of water back by 39 per cent, thus reducing pressure on the Indus River. They also cut back on the use of pesticides by 47 per cent and fertilizer by 39 per cent across over 300,000 hectares. Whereas yields were equally good, BCI-farmers had an average 11 per cent increase in income compared to farmers who continued using conventional practices. But there is room for further improvement, as BCI, for instance, does not address genetically modified cotton. Whilst Triodos Investment Management prefers that the companies it invests in aim to use 100 per cent organic cotton, the BCI sustainable standards addressing the negative impact of mainstream cotton production are a firm step in the right direction.  

Note: The issues explored in this article are relevant for sustainable investments on the stock market. Triodos Bank believes that our socially responsible investments are a powerful means of promoting our values and working for greater sustainability, while enabling us to offer a complete range of attractive investment options to customers who choose to invest on the stock market.