Zara Owner Inditex Demands Clarity from Cotton Certifier Accused of Standard Breaches

 Shoppers visit a Zara store in a shopping mall the day of its reopening after being closed for more than two years due to Russian full-scale invasion of Ukraine in 2022 in Kyiv, Ukraine April 3, 2024. (Reuters)
Shoppers visit a Zara store in a shopping mall the day of its reopening after being closed for more than two years due to Russian full-scale invasion of Ukraine in 2022 in Kyiv, Ukraine April 3, 2024. (Reuters)
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Zara Owner Inditex Demands Clarity from Cotton Certifier Accused of Standard Breaches

 Shoppers visit a Zara store in a shopping mall the day of its reopening after being closed for more than two years due to Russian full-scale invasion of Ukraine in 2022 in Kyiv, Ukraine April 3, 2024. (Reuters)
Shoppers visit a Zara store in a shopping mall the day of its reopening after being closed for more than two years due to Russian full-scale invasion of Ukraine in 2022 in Kyiv, Ukraine April 3, 2024. (Reuters)

Zara owner Inditex demanded more transparency from a certifier that vets some of the cotton used by the Spanish fashion giant following an investigation that found evidence of malpractice by two Brazilian certified cotton producers.

Inditex sent a letter dated April 8 to Better Cotton CEO Alan McClay asking for clarity on the certification process and progress on traceability practices after the NGO Earthsight informed the retailer that producers with Better Cotton certifications were involved in land grabbing, illegal deforestation and violent acts against local communities, according to a copy of the letter seen by Reuters.

Inditex said it had waited more than six months for the results of an internal investigation by Better Cotton that was promised for the end of March and began in August 2023, according to the letter.

The allegations "represent a serious breach in the trust placed in Better Cotton's certification process by both our group and our product suppliers," Inditex said in the letter. "The trust that we place in such processes developed by independent organizations, such as yours, is key to our supply chain control strategy."

The contents of the letter was first published by Modaes, a fashion business news site. Inditex confirmed to Reuters it had sent the letter.

Inditex does not purchase cotton directly but its providers are audited by certifiers such as Better Cotton to ensure good practices when obtaining their raw materials.

Geneva-based Better Cotton, one of the world's largest certifiers of sustainable practices in the cotton industry, did not respond to a request for comment on Wednesday.

It said in an April 4 statement that it had concluded a third party audit of three farms implicated by Earthsight but that it would not publish its findings until it had seen the full report, which was due to be published on Thursday.

Better Cotton said its strategic partner in Brazil, the Brazilian Association of Cotton Producers, was revising elements of its standards to align with those of Better Cotton.

Created by companies and several nonprofits including the World Wildlife Fund, Better Cotton says it aims to support improved practices in areas like water and soil stewardship and to promote better working standards.

Fashion retailers face increasing pressures from consumers and activist groups to sell products with less environmental impact and made in safe labor conditions.



Burberry Shares Jump on Moncler Bid Report

A Burberry logo displayed outside its store on New Bond Street in London, Britain, July 15, 2024. (Reuters)
A Burberry logo displayed outside its store on New Bond Street in London, Britain, July 15, 2024. (Reuters)
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Burberry Shares Jump on Moncler Bid Report

A Burberry logo displayed outside its store on New Bond Street in London, Britain, July 15, 2024. (Reuters)
A Burberry logo displayed outside its store on New Bond Street in London, Britain, July 15, 2024. (Reuters)

Burberry shares rose as much as 8% on Monday after a media report said Italian luxury outerwear maker Moncler was considering a bid for the British luxury retailer.

Moncler, known for its puffer jackets, on Sunday, said it would not comment on "unsubstantiated rumors" of a possible deal between the two luxury brands.

Burberry, which had a market valuation of nearly 3 billion pounds ($3.89 billion) as of the last close, did not immediately respond to a Reuters request for comment on Monday.

The company's shares, which jumped to 876.6 pence in early trading, pared gains to trade around 3.5% higher by 0732 GMT. The stock has plummeted about 40% so far this year.

Moncler shares, largely flat at 50.8 euros currently, fell as much as 1.5% early in the session.

Burberry, known for dressing the English upper class in its classic camel, red, and black check prints, has lagged behind its peers as it struggles to revive demand for its clothing.

It scrapped its dividend and issued a profit warning in July.

Broadly, luxury groups have struggled with tighter consumer spending in recent quarters, especially in China, with Moncler reporting a 3% drop in third-quarter sales last month.