Collaborative Learning: Rethinking and Reframing Sustainable Sourcing
Between now and the next Round Table on Organic Cotton at our conference in Istanbul, Textile Exchange will be bringing you a unique opportunity to explore sustainable sourcing in a new and innovative way. Our exciting Collaborative Learning Series titled Rethinking and Reframing Sustainable Sourcing covers six related topics and consists of blogs, thought pieces, and live conversations. A new topic will be introduced every month. We see this program as potentially an incubator for rethinking and reframing sustainable sourcing of raw materials in the textile industry - your participation will be the key to its success!
Rethinking and Reframing Sustainable Sourcing will be a collective effort – a safe place and space to hear from peers and practitioners, peek into the value chains of other industries, and take away ideas and inspiration to help make business – and the world at large - a better place.
We will be inviting TE members and friends – from all walks of life - to share their expertise via our Q&A style webinars. It’s here that you will be privileged to join first-hand conversations with our guest presenters and knowledge experts... plus the chance to ask your questions directly. To register for our webinar conversations click here.
Rethinking and Reframing Sustainable Sourcing is centred on six webinars and each topic is introduced with a thought-provoking blog. The first in the series is about Creating Shared Value.
Over the course of the next six months we will explore:
- Creating Shared Value: how could this approach work for cotton?
- Impact Assessments, Footprints and Life Cycle Analyses: can these tools help guide sourcing decisions?
- Holistic value chains: moving from disconnection to integration.
- Three Dimensional Profit & Loss: will this be the next big thing?
- Role of Certification: how to make it more than a piece of paper.
- Telling the story: is communications the biggest missed opportunity yet?
to find out more about the six topics and to meet our webinar panellists.
Q&A style webinar
On the 23rd and 25th of January we will hold our first live conversation with two very knowledgeable and inspiring people:
Dr Helen Crowley, Conservation & Ecosystem Services Specialist, PPR and Alison Ward, Sustainability Consultant (formerly Associate Director Global Public Policy (Sustainability) at Kraft Foods and Head of Corporate Social Responsibility at Cadbury). Meet our panallists here.
Creating Shared Value
So what do we know about Creating Shared Value and why does it make an interesting topic under the banner of Rethinking and Reframing Sustainable Sourcing...? We encourage you to add your thoughts, opinions, and questions in the comments box. Links to particularly good articles online would be great to share here too!
Let’s get started...
The concept of Creating Shared Value (CSV) was coined by academic writers Michael Porter and Mark Kramer back in 2006. The basic premise of CSV is that there is mutual and tangible economic and social benefit to be gained through business that works within, and for the needs of, society. For example, trading partnerships between raw material producers and product retailers, based on CSV, can deliver benefits to producers by way of investment in raw material production, (training, inputs, yields, certification, etc), and by entering farmer friendly contracts. Other benefits include investment in the socio-economic and development needs of the supplier community, such as spin-off cottage industries, secondary processing, and local market development.
For the retailer partner, product quality and volumes, timely availability, and improved product preparation and packaging etc… all add value to the business and potentially give it a competitive advantage. Ultimately, for both partners, the security of business (committed supply and demand) underpins the relationship and reduces risk - it’s what is commonly known as a win-win.
Click here for more information on Collaborative Learning.
CSV and Sustainable Sourcing
Applying CSV is a logical step when it comes to securing high value/high demand or scarce raw materials with short supply chains. Cocoa is a perfect example. The short chain makes it relatively easy for the raw material producer and the end of chain retailer to know each other directly (unlike cotton supply chains). Furthermore, multinationals such as Nestlé and Cadbury (Kraft) are increasingly aware of the vulnerability of their business due to their dependency on the cocoa bean. They are feeling the impact of dwindling supplies, climate change, and other localised concerns. Further, the quality of the raw material (the cocoa) is massively important to the reputation of their company and the distinctive quality of their product in the marketplace.
SPOTLIGHT on Nestlé
The coffee and cocoa giant, Nestlé, is a great example of a large company deeply committed to the objectives of CSV and indeed they use this concept to help develop and drive their sustainable business strategy, secure their raw materials, and improve product (and production) quality. Along the way Nestlé has built closer relationships with raw material suppliers and is much more in tune with the needs of the community. In fact, for Nestlé, CSV has catapulted them out of the relentlessly bad reputation they held in the past (concerning the promotion of breast milk substitute, amongst other things) and built their perception as leaders in sustainable development and community investment within their sourcing countries.
Nestlé’s CSV pyramid (diagram) illustrates how the company’s commitment to sustainable development goes beyond compliance with international standards, laws, and codes to positively investing in their supplier communities, and potentially, contributing to country-wide sustainable development.
“The overall wellbeing of farmers, rural communities, small entrepreneurs and suppliers is intrinsic to the long-term success of our business, yet an estimated 70% of global poverty is concentrated in rural areas. We are working to support rural communities surrounding our operations in building a better future.” Nestlé (see Nestlé CSR overview).
What could CSV mean for cotton?
As yet, sourcing cotton fiber does not attract the same scarcity of supply concerns as cocoa. However, there are issues underlying general commodity sourcing that apply to cotton already, and a growing recognition among retailers, including textile companies, that they need to secure a sustainable supply of their raw materials. Related issues include the need to invest in the agro-ecological environment and the rural communities behind the production, and improve the sustainability credentials of their raw materials sourcing conduct. That’s if we want to see businesses go beyond more sustainable products and genuinely engage in sustainable development; to be part of the solution instead of being part of the problem. Applying the framework of CSV could be a worthy approach.
What about CSV and organic cotton value chains?
Generally speaking CSV does not promote investment in ‘special’ initiatives such as organic and Fairtrade which attempt to work outside mainstream commodity markets, and arguably create an artificial or niche product. Instead, proponents of CSV would argue that direct investment in farmers (training, capacity building, etc…) and discrete investment in community projects should be enough to build a stronger supply base, i.e. through improved product quality and productivity. This sounds good in theory, but it oftem means the retailer (the investor) has a great deal of control over the benefits delivered to farmers and their communities on the ground. Community programs often rely upon a charitable investment (a CSR fund or similar) being streamed into the social development side.
Perhaps CSV, coupled with a farmer-centric production system such as organic agriculture, can be a framework for shifting producers from dependency to autonomy; to enjoying interdependent business partnerships where risk and rewards are shared equally? Using pre-existing agro-ecological farming systems (which benefit small scale resource poor farmers) and certification schemes, such as organic and Fairtrade, can ultimately boost farmer-led development, help farmers organise and achieve scale, and can result in benefits being more independently – or interdependently – owned by the members of the community. These thoughts I have thrown in to start the debate... and will be picked up by our panellists later in the month!
Image: Bergman Rivera supporting livelihoods within the Amazonian rainforest, Peru. Credit: Bergman Rivera
This month’s webinar
In our live conversation we will be exploring how CSV works in practice, pros, cons and limitations, and how it might be a useful framework for more sustainable cotton sourcing.
Over the next few weeks we want you to share your thoughts with us here and start sending in your questions via the comments box below. If there is anything you particularly want us to cover in the webinar please do let us know! Early postings will give our speakers time to prepare their best answer.
We look forward to an energetic and dynamic month “creating shared value”! Please sign up to our webinar - or all six in the series here.
Textile Exchange webpages: Collaborative Learning Series, First topic of the series Creating Shared Value, and an introduction to collaborative learning.
For more information on the concept of Creating Shared Value see the FSG website.
Video: Creating Shared Value: It's the Future
FSG illuminates the potential of shared value in this short motion graphic.
See also Creating Shared Value at Nestlé.
Green Futures Magazine: Will Supply Rule the Food Chain?
Food retailers are waking up to the risk of crop shortages. This article explores the awakening of our recognition of raw material shortages and how this is effecting supply chain dynamics. Supply chains are now centre stage. And as they acknowledge their vulnerability as buyers, they're developing a new sense of responsibility for the supply.In the past, the motive for initiatives like Cadbury's may have been reputation. Not anymore. As Oscar Chemerinski, Director of Global Agribusiness at the International Finance Corportation, explains: "There is an increased realisation by global agribusiness that their success or failure in the medium and long term is tied to the success of the small farmer, both financially and environmentally." Read the full article here.