Zara owner Inditex wants answers from the world’s largest cotton sustainability initiative after an environmental nonprofit linked the Spanish fashion giant to corruption, illegal deforestation, land grabbing and violence against local communities through two Brazilian producers of its certified cotton.
The allegations by London-based Earthsight “represent a serious breach in the trust placed in Better Cotton‘s certification process by both our group and our product suppliers,” Javier Losada, Inditex’s head of sustainability, told Better Cotton CEO Alan McClay in an April 8 letter that was first reported by Spanish news site Modaes on Wednesday. “The trust that we place in such processes developed by independent organizations, such as yours, is key to our supply chain control strategy.”
Losada wrote that Inditex had waited six months for the results of a Better Cotton investigation into Earthsight’s findings that was promised at the end of March. A spokesperson for the Geneva- and London-based program, which touts more sustainable cotton grown with less water, fewer pesticides and healthier yields for farmers, told Sourcing Journal on Monday that it will provide further details after it has analyzed the results of a third-party audit of three farms implicated by Earthsight’s research, which was published on Thursday.
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The report also incriminates H&M Group in the destruction that industrial agriculture has wrought in the species-diverse and ecologically sensitive tropical savanna of Cerrado, just south of the Amazon, where deforestation due to agricultural expansion has soared by 43 percent in 2023—the result, some ecologists say, of efforts to spare the Amazon that simply displace those harms elsewhere. Clearing land in the Cerrado for agriculture generates 230 million metric tons of carbon per year, the equivalent of annual emissions from 50 million cars, according to the World Wildlife Fund. Because of tree loss, more than one-fifth of the region’s species, including flagship animals such as the maned wolf, the jaguar, the giant anteater and the giant armadillo, are staring down extinction. In addition, over one-third—34 percent—of its river flows could also disappear by 2050.
“We visited a number of communities where you see dried-up springs and rivers because of the unsustainable water extraction by agribusinesses,” said Rubens Carvalho, head of deforestation research at Earthsight.
Neither H&M nor Inditex buy the cotton directly but rather source their garments from suppliers in Asia. But both companies have also specified that their cotton hail only from more sustainable sources, including certified organic, recycled and Better Cotton. Certified organic cotton makes up roughly 1.4 percent of total cotton production, according to Textile Exchange. For recycled cotton, the share is 1 percent. To fill the gap, more than 320 brands seeking to boost their environmental profile have turned to Better Cotton, which is grown in 22 countries and made up 22 percent of global cotton production in the 2021-2022 season. Nearly half of this came from Brazil.
The narrative around deforestation in Brazil has largely centered around cattle farming and soy and far less so cotton. This is an oversight, Carvahlo said. The Latin American nation is the world’s second-largest exporter of cotton after the United States, with aspirations to be No. 1 by 2030. Most cotton cultivation is concentrated in the Cerrado, where the states of Mato Grosso and Bahia are responsible for 90 percent of Brazil’s total bounty.
During its yearlong investigation, which included scouring thousands of customs records, Earthsight found that H&M and Inditex’s suppliers purchased cotton grown in the western portion of Bahia by Grupo Horita and SLC Agrícola, two of the country’s largest and wealthiest family-owned producers. Both have been tied to a litany of lawsuits and federal investigations into the illegal—the report uses the word “brazen”—appropriation of hundreds of thousands of hectares of natural lands inhabited by traditional communities, known as geraizeiros, whose centuries-old livelihoods are being threatened by this incursion. Community leaders and activists told investigators that it is difficult to find a single large-scale cotton or soy farm in western Bahia that isn’t a byproduct of land grabbing.
“Not only that but these communities have also been targeted by these businesses,” Carvalho said. “They’ve suffered a lot of harassment, intimidation [and] violence over the years.” Grupo Horita and SLC Agrícola did not respond to emails requesting comment.
Shipment documents show that Grupo Horita and SLC Agrícola directly exported at least 816,000 metric tons of cotton from Bahia to foreign markets between 2014 and 2023, Earthsight said. Eight Asian clothing manufacturers, including Indonesia’s PT Kahatex and Pakistan’s Interloop and Nishat Mills, used some of this cotton, all of which was certified by Better Cotton, to supply H&M, Zara and Zara sister brands Bershka and Pull&Bear with nearly 250 million garments and homewares over a 12-month period. More cotton, hidden from view due to the opacity of the supply chain, could have been exported through intermediaries, meaning that the figures the organization was able to pin down are “very conservative,” Carvalho said.
Both Interloop and Nishat Mills denied conducting business with either Grupo Horita or SLC Agrícola. PT Kahatex said that it will raise Earthsight’s findings with its cotton trading partners.
H&M told Sourcing Journal that the company is in “close dialogue” with Better Cotton to follow the results of its internal investigation and the “next steps that will be taken to strengthen and review their standard.” The Cos and Monki owner is appreciative of the “open dialogue, engagement and collaboration” with Better Cotton, a representative said, noting that both share the same goal: “to improve cotton production in [the] supply chain.”
Inditex was more terse. “We take the allegations against Better Cotton extremely seriously and we urge them to share the outcome of their third-party investigation as soon as possible and take any necessary measures to ensure a sustainable cotton certification that upholds the highest standards,” a spokesperson said.
Better Cotton has fielded scrutiny over its participants and collaborators before, raising questions about the robustness of its due diligence process. Indorama Agro, a now-suspended partner in Uzbekistan, has also been accused of land grabbing, not to mention other human rights violations. In December, the U.S. Department of Homeland Security added Anhui Xinya New Materials Co., which until recently appeared on Better Cotton’s roster, to the Uyghur Forced Labor Prevention Act Entity List, citing its involvement in the involuntary recruitment and transfer of Uyghurs from Xinjiang. And despite mounting evidence that Uyghurs and other Turkic Muslims were being thrown into internment camps, pressed into forced labor and subjected to mental and physical abuse, it was only in 2019 that Better Cotton severed ties with the Xinjiang Production and Construction Corps, a state-owned paramilitary group that served as its implementation partner in the province.
Another matter of controversy is Better Cotton’s use of “mass balance,” a volume-tracking system that allows Better Cotton to be substituted or blended with conventional cotton as it moves through the supply chain. As a traceability scheme, this is “completely inadequate,” Carvalho said. “Better Cotton is now promising to put in place a new traceability system, but that will only trace cotton back to the country of origin as opposed to the farm of origin, which is the only level of traceability that really matters.”
The way Better Cotton addresses land ownership, the rights of local communities and illegal deforestation is also “not fit for purpose,” falling short of the strict criteria that should be in place, he added. Then there’s the fact that the Brazilian Association of Cotton Producers, better known by its Portuguese acronym ABRAPA, acts as Better Cotton’s administrator in the country.
“ABRAPA exists to defend the sector’s interests, not to guarantee the sector’s sustainability or legality,” Carvalho said. “So basically, you have a situation of cotton producers certifying themselves. It’s not only cotton; there is a tendency in various industries to rely on certification schemes that themselves have a number of flaws. So there is an urgency for the industry to act and to clean up the supply chains and to demand more from their suppliers.”
There appears to be a lack of consensus about how much cotton in Brazil is Better Cotton certified. Grupo Horita and SLC Agrícola claim all their production is certified, while ABRAPA says that 14 of the companies’ farms in Bahia are certified. Better Cotton itself, however, counts only three.
Better Cotton said that it remains committed to Brazil and that it continues to actively engage with its partners to strengthen the Better Cotton standard and its field-level due diligence activities. It requires time to analyze the findings of its “enhanced” third-party verification audits, as well as determine the most effective means of implementing follow-up measures. ABRAPA, meanwhile, is in the process of revising the elements of its standard to align with those of the latest iteration of Better Cotton’s principles and criteria.
“Since being notified of Earthsight’s investigation, Better Cotton has endeavored to engage the organization in meaningful dialogue and when we can analyze the full details of their report, we will identify ways to strengthen our standard and field-level monitoring,” a spokesperson said. “The issues raised are of high concern. As a field-level organization, cotton farming communities are of utmost importance to Better Cotton and we will always take the necessary action to create an enabling environment for farmers and farm workers to prosper.”
The Better Cotton standard is “designed to stop land with high conservation values being converted to cotton farming and land from being converted without the consent of the community,” the representative added.
ABRAPA has pushed back at Earthsight’s report, saying that it provided the organization with the “legal and technical evidence to address and counter the allegations” but ”unfortunately, these were largely disregarded.” A spokesperson said that ABRAPA does not approve or disqualify farms from the Responsible Brazilian Cotton or Better Cotton programs. Instead, third-party auditing companies have “complete freedom” to deny certification to companies that don’t meet international requirements.
Ultimately, brands can’t outsource responsibility, said Mariana Gatti, a partner at Farfarm, a São Paulo supply chain consultancy that specializes in regenerative systems. Fashion companies may have a growing presence at manufacturing facilities, but “I don’t think they’re at farms as much as they should be,” she said. “I think brands have to know their supply chain and agriculture is a fashion issue.”
Farfarm works with companies like Veja and Osklen that “don’t even feel like they need certification or auditing because they have people on the ground that are part of the teams and that they trust,” Gatti said. “ I understand that the opacity and complexity and all the intermediate actors in supply chains only exist because brands, especially big brands that have negotiation power, don’t try to disrupt this modus operandi.”
Not all Brazilian cotton is created—or grown—equal. Veja, whose shoes are sourced and made in Brazil, buys organic cotton from a network of 100 geraizeiros families that it developed with Farfarm. Instead of ravaging the environment, the fiber’s production is a driver for using agroforestry strategies to revive degraded areas while generating income and food security for society’s most vulnerable.
“We work with farmers with fair trade principles,” said Sébastien Kopp, its co-founder. “We work with the farmers considered the most far from the economic system. They often have one acre of land or two and cultivate their own food. What we do in Brazil is another world from Better Cotton. We have always refused to use or buy Better Cotton because it allows pesticides and insecticides; because Better Cotton is not organic from our perspective.” The rise of Better Cotton has caused the organic cotton label to “crash,” he added.
Experts say that Brazil’s use of pesticides has skyrocketed by more than 300,000 metric tons since 2010, exposing indigenous lands to harmful chemicals are poisoning local populations. A recent study by the nonprofit Operação Amazônia Nativa and the University of Mato Grosso found pesticide residues in 88 percent of the plants they collected in Mato Grosso’s Tericatinga territory, where large-scale cotton farming has taken over. One of the substances researchers detected was carbofuran, which has been outlawed in Brazil since 2017 and for more than five decades in the United States and Europe.
One thing that worries Marzia Lanfranchi, founder of the Cotton Diaries, an initiative that works to reshape the way the story of cotton is being told in more positive ways, is that Brazilian cotton could be villanized and even shunned because of bad PR. It happened to Chinese cotton because of the human rights crisis in Xinjiang. And it happened when Brazilian leather production was connected with the razing of the Amazon.
Still, there’s a “huge difference” between family farming and “huge conglomerates that are linked to mining, oil,” she said. Lanfranchi said that instead of “pointing fingers,” brands should be trying to better understand the way various supply chain actors operate and how they can do things better. “You can’t just problem shift by sourcing from another region because all cotton regions have problems and all fibers have problems,” she said. “It’s become clear that we have to take responsibility as companies toward creating solutions within the supply chains that we already have.”
Carvalho said that the problem with existing or burgeoning deforestation legislation is that they don’t cover cotton. Companies, he said, need to be dissuaded from bad behavior through the stronger government action that has “been missing.”
“I don’t believe there is an easy way to strengthen Better Cotton to a point where it would be reliable enough that the industry could trust it to ensure the cotton is sustainable and legal,” he said. “I think the only way is regulation—legally binding regulation. Certification schemes might have a limited role to play in aiding companies to carry out their diligence but they cannot replace proper regulation and law enforcement. The voluntary commitments that we’ve seen from the private sector have not been enough.”
And the point is that brands, including H&M and Inditex, have a number of human rights and environmental policies in place, which means that they have a responsibility to ensure that their raw materials aren’t stoking environmental destruction or human rights violations, Carvalho said.
“What they need to do now is to actually put the right measures in place to make sure that those plans and those policies are implemented,” he added. “[They] need to know the individual farms where [their] cotton is coming from. That requires understanding what happens with the cotton throughout the supply chain at every stage of the production process.”