Better Cotton Chain of Custody Rules Better Cotton

Better Cotton Chain of Custody Rules © Better Cotton Initiative

Better Cotton Chain of Custody CLAIMS BY RETAILERS AND BRANDS How can adidas make this volume-related claim? Credible P = f o ro f o t ip e c Re s U C BC Enough BCCUs to equate 30% of its overall cotton foot print for all orders Verifiable Proof How they many B CCU nee d? s do 1 BCCU = 1 KG of BC sourced

Traceability System (Volume not Fiber) Proof = Receipt of BCCUs are received from suppliers and passed onto the customers as proof of Better Cotton sourcing in the supply chain Retailers and brands collect these BCCUs from their suppliers to make their total claims Chain of custody rules provide suppliers with a set of rules that explains how fiber can be used in production and how the reporting of BCCUs can be made

Receiving proof from vendors Traceability and documentation requirements Ginners Traders Spinners Fabric Mills Garment Man. Retailer ODF issued by a spinner ODF issued by a fabric mill Spinners Fabric Mills Garment Man. B C C U Retailer Electronic receipt of BCCUs + ODF issued by a fabric mill

Example of Output Declaration Form

BCCU Allocation to products Calculation of BCCU allocation to yarns & other products BCI’s traceability system uses two average conversion rates to calculate the lint volume used in spinning These conversion rates help the system allocate the correct number of BCCUs to various products

Better Cotton Chain of Custody OVERVIEW

Better Cotton Chain of Custody GIN LEVEL – PHYSICAL SEGREGATION Better Cotton is kept physically separate from conventional cotton at the gin level in all countries 100% Better Cotton Bales Total available lint Better Cotton globally

Better Cotton Chain of Custody MASS-BALANCE SYSTEM BASICS – AFTER THE GIN LEVEL 3 kg of Cotton Purchased BCI Credit: 2 BCCUs ü Mass-balancing applies to bales, yarns, fabrics and garments ü It allows the “natural flow” of cotton through the supply chain to remain undisturbed ü Same Specs + Same Quality = Same Product with BCCUs

Spinning Mill in China Better Cotton Chain of Custody MERCHANTS – MASS-BALANCE W/ A COUNTRY SCOPE Merchant Yarn strict spunships and shipped physical Needs middling cotton Better Cotton strict middling to theorder mill forusing a conventional Warehouse in TX U BCC Spinning Mill in NC U BCC Strict middling cotton from a BCI licensed US Grower U BCC Warehouse in SC Merchant Mill ships BCCUs middling to Andallocates BCCUs Needs middling cotton yarn shipment to the mill to this shipment for a BCI order The rules: Middling cotton from a non-licensed US grower Ø Merchants don’t have to ship physical BCI bales to spinners Ø BCCUs can only be transferred between bales of the same origin

Spinning Mill in Turkey Better Cotton Chain of Custody MERCHANTS – MASS-BALANCE W/ A COUNTRY SCOPE Supima cotton Warehouse in CA U BCC Spinning Mill in NC Spinning Customer in NC Supima cotton from a licensed US Grower U BCC Warehouse in SC Middling cotton for a BCI order The rules: Middling cotton from a non-licensed US grower Ø Merchants don’t have to ship physical BCI bales to spinners Ø BCCUs can only be transferred between bales of the same origin

Better Cotton Chain of Custody MERCHANTS – MASS-BALANCE W/ A COUNTRY SCOPE Warehouse in CA U BCC Spinning Mill in Punjab Supima cotton from a licensed US Grower U BCC Warehouse in INDIA Shankar 6 cotton for a BCI order The rules: Shankar 6 cotton from a nonlicensed INDIAN grower Ø Merchants don’t have to ship physical BCI bales to spinners Ø BCCUs can only be transferred between bales of the same origin

Better Cotton Chain of Custody SPINNERS – MASS-BALANCE W/ A SITE SCOPE U BCC Better Cotton (Any Origin; Any Specs) Spinner Conventional Cotton (Any Origin; Any Specs) The rules: Ø Spinners don’t have to consume physical BCI bales to make the yarn Ø BCCUs can be transferred to any yarns made with any fibers regardless of the country of origin of fiber used

Better Cotton Chain of Custody SPINNING MILLS - MASS-BALANCE W/ A SITE SCOPE U U BCC BCC U Better Cotton Tracer Inventory Better Cotton Yarn 1 kg Better Cotton (Any Origin) Conventional Cotton Yarn 1 kg Conventional Cotton (Any Origin) Physical Cotton Inventory Spinners don’t have to use the physical Better Cotton bales BCCUs can be transferred between bales of different origins Spinner can keep their existing blend

Better Cotton Chain of Custody TURKISH SPINNING MILL U U BCC BCC U Better Cotton Tracer Account Inventory Better Cotton Yarn (Greek, BF, Turkish, US Blend) Better Cotton from Burkina Faso, Brazil, and Turkey Conventional Cotton Yarn (Greek, BF, Turkish, US Blend) Conventional cotton from the US and Greece Physical Cotton Inventory Spinners don’t have to use the physical Better Cotton bales BCCUs can be transferred between bales of different origins Spinner can keep their existing blend

What takes place in the supply chain? Placing BCI Orders - Impact Retailers & Brands Garment Order Fabric Order Yarn Order Lint Order Total cotton footprint 4 the order Retailers & Brands 50% BCI 50% Better Cotton + BCCU 50% of cotton footprint 4 the order is now Better Cotton It is not about procuring products that contain Better Cotton It is about transforming your supply chain into a more sustainable one

Traceability Updates Fall 2015 » Automated reports » Country of origin report (Brands/Retailers) Ivory Coast: 18% 6% Brazil: 17% 18% Pakistan: 16% 6% India: 14% 8% China: 9% 17% 9% Mali: 8% Australia: 6% Turkey: 6% Burkina Faso: 2% 14% 16% Zambia: 2% Zimbabwe: 1% SUMMARY ü Between 1 January 2015 and 1 January 2016 your company has sourced 18, 500 metric tonnes of its cotton consumption as Better Cotton. ü This Better Cotton was sourced by 27 spinners based in 8 countries. ü Your company’s orders have contributed to these 27 spinners sourcing a collective total of 83, 000 metric tonnes equivalent of Better Cotton, from 11 origins.

Team Contacts BCI Supply Chain Team: Lea Michalczik – BCI Traceability Systems Coordinator lea. michalczik@bettercotton. org Kerem Saral – BCI Supply Chain Manager kerem. saral@bettercotton. org Direct Line: +41 -22 -939 -1293 Skype ID: keremsaral Manish Gupta - India Supply Chain Coordinator manish. gupta@bettercotton. org Muhammad Shuiab – Pakistan Supply Chain Coordinator muhammad. shuaib@bettercotton. org Leo Xiao - China Supply Chain Coordinator leo. xiao@bettercotton. org Seyma Karacay – Turkey Supply Chain & membership Officer Seyma. Karacay@bettercotton. org