Cotton is an important crop and product. Nearly every person around the world uses it on a daily basis. The cotton industry employs more people than any other industry and is a significant contributor to the gross domestic product of many developing countries. Despite its global significance, cotton production can still benefit from improvements to maximize the benefits of cotton production while minimizing the potential negative impacts.

The Better Cotton Initiative (BCI) aims to transform cotton production worldwide by developing Better Cotton as a sustainable mainstream commodity with the following aims:

• Reduce the environmental impact of cotton production
  
• Improve livelihoods and economic development in cotton producing areas
  
• Improve commitment to and flow of Better Cotton throughout the supply chain
  
• Ensure credibility and sustainability of the Better Cotton Initiative 

The BCI itself has transformed since I had the pleasure of acting as its first Chairperson five years ago, when a dozen passionate council and staff members came together to design the initial principles and framework for implementation

When we envisioned the evolution and global expansion of the BCI we saw three stages:

• A start-­‐up phase with limited members and a goal to build credibility and collect data to make a compelling business case for engaging more farmers, involving more governments, and gaining support from other value chain actors.
  
•  An expansion phase with additional regions and value chain actors. During this stage we would be collecting data (e.g., key performance indicators) and following other business benefits to tell an increasingly convincing story for more farmer participation and industry support.
• A normalization phase that would include further expansion to new regions. Better Cotton would flow into already existing systems without much direct engagement from actors. Farmers’ participation, industry and government support expands with program expansion.

I see evidence of great change when Reading the many accomplishments and metrics in the BCI’s 2011-­‐12 Annual report. The BCI is moving into a new phase. I would like to share a few of these milestones with you here.

• This past year the BCI worked with 125,000 farmers (approximately 90,000 of whom produced Better Cotton) on 450,000 hectares through a network of farmer learning (training) groups and implementing partners1 to produce approximately 490,000 metric tons of Better Cotton lint in Brazil, India, Mali and Pakistan.
• In addition, 25,000 workers, including over 20,000 women, received training tailored to what was most important to them. For example, while farmers typically were trained on all Better Cotton principles, most women and workers were trained only on decent work and fiber quality principles – the principles that directly correspond to their needs.
• Membership more than doubled to 119 organizations by the end of 2011, with the largest growth in the supplier and manufacturer categories. The cotton consumption of BCI brand and retail members now represents over 5 percent of the world’s total consumption.

You can find a snapshot of the BCI’s key performance metrics for each BCI indicator from 2011 to 2012 in their 2011 Annual Report.

The BCI’s recent accomplishments are impressive for this initial stage of development. With this said, the BCI recognizes that there is much more to do as they enter a new stage of development. Better Cotton is perched on the edge of expanding to become a mainstream commodity. To this end the BCI recently developed a strategy for the years 2013 to 2015 that is aimed at scaling up Better Cotton and working towards financial self-­‐sufficiency.
Some changes to the BCI system include their membership options and structure. I have highlighted these below with the hope that some of you will consider exploring supporting the BCI in a way that makes most sense for your organization.
Suppliers and manufacturers will be able to choose between basic and registered membership.

• Basic membership is for entry-­‐level companies that want to support BCI in a more hands-­‐off way while they learn about what it means to market, buy and sell Better Cotton.
  
• Registered membership is for those suppliers and manufacturers who are active in the Better Cotton supply chain.
  
• Brands and retailers can choose between standard membership and pioneer membership.
  

• Standard members contribute to supply creation by investing in farmer support, communicating about
  
• Better Cotton and accessing all BCI benefits, such as the traceability system, field data and results.
  
• Pioneer Members are the driving force behind the success of BCI. They invest significant financial support
  both in BCI capacity and for farmer support, work closely with members and their staff to ensure that Better
  Cotton is entering their supply chain. They are also members of the Better Cotton Fast track program. Brands are also able to start with a learning membership as they get ready to start supporting and procuring Better Cotton the following year. On a personal note I would like to ask that you urge your favorite retailers to consider joining or otherwise supporting the BCI.
  
  

The challenge of sourcing minerals and determining whether or not they are “conflict minerals” has become a significant issue that companies must address – especially companies subject to the U.S. Securities and Exchange Commission (SEC). According to U.S. legislation signed in 2010, (the Dodd-­‐Frank Wall Street Reform and Consumer Protection Act), companies are required to conduct sufficient due diligence and disclose the presence of conflict minerals in their supply chains. Conflict minerals are minerals (namely gold, tantalum, tin and tungsten) that directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo (DRC) or an adjoining country.

Before the Dodd-­‐Frank Act came into play, the Electronic Industry Citizenship Coalition (EICC) began conducting research for and developing a program aimed at ridding conflict minerals from their supply chains. I believe the cotton industry could benefit from some valuable insights and lessons learned by the EICC’s experience.

I had the pleasure of welcoming Bob Leet of Intel and Co-­‐Lead of the EICC Extractives Working Group when he presented the EICC's Conflict-­‐Free Smelter (CFS) Program at a sustainable biofuels workshop in Brussels, sharing his experiences with other industries. Mr. Leet made some interesting observations during his presentation at the biofuels workshop. I am highlighting some key points below, which are worth noting for how they might apply to the cotton industry.

Once United Nations reports (from 2001, 2008 and 2009) began to state that minerals trade directly contributes to funding the war in the Democratic Republic of the Congo, numerous non-­‐governmental organizations (NGOs), as well as the media were quick to focus on conflict minerals issues.

Two industry associations, the EICC and the Global e-­‐Sustainability Initiative (GeSI)) were already focused on responsible sourcing. They came together to address the issue of conflict minerals in 2007. The industry conducted research into the operations and connections in their supply chain and worked with external stakeholders to design a CFS program. The program focuses on banning conflict minerals from entering the roughly 200 smelters that mix and convert ore or recycled material into manufacturing grade for the four conflict minerals: gold, tantalum, tin and tungsten. The CFS audits are designed to ensure that conflict minerals are not in the “mine to refined raw material” stage of the supply chain, which is the stage that removes the identity of the minerals’ origin. It is worth noting that most commodity supply chains can have many thousands of initial processors, which would pose a significant challenge to the institution of an industry-­‐wide audit program.

The CFS program is supported by many global electronics brands (and thus the majority of the market for some minerals, such as tantalum and tungsten). This industry-­‐level approach motivates suppliers to participate in the program (for fear of losing their market if they don’t) and allows multiple companies to rely on one set of CFS audits. In addition, individual brands can focus their due diligence efforts on more direct suppliers (e.g. component and product manufacturers).

Mr. Leet stressed the importance of engaging a variety of committed stakeholders to achieve success in areas of mutual interest. While each stakeholder plays a role, not every stakeholder needs to be engaged in each aspect of the wider effort. NGOs and governments can bring credibility to the work being done by the industry, which can, in turn, lead to investments. NGOs can be advocates, activists or implementers, they can be opinionated, fair or unfair, and they are unlikely to change their position. Governments often need to be educated on the issues and possible solutions (and they may not agree with your perspective). It is important to engage them early in the process because regulations are more difficult to modify once established.

The actors along the supply chain must be fully engaged. This involvement is essential for industry-­‐wide efforts that aim to improve conditions at the raw material stage of supply chains. There will be some conditions that the industry can affect more easily than others. More creative solutions can be developed with supportive suppliers and industry leaders. Brands and retailers must recognize the value that these actors play and avoid treating them as commodities. An even trickier issue lies in how to collaborate without putting proprietary information at risk and violating anti-­‐trust laws.

Mr. Leet proposed that quality initiatives of global scale are developed over time through the following stages:

• Program development (1 to 5 years): Lots of learning, engaging motivated and passionate members
  
• Industry harmonization (5 to 8 years): Efficiency gains, common suppliers, customers and expectations
  
• International standards (10 plus years): Established and accepted by multiple industries

Some of Mr. Leet’s comments were particularly helpful in thinking about key issues for the cotton industry. I’d like to take the time to break out some of those issues, which include, specifically, UN oversight of and concern about conflict minerals, the fact that some industry agencies were already working on ways to source the raw materials, and the importance of engaging stakeholders along the way. And, when we look at the industry over all, we need to keep in mind how tough it can be to introduce checks and balances (or a system) that make certain standards the standard for the whole industry. But, if key players are able to take the time to get these standards in place, such a universal standard will benefit the industry’s supply chain and materials sourcing overall.