The Next Economy
Community-Inclusive Supply Chain Helping Regenerate Ecosystems, Economies in South Asia

The European Union (EU) recently passed new requirements that companies operating there must, among other things, “end or mitigate the negative impact of their activities on human rights and the environment such as on child labor, slavery, labor exploitation, pollution, environmental degradation and biodiversity loss.”

The law, when it comes into force, will be a landmark for mandatory due diligence and traceable supply chains globally.

“The European Parliament's support is a turning point in the thinking about the role of corporations in society,” said Lara Wolters, a member of Parliament, in a press statement. “The future lies with companies that treat people and the environment in a healthy way — not with companies that have made a revenue model out of environmental damage and exploitation.”

Around the world, companies are scrambling to trace their supply chains to ensure they are free of social and environmental risks — a tall order as, for far too long, supply chain visibility has been neglected. But for brands that have embraced sustainability from the start, complying with laws such as the EU’s — or others proliferating around the world, such as the Uyghur Forced Labor Prevention Act — is business as usual, in a good way.

Take, for example, Tengri — a luxury textile and apparel brand founded by impact entrepreneur Nancy Johnston that imports fiber from yaks, camels and sheep from Mongolia’s Khangai region to the United Kingdom. Unlike most textile businesses, Tengri started not with an idea or product that required sourcing materials, but a high-quality “noble” fiber from a remote region that lacked access to global luxury brands.

“Unlike most brands that create a product and then try to be sustainable, my brand was created to create a sustainable impact,” Johnston told Sustainable Brands®.

Image credit: Tengri

Tengri started in rural Mongolia, where Johnston built a relationship with an impoverished rural farming community to produce these rare natural fibers — whose softness, lightness and breathability are similar to cashmere (yak and camel fabrics are also hypoallergenic, making them ideal for those with allergies) — for use in luxury products; Tengri’s textiles are now being used by brands including Huntsman, Michael Browne, Cifonelli, Gownsmith and Selfridges.

“I don't have any agents,” Johnston says. “The indigenous communities are my business partners. I've trained them to trade with me directly on the international global market.”

Johnston said she became fascinated by the relationship between people, animals and the land while living with a nomadic herder family while traveling in Mongolia. Many of their animals had died due to land desertification and a prolonged winter, and the family was desperate to save money for their young daughter’s education and for their future. Seeing an opportunity for the herders to profit from their noble fibers, Johnston put together a business plan; then, back in London, she brought Tengri to life by building a network of experts in fiber and yarn technology, fabric production and sustainability.

In essence, Tengri created a new supply chain — creating value for goods that were, until this link was created, going to waste or middlemen who provided little to the local communities. Today, Tengri works with 4,500 herder families in Mongolia and Bhutan, and hopes to start working with herders in rural Nepal soon, too.

“To me it's beyond sustainability,” Johnston says. “It's a regeneratively designed business that supports the ecosystem, the culture and the land.”

Image credit: Tengri

Johnston visits Mongolia and Bhutan regularly; and Tengri can trace yak fibers not only to each family but sometimes, to the specific animal. It can also ensure that families are receiving a fair price for their fibers, while also ensuring that it is being produced in a sustainable way. It is a level of visibility that is rare in the apparel sector, which often depends on a complex web of traders procuring and sending raw materials from one side of the world to another.

There are business benefits to this model, too, Johnston says.

“I think what a lot of businesses struggle with is, when you buy materials for your business, it's already processed. Unless you're working with farmers, you really don't know where it's coming from, how it's been treated,” she adds.

This allows Tengri to maintain quality, due to the company’s intimate knowledge of its supply chains. Moreover, because fibers can vary year by year, the ability to understand those variables from the beginning can be invaluable.

“Every year, the batch of fibers is different,” Johnston says. “It requires us to start from a blank slate every year when you're designing the yarn.”

Other brands that have the benefit of fully integrated, traceable supply chains include Fair Trade Cashmere, which sources exclusively from family farms in China; beverage brand Rebbl and Filipino coconut-oil producer Dignity Coconuts. Notably, these are all relatively small brands; but there are still lessons for larger companies, too.

“My business really is about supporting indigenous mountain communities across the Asian countries that supply into the luxury goods industry but don't have a voice or visibility in the global narrative on sustainability,” Johnston asserts.

Perhaps the future of supply chains is to stop thinking of raw material producers as merely a source for materials, but to do like Tengri and these other new brands that have taken a more conscious, inclusive approach to building their supply chains. Make the communities in question a business partner; and put in the time and effort to build a genuine, equal relationship. Traceability, ethical sourcing and compliance with new mandatory due diligence requirements is then merely a side benefit.