Supply Chain
FTC Cashmere Models New Approach to a Truly Sustainable Supply Chain

Over the past several years, allegations of human and labor rights violations in the Asian supply chains of global apparel brands have come to light. The far-too-common system of relying on subcontracting and relying on multiple sources for raw materials and goods often means that brands have little visibility in what is happening along their supply chains – until it's too late.

But it is possible to source ethically from Asia – including from China. Fair Trade Cashmere (FTC) — a European premium brand of high-end cashmere products — has been doing so since 2003, when they first started working with goat farmers in Shaanxi, China.

“For my father, who has been in Asia since the 1990s, it was crucial from the beginning to understand where the product actually comes from,” Adrian Knezovic — who, with his sister, is now the second generation to work at the family-run, Switzerland-based company — told Sustainable Brands™. “The local farmers are, of course, the first people in the supply chain.”

According to Knezovic, 70 percent of global cashmere comes from China — specifically, Shaanxi and Inner Mongolia provinces, both remote regions. In the early 2000s, few luxury brands bothered to venture to the distant goat farms that were producing their raw, high-quality cashmere.

Vertically integrated supply chain

FTC took a different approach, starting with building a relationship with farmers in Shaanxi. Today, FTC has a fully integrated supply chain — with direct ownership of farms, factories and facilities in Shaanxi, Hebei and Europe. On top of this, FTC has a high standard for its cashmere, starting with how the goats are fed and cared for at both its own company farm and the small family farms it sources from. Workers throughout the supply chain are paid living wages and provided benefits — including education for family members; and the company has established guidelines for reducing waste, pollution and climate impact.

Having a fully traceable, end-to-end, vertical supply chain is an accomplishment; but FTC does not expect us to just take its word for it: The company has either achieved, or is in process of achieving, several independently verified certifications — including Made in Green by Oeko-Tex — and has been certified climate neutral by ClimatePartner. The value of certifications, to FTC, is not just to identify which suppliers are following its code of conduct, as is often the case for other brands; it gives consumers another way to verify the brand’s claims, creating more trust.

“One of our biggest challenges is to reach the consumer and to get their attention and tell our story,” Knezovic says. Not everyone will visit their website and see the stories of the Shaanxi farmers they’ve worked with for generations – for them, certification is a meaningful shortcut.

Next-level traceability

FTC is also working on adding a third layer of traceability, via DNA tracing. It’s adopting a new technology from Haelixa — a type of marker that is sprayed on cashmere at the farms and can be tested on store shelves to prove that it is from their farms in Shaanxi.

“It's impossible to tamper with,” Knezovic asserts. “We really liked the technology and felt this can also help us be more authentic and transparent. It is a physical proof of our own value chain.”

FTC believes it has nothing to hide and is willing to show that through its unique, vertically integrated, traceable model — very different from the norm in the garment industry, including among higher-end brands.

“When you talk about fashion brands, they often don't know where their raw material comes from because it's so complex,” he says. “Normally, cashmere changes hands though several parties within China alone. However, we are with the goats — our own goats. We take care of them and also manage all the following steps in the supply chain. That is unique.”

Benefiting supplier communities

FTC believes that if brands want to be sustainable and have a positive impact in their community, it is not only about ethical sourcing, but creating lasting value in the long term. FTC can see how, over nearly 20 years, it has helped bring education, better livelihoods, and new opportunities to the people that make up its supply chain. That comes alongside a business benefit, too – a sustainable source of high-quality raw materials.

Knezovic laments how, in fashion, companies are often looking to shift markers, or sources, just to save money. To him, there is value in long-term relationships; and that is also where a brand can make a real difference in a community.

“If you really want to be sustainable, I think you also have to understand and really work together with your whole supply chain,” he says. “I don't necessarily think that you need to have your own raw material source like we do; but you definitely have to try to keep it steady — because then, you can have a long-term impact for the people that produce the raw material or work in the manufacturing.”

Could global apparel brands do it?

This takes significant time, effort and dedication. But if FTC can do all this despite being a small brand, why can’t a global brand — with a vastly larger sourcing department — also implement a system with multiple layers of traceability?

“Very often, there is a lack of understanding of their supply chain,” says Sara Mettler, who leads FTC’s marketing and communication. “The consequence is that brands cannot be sure about really telling the truth. They don't know what is happening within and along their supply chain. In our case, we know what we're doing, so there's no reason to hide.”

From the 2013 Rana Plaza factory fire in Bangladesh, which killed 1,132 garment workers and was sourcing several major western brands; to the ongoing human rights crisis in Xinjiang, China, where forced labor of ethnic Uyghurs has implicated more than 80 brands; it’s clear that the conventional model for apparel supply chains — characterized by opaque sourcing and reliance on third-party audits — is not working. More and more tools — including platforms such as TrusTrace and Laudes Foundation’s Transparency in Action portal — are emerging to help brands gain more control, but industry efforts remain piecemeal.

For apparel brands to protect themselves against all of the aforementioned risks of opacity, they must have clear, verifiable visibility throughout their supply chains. FTC shows that it can be done; but it requires a vastly different way of thinking.