A Radical Solution to Denim’s Climate Cost: Go Direct to the Farm #466

For the last two-and-a-half years, denim group Citizens of Humanity has struggled with a familiar series of supply chain challenges.

The price of cotton, the key raw material for any denim company, has soared, driven higher by supply chain snarls, crop-busting weather extremes and a US ban on imports from Xinjiang (China’s largest cotton-producing region) over forced labour concerns.

To make matters worse, the organic cotton once favoured by Citizens of Humanityas the most ethical and climate-friendly option available was hit by a fraud scandal that made sourcing reliable supply particularly challenging and costly.

The group, which owns premium denim brands Agolde and Goldsign as well as cult noughties label Citizens of Humanity, wanted a better option to deliver on its sustainability ambitions. It wanted visibility over where its cotton came from and certainty that it was farmed in a socially and environmentally responsible manner.

For the Los Angeles-based denim maker, that meant turning to regenerative agriculture, an approachthat aims to improve soil health, biodiversity and carbon sequestration, rather than simply reducing negative impact.

It settled on a radical solution. While most brands can barely trace their supply chain back past their first line of manufacturers, Citizens of Humanity decided to go straight to the source: cotton farms.

This year, it’s partnering with six farms across the US to procure roughly a third of its cotton for the second half of next year ― enough to make 500,000 pairs of jeans. And it’s agreed to front the cost, budgeting as much as $1 million extra for its cotton this year.

“We were all used to the word ‘organic’ and thinking that was better for people… we were excited to better understand what actually could improve the earth,” said Citizens of Humanity chief executive Amy Williams. “We were willing to pay for that.”

The Rise of Regenerative Agriculture

The concept of regenerative agriculture is increasingly mainstream in fashion. While there is no clear-cut definition of the term, it encapsulates an holistic approach to farming that aims to work with and restore nature, rather than trying to control it.

Companies including Kering and Ralph Lauren have committed millions to support broader adoption, embedding it into their sustainability commitments. But making the transition is expensive, time consuming and complicated. What works on one farm, may not work on another, and there’s no one-size-fits-all solution. Most projects are still in the pilot phase.

The challenge isn’t that regenerative farming techniques are radically new. On the contrary, they often reflect traditional farming techniques.

However, practices like minimising or avoiding tilling, planting crops and grazing livestock to help naturally fertilise fields aren’t typically deployed in modern industrial agriculture. Many farmers are skittish about investing to change the way they operate, while forgoing crop-boosting synthetic fertilisers and pesticides.

To support farms in making the transition, Citizens of Humanity has contracted directly with farmers to source its cotton, agreeing to pay a premium for their product and guaranteeing volumes. It’s a fundamental shift in the way the industry operates and will need to become much more common to help embed regenerative practices at scale.

“We can often be put under a banner of being snake-oil salesmen,” said Kish Johnson, national sales director at Advancing Eco Agriculture, a regenerative agriculture system that is working with Citizens of Humanity. “It’s huge to have a brand partner.”

An Unconventional Business Model

Citizens of Humanity is better placed than most brands to embark on such an overhaul.

The group is vertically integrated, manufacturing most of its products in its own sewing and laundry facilities in Los Angeles and Turkey. The unusual structure gives it closer ties deep in the supply chain than many competitors, plays into its premium price positioning and underpins its focus on quality and craftsmanship, all of which support its decision to invest in its raw-material supply chain.

The company is also privately owned, following a management buy-out from private equity backers in 2017. Sales have grown more than 80 percent in the last four years, reaching more than $160 million in 2021. In the seven months to July, they grew another 21 percent, putting the group in a position of strength and independence to make bold bets in pursuit of its sustainability agenda.

Even so, directly sourcing cotton is a complicated process.

Typically mills, where cotton is woven into denim, source raw material from a number of different places with little engagement with brands that eventually end up using the fabric they produce. Usually they won’t know themselves details of where the cotton is farmed, buying from intermediaries like traders to help hedge pricing and production risk.

For its regenerative cotton programme to work, Citizens of Humanity had to find a denim mill willing to change that practice and accept cotton directly from the group’s farm partners. Luckily, it was something Turkish denim manufacturer Orta Anadalu, one of the group’s long-term suppliers, had been looking at for some time.