China Water Risk

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By Debra Tan

Although we have had our suspicions about this, there wasn’t really a link; until now. An interesting piece of research on “Groundwater depletion embedded in international food trade” was just published in Nature on 30 March 2017. The paper warns of alarming rates of worldwide groundwater depletion (GWD) due to irrigation withdrawals. Estimates are that around 11% of non-renewable groundwater is embedded in the International food trade.

What has this got to do with fashion? Well, the title of the Nature paper is somewhat misleading: it should have said “Groundwater depletion embedded in crop trade” not “food trade”. A deeper dive into the results shows that some of this over-abstraction was down to the cotton crop.

Cotton is a Top 5 crop leading to the most groundwater depletion globally

Cotton was amongst the Top 5 crops leading to the most depletion globally – wheat (22% of global GWD), rice (17%), sugar crops (7%), cotton (7%) and maize (5%). That said, the trade in cotton alone accounted for 11% of global GWD transfers, with rice topping the list at 29%, followed by wheat at 12%. Maize and soybean are more water efficient crops, only representing 4% and 3% respectively.

Groundwater Depletion (GWD) is defined as …
“the volume of groundwater that is abstracted for irrigation use in excess of the national recharge rate and irrigation return flow, accounting for environmental flow requirements, and thus corresponds to an unsustainable use of groundwater for crop production”

Groundwater Depletion in Crop Production & Trade (2)

Who’s sucking up whose aquifers?

A glance at chart below indicates that Pakistan, USA and India are exporting GWD through trade. These three are the largest exporters of GWD, accounting for two-thirds of all GWD embedded in the crop trade.

Global GWD Transfers in the Crop Trade

Cotton drives USA’s GWD exports and is a quarter of India’s GWD exports …

Rice leads Pakistan’s GWD exports at 82% – mostly to Iran, Saudi Arabia, Bangladesh and Kenya. Cotton, however, drives USA’s GWD exports at 24%, followed by wheat (16%) and maize (10%) to China, Mexico and Japan. Meanwhile, for India (#3 GWD exporter), nearly half of the over-abstraction is caused by rice (25%) and cotton (24%).

… Almost half of China’s GWD imports are from cotton

In short, cotton accounts for a sizeable amount of GWD exports by USA and India. So who’s this cotton going to? It appears that the beneficiary is China; almost half of China’s GWD imports are from cotton, whereas soybean, which China does import a lot of, only accounts for 14% of GWD imports.

From the research, it appears that demand from China along with USA, Mexico and Iran are sucking up other people’s aquifers.  But before we start blaming China, the truth is that China is not the only end user of its cotton imports. Clothing & Textiles form the largest chunk of its industrial virtual exports – see chart below.

But China is not the only end user of its cotton imports…

… Clothing & Textiles form the largest chunk of its industrial virtual exports

China Net Virtual water Export (1)

In fact, China makes so much stuff for the rest of the world that it is a net virtual water exporter despite its agricultural imports. So what is really driving demand for cotton in China?

Zara, H&M and Uniqlo et al ultimately driving China’s cotton appetite?

China only began seriously to import cotton in the early 2000’s. We argue that this increase in appetite for cotton imports is driven by the meteoric rise of its manufacturing prowess for fast fashion.

Cotton appetite in China rises in tandem with store openings of fast fashion brands …

The chart below says it all – cotton appetite in (imports & domestic production) China rising in tandem with store openings of Inditex (which owns Zara), H&M and Fast Retailing (FR – which owns Uniqlo). Of course these three brands are not the only ones to blame; there has also been a similar explosion of stores in Target, Walmart, M&S stores in the same period. And let’s not forget the stellar rise of on-line shopping. However, since it is difficult to pin down which store is just a clothing/ food store, we used store openings of the three clothing brands for illustrative purposes.

1992-2015 china's appetite for cotton driven by fast fashion

The pursuit of the lowest price 

With fast fashion driving the search for the cheapest prices in the supply chain, the price differential between domestic and international cotton drove China to import cotton.

China’s biggest trade partner has traditionally been the USA. But in 2011, cheaper cotton and shorter transportation times from India meant that the country overtook the USA to become China’s biggest trade partner for cotton. Today, the Top 5 cotton nations that China is importing cotton from are: India, USA, Australia, Uzbekistan and Brazil.

Meanwhile, China’s homegrown cotton storage stockpiled to over 12 million tonnes by 2013-2014. Since then, China has reduced incentives to farm cotton in the parched North China Plain. So while China’s own cotton production and imports fell in 2014, global production was still on the rise. As can be seen from the chart below, global production of cotton has been only rising markedly over the last decade.

Global cotton production on the rise

 The last decade has seen global GWD in crop production increase by 22%

An increase in global crop production has an impact on groundwater. Over the last decade, global GWD in crop production has increased by 22%, with the biggest deterioration from China (102%), India (23%) and USA (31%). The paper published in Nature warns USA, Mexico, Iran and China are particularly exposed as they produce as well as import food irrigated from rapidly depleting aquifers, including those in NW India, the North China Plain, central USA & California.

Given that China’s largest trading partners for cotton are India and USA, we can broadly say that the likes of Zara, H&M and Uniqlo, or anyone else in fast fashion selling cotton products are causing groundwater over-extraction in USA India and even in China, which itself grows a quarter of the world’s cotton.

Wasting resources

So more stores = more stock and as four-season fashion moved to 52-week fast fashion, global cotton production also grew. So actually, we are depleting our aquifers globally for something we don’t eat. Also, why are we growing virgin cotton when we can recycle? Worse still, the business model of fast fashion is premised on encouraging us to throw away the garment after one week of use, if we are going by 52-week fashion.

Not only is cotton sucking some areas dry, it also causes groundwater pollution

And if that is not enough, let’s not forget that the cotton crop is also dirty, sucking up significant amounts of global insecticides and pesticides. So not only is cotton sucking some areas dry, it also causes groundwater pollution, which in turn exacerbates scarcity. In China, the over-abstracted North China Plain, where a quarter of China’s cotton is grown, faces severe pollution: >70% groundwater is unfit for human touch.

Most brands are only visibly dealing with the “dirty” part of the crop. Many of the more responsible brands can tell you how much of their cotton is organic or ‘Better Cotton’. However, we are not aware of any major high street fast fashion brand that discloses just how much cotton they have sourced from where. Sucking aquifers dry in countries that are already facing water stress is clearly not a priority for action.

7 of the Top 10 cotton producing countries face medium to extremely high water stress…

… yet brands do not disclose how much cotton they have sourced from where

2014 Top 10 Cotton Producing Countries & Water Stress

Where & when does this stop?

For cotton, the answer is staring us in the face: switch to slow & more expensive and durable fashion that reflect the scarcity and polluting nature of fashion raw materials; switch to recycled cotton; or, better still, switch to hemp. Brands: surely it’s time to invest in any and/or all of these changes and not wait until the aquifers in USA, China, Pakistan and India are sucked dry. Too far-fetched? Think of what cotton-growing did to the Aral Sea: a volume loss of ~70% between 1960-2000 due to water diverted to grow cotton in the desert.

cotton tshirtWho should be held accountable? Governments, brands or the consumers?

Fashionistas, it is also time to face up to the ugly truth. You are partly to blame for over-extraction of groundwater. The frivolity of throw away fashion means that you are only beautiful on the outside.

Ultimately, we are all to blame. Almost everyone will have at least one cotton T-shirt in their wardrobe. If this makes you, the consumer, feel uncomfortable, start demanding your favourite brand to (1) tell you where it sources its cotton and (2) guarantee that it is not causing groundwater depletion.

*This story first appeared on China Water Risk

The Human Cost of Water in Fashion

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Can you imagine what it’s like not to have clean drinking water because it’s been used or polluted? Whether we like it or not, producing our clothes contributes to this. Right now, this is the reality for communities in water stressed regions of fashion producing countries such as China, India and Bangladesh. When we think of the ethical footprint of fashion, labour exploitation and poor working conditions typically come to mind. This human cost of water from fashion is as urgent an ethical, as well as environmental dilemma.

The reality is that to produce clothes we use and pollute significant amounts of water. This impacts both people and the planet. Cotton growing, as well as dyeing and finishing processes are particularly water intensive. For example, about two million Olympic sized swimming pools of water are used each year to dye our clothes! The water footprint embedded in a pair of jeans can be as high as 10,000 litres! Also, the apparel supply chain cuts through many countries where water is already scarce. These include the top 10 cotton producing countries in the world such as China, India, USA, Pakistan, Uzbekistan, Australia and Turkey. It is ironic that China and India produce most of the world’s garments, yet have some of its most water stressed regions!

2015-09-17-1442485581-9175229-PratibhaSyntexHuffPost.jpg Photo by permission of Pratibha Syntex

Given that the same amount of water is on the planet now as when it was formed, why are water constraints increasing and what has changed? The answer is rooted in our increased use and pollution of water – not just from fashion, but other human activities. Increased population and urbanization are key features in the growth in global demand for water for drinking, sanitation, food, and energy. According to the World Economic Forum, by 2030 four billion people are expected to live in water stressed areas and global freshwater demand will exceed supply by over 40 percent if this “business as usual” continues. With the apparel market expected to grow 3-5% in the same time, demand for water will exceed supply. It’s clear that water efficiency measures alone – the mainstream fashion industry focus at present – will not solve the problem. The bottom line is that the human, environmental and business case for solving these water challenges is critical.

So how can we responsibly manage water and what does success look like? The UN Sustainable Development Goals out this month see success as a world where available and sustainably managed water is a human right for all. Solutions to get there include legislation, market and financial incentives that drive long term responsible water management. Price can be a major incentive if it reflects the true costs and benefits of water, but this is rarely the case. For example, if the cost of water and energy was accurately factored in cotton, it would cost around $US7.50 per tonne as compared to its current $US1.50 per tonne! If this was the case, sustainably produced cotton would be cheaper than conventional cotton. Other parts of the solution include infrastructure and technology that can leapfrog improvements and collaborations to scale action quickly.

The good news for fashion is that potential solutions from brands, suppliers, governments and NGOs have begun to emerge. On the government front, China’s 2015 “Water Ten Plan” is the country’s most stringent water policy to date. Under this, textiles are among the industries being hit hardest to clean up its act. According to Debra Tan, Director of China Water Risk, “Fashion is not only dirty, it is thirsty and since China has declared ‘war on pollution’ to protect its limited water resources, fashion faces unprecedented pressures.”

Peak Performance Dyedron jacket, Credit: Tomas Monka/Peak Performance

From brands and suppliers some innovative low water and even “zero water” fashion solutions have emerged. For example, DyeCoo’s zero water and process chemical free dye technology is being used by Nike in their (ColorDry) and in Peak Performance Dyedron jackets. For jeans, Levi Strauss & Co’s Water-Less™ technology and production improvements have saved one billion litres of water since 2011. They have reduced the water used to produce a pair of Levi’s® 501® jeans to about 3800 litres. Indian textile manufacturer Pratibha Syntex uses organic farming techniques and applies best available water efficient dyeing techniques to fabric manufacturing. With an eye on the future, they are pioneers developing highly water-efficient fabrics that are not cotton dependent.

So could “low or zero water” fashion be the next trend? What would it look like to use no water to make a garment, or better still, provide a net surplus to the local community where it is produced? We are already seeing “zero” replacing “reduction” for fashion’s chemical and pollution impacts though initiatives such as the Roadmap to Zero Discharge of Hazardous Chemicals. This trend is also seen in other sectors where there is a shift away from a “doing less bad” approach to impact reduction to “enhancing” the communities and environment a business interacts with. I look forward to fashion that always gives us style while respecting every human’s right to clean and sustainably managed water.

Dorothy Maxwell PhD is Director of The Sustainable Business Group , authors of the State of the Apparel Sector Water report for the recent Global Leadership Award in Sustainable Apparel 2015 (GLASA) at World Water Week 2015.

**This story first appeared on Huffington Post.

Where Are The Top Fashion Brands?

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CWR’s McGregor & Wong reviews 10 top fashion brands’ latest environmental disclosure

– All brands have actions to reduce environmental footprint (water, energy etc…); but are targets set high enough?
– Limited actions on reporting with only Kering Group doing EP&L; actions towards going circular distinctly absent
– Given this, more action needed from leaders; worrisome to think about the rest of the industry – need to catch-up

Major apparel & fashion brands have been disclosing their sustainable practices and initiatives for years; some since 2000. Whilst this is a positive trend, the environmental cost of the industry is still vast as various papers, documentaries & industry groups show. So, what does their disclosure really tell us about them and the sustainability status of the industry?

To get the latest on this we analysed 10 brands. We selected these 10 brands because they nine of them are industry leaders when it comes to sustainability and one is a top brand in the industry and serves as a comparison – more below. Between them they include:

  • The founding members of Zero Discharge of Harmful Chemicals (ZDHC);
  • The Top 5 ranked brands in the Green Supply Chain Corporate Information Transparency Index (CITI) 2014 Report by China’s Institute of Public and Environmental Affairs (IPE); and
  • Kering, the first fashion company to execute an Environmental Profit & Loss, as well as its main luxury competitor Moët Hennessy-Louis Vuitton (LVMH) – for comparative purposes.

All brands have actions to reduce their environmental footprint

But actions still lacking or absent in reporting and going circular

For each brand, we looked at their environmental footprint reduction actions, reporting and actions to go circular/close the loop. We did this through their latest annual & sustainability reports and websites. At no point in this review are we ranking the brands, including in the tables below (brands are arranged alphabetically, except for the two luxury brands – Kering & LVMH – which are at the bottom of the table).

Our review shows that all 10 brands are acting to reduce their environmental footprint. However, limited action towards reporting and pretty much distinctly absent action towards closing the loop on textiles, which raises some serious concerns. This is important because closing the loop will make fashion more sustainable. More on this and key findings from of our review below.

Well done for reducing your environmental footprints; but are the targets set high enough?

It’s clear from our review that all 10 brands are at least to some extent acting towards reducing their environmental footprint and this is across key resources (water, chemicals, pollution, energy & waste) – see all the ticks under the “Reduce” heading in the table below.

Brand Action to Reduce Overall Environmental Footprint

All doing work to reduce their footprint – well done;

but are the targets set high enough?

The extents of the brand’s actions are not detailed here but a broad takeaway is that some are doing much more than others.

Moreover, with different targets and limited information how can we gage how well they are really doing? Also, are their targets set high enough?

Brands are doing various sustainability initiatives but all pretty similar to each other – safety in numbers?

We noticed that many of the brands as part of their reduction actions are implementing sustainability initiatives and moreover that many of them are similar to each other. This similarity is both in the focus of the initiative (sustainable materials/cotton/leather/supplier auditing) or in the partner (SAC/NRDC/ZDHC) – see table below. Partnering (data showed usually with NGOs) is symbolically powerful but also helps to have greater impact & hold one another accountable. However, in some reports it was unclear how much had been done with little quantitative data on the partnership, just that there is the partnership.

Brand Sustainability Initiatives

It’s positive to see that 8 of the 10 brands are members of the Sustainable Apparel Coalition (SAC), which is responsible for the Higg Index (a suite of sustainability assessment tools for apparel and footwear products). Another positive result is the widespread membership to ZDHC.

One potential concern is the lack of brands partnered with Solidaridad, which works towards creating fair and sustainable supply chains. However, this is mitigated by the results showing that 9 of the 10 brands conduct supplier/factory audits in some form (internally, externally or both).

Still a lot of ticks in this table but brands must push on & think outside-of-the-box

There are still many ticks in this section (table above), though less than in the previous “Reduce” section (table). We note that whilst industry wide initiatives are good, brands should not stop here; they must think outside the box and go beyond safety in number initiatives.  A potential opportunity to do this lies in raw materials (sourcing & recycling), more on this later.

Kering Group the only ones with EP&L across the board

All of the brands we analysed are disclosing their sustainable initiatives, using verified and mostly the latest reporting tools (such as the Global Reporting Index (GRI), have some form of communication or data disclosure with IPE and the Carbon Disclosure Project (CDP)).

Overall reporting ok but not all up to date & only Kering Group doing EP&L

However, a point of note is that not everyone had a 2014 sustainability report, for some the most recent was 2011/2012. Another issue is that despite the disclosure frameworks the information and the data disclosed can be mostly self-selected.

Only two brands, Kering & Puma, did an Environmental Profit & Loss (E P&L). The reason Puma has an E P&L is because it is one of Kering’s brands (Kering pioneered the E P&L with Puma in 2011 and in 2013 conducted an E P&L for all of its 17 brands – more on Kering’s E P&L efforts here); and

These takeaways are reflected in the table below which has fewer ticks and this time crosses (crosses were used because this data was solely based solely on specific reports & no websites).

Brand Sustinability Reporting & Environmental Disclosure

Business and the environment cannot be handled separately for truly sustainable growth.   We especially see the case for this with raw material risks  –more on this in “Brands: Time To Walk The Talk”.

Action distinctly lacking on closing the loop/going circular

Recycling, re-using & designing with a closed loop purpose is where action is most lacking and yet it is one of the most crucial stages given limited raw materials, especially cotton. Brands themselves have acknowledged this and the importance of closing the loop and going circular (more here).

This last table has the most blanks in comparison to ticks. This means this is the area which needs most work

It’s clear that this last table (below) has the most blanks in comparison to ticks. This means this is the area which needs most work and action. Whilst some brands do have ticks, it is again the case that some are doing more than others.

The three brands Adidas, H&M and Puma (highlighted in yellow) are doing the most to close their loops – however, there is still much to do:

  • Adidas – Launched “Sustainable Footprint” in Brazil in 2012: consumers receive a discount for new shoe purchases after leaving an old pair; plans to expand into apparel
  • H&M – Actively trying to close the loop on textile fibres by recycling garments. In 2013 became the 1st to offer garment collection worldwide. The garments can be any brand and in any condition
  • Puma – “Bring Me Back” campaign launched in 2012: consumers bring used shoes, clothing and accessories from any manufacturer. The items are then either broken down & re-used to create raw materials, or they will be re-used in the case they are still in a suitable condition, or they will be recycled into new products. Since the start of the programme, PUMA has collected approximately 4,000 kg of used goods

Adidas, H&M and Puma (highlighted in yellow) are doing the most to close their loops

Other brands not in yellow need to at least catch-up

Still more action needed from everyone

Brand Action Towards Closing The Loop

As for the other brands not in yellow, they need to step up to at least match these three brands. It’s not easy to close the loop but there is still not enough movement towards going circular, particularly as production & growth demands continue to rise.

Move past savings onto initiatives that ensure your brand survives

It is clear why these 10 brands are industry leaders or a top brand; they are all doing some good work, particularly in reducing their environmental footprint – though questions on the ambition on targets remain. However, this is not enough.

Key areas distinctly lacking action

Worrisome to think about the rest of the industry if leaders still need to do more

As we have shown there is plenty of room for more action in reporting and there is distinctly a lack of action being taken in closing the loop. By not closing the loop brands are not making their business model sustainable, which ultimately means they could go out of business. Risks have gone beyond CSR. Resources (water, land etc..) are limited, which is means physical and regulatory risks are impacting business.  It’s not about being green but being sustainable. The future is business-unusual.

If the industry leaders aren’t doing enough, it’s worrisome to think what the status of the rest of the industry is and how much more work needs to be done.

Further Reading

  • Brands: Time To Walk The Talk – H&M & Kering, are not walking the talk on raw material risks they identified themselves. With concrete action towards a circular transition missing, China Water Risk’s Dawn McGregor wonders how serious they are
  • Corporate Strategy & The New Chinese ConsumerAuthors of new report say that China’s war on pollution has created a fundamentally new Chinese consumer. Hart, Zhong, Ying & Zhu from Renmin University on why firms need to evolve their strategies
  • Corporate Water Reporting in China – CDP’s report shows potentially inadequate water risk assessment by Chinese companies & those with HQ’s in China. CDP’s Gillespy on their latest report and why it’s time to report on water risks

Textiles & Water Risk

  • Water Stewardship: Actions Must Match Risk – Despite acknowledgement of water risks, 58% of companies in CDP’s 2014 Global Water report do not have a public commitment to water. We expand on actions needed in China & globally to match the risk
  • One Year On: H&M & Water Stewardship – H&M’s Sustainability Relations Responsible, Julia Bakutis updates us on their Water Stewardship programme one year on. Find out what they have done & what challenges lie ahead for H&M as a water steward
  • Water Ten & Fashion: 8 Reasons to Leap or Fall – China Water Risks’ Hu shares 8 reasons why China’s Water Ten is actually an ultimatum for textiles to leap or fall. They need to decide which soon, as there is only two to three years before the paradigm shift
  • Risks Shifting Beyond the Wall – In China’s printing & dyeing sector centralised wastewater treatment brings centralised pollution, Ma Yingying of the Institute of Environment & Public Affairs tells China Water Risk. Lax supervision & vague responsibilities between factories & treatment facilities leave brands exposed

Textile initiatives

  • Clean by Design: Gaining Traction – Many factories look to MNCs to help address environmental issues that have arisen from textile production but there is scant on ground corporate engagement by brands. See how NRDC’s ‘Clean By Design’ textile mill programme in China has achieved stellar results despite this. NRDC’s Linda Greer expands
  • On Being Water Conscious in Textiles – Zhao Lin from Solidaridad expands on the Better Mill Initiative (BMI) and provides solid business cases in water savings for the textile sector. See how water & energy savings can result in sustainable & financially viable gains with short payback periods

**This story first appeared on China Water Risk blog here.