Innovation

Regenerative agriculture is not a new phenomenon. Currently, the “modern” approach to agriculture is to maximize output to favorize a single, high value crop. Unfortunately, this approach tends to be extremely resource-intensive: overplanting of crops tends to degrade soil quality, which in turn requires the use of specialized chemicals that must be synthesized and transported to solve the problem. Instead, regenerative agriculture supplements the production of a target crop with other, sympathetic/symbiotic species, such that these chemicals are rendered unnecessary–along with their carbon byproducts. Not only is this environmentally friendly, but it has provided VF Corp with a scalable competitive advantage.

Additionally, regenerative agriculture has a positive ripple effect all the way down a company’s supply chain. In the case of an apparel producer like VF Corp, bringing a product to market involves partnerships with a number of different providers, from rubber farmers in Thailand to leather producers in South America. Gone are the days in which a company can claim ignorance of the working conditions and environmental waste production of their partnering vendors: for VF Corp, regenerative agriculture allows a deepening of relationships and sharing of values with the farmers that form the literal backbone of the company’s operations.

As Carol Shu (Senior Manager of Global Sustainability for The North Face) explained to us, the process is “a way of farming and approaching land management and land stewardship that honestly is more in line with how we used to farm pre-industrial revolution.” That is, farmers of the past lacked the option to rely on chemical inputs in order to replenish the nutrients depleted by crop growth; as such, they learned to plant other, complementary flora in order to rehabilitate the soil and increase overall production in a way that is general rather than destructive.

Patrick Fox, Senior Director of Customs and Trade Strategy for VF Brands, elaborated on the importance of returning to agricultural roots. “Synthetic, synthesized fertilizers are one of the top five emitters of CO2,” Fox noted. He explained that while these chemically-derived compounds have resulted in breakthroughs in agricultural productivity that have helped to reduce worldwide poverty, mature brands have the opportunity to re-examine their use of such chemicals as part of their supply chain and desired carbon footprint. “There's a balancing act,” he said simply.

Truly, VF Corp's regenerative agriculture initiative is a tangible manifestation of their commitment to several UN Sustainable Development Goals (SDGs). In particular, these include:

• Goal 9: “Industry, Innovation & Infrastructure”: The initiative is not just producing dividends to stakeholders across VF Corp, but represents a new way of approaching farming and the production of raw inputs that is highly scalable - both to future products produced by VF Corp, but also to the way that the apparel industry produces items in general.

• Goal 12: "Responsible Consumption and Production": VF Corp's approach to sustainable sourcing and supply chain management aligns with Goal 12 by minimizing waste, optimizing resource use, and promoting responsible consumption.

• Goal 15: "Life on Land": The company's efforts in regenerative agriculture directly contribute to halting land degradation, promoting biodiversity, and restoring ecosystems.

Across VF, the commitment to Regenerative Agriculture has not been a top-down or bottom-up approach, nor has it been a project attributable to a single individual; instead, it seems to have occurred as an organic byproduct of the company being willing to study, listen to stakeholders, and question a better path forward.

Inspiration

Mr. Fox and Ms. Shu explained that one core product allowed them to see a pathway to a better future: the humble beanie. Ms. Shu noted that it was North Face’s goal to produce a beanie made locally with respect to its offices in the Bay Area; they happened to connect with a nearby cotton farmer able to produce cotton that was naturally colored, though the farmer had a passion for reducing carbon emissions and restoring soil quality without chemicals.

“You know, I think we made, like maybe 2,000 or 4,000 beanies the first year,” Ms. Shu said. “That's not a lot of beanies in our grand scheme of things.” However, in seeing the potential of that and similar relationships globally, Ms. Shu noted that VF set some aggressive goals within the next fiscal year. “For our apparel business, 100% of our poly-cotton and nylon needs to be recycled, responsibly sourced, renewable, or regenerative by 2025,” she said.

This new focus changed VF’s perspective as a whole. It didn’t simply view cotton as an interchangeable commodity: the company built had a strong and sincere interest in making sure these (and other production inputs) were farmed the right way. As a result, Ms. Shu and Mr. Fox noted that part of VF’s core operations are engaging in dialogue with different farming collectives, hearing their concerns, and helping to directly work with them to obtain carbon credits and offset the production of greenhouse gasses through regenerative agriculture.

Overall impact

Mr. Fox described the importance of VF’s commitment to regenerative agriculture in terms that were quite candid. “It’s a sea change, right? The movement, I'll call it, is

something that's been going on for a long time,” He noted. “But I think it's the urgency around the change that's needed to rein in CO2 from the atmosphere that’s important. Businesses like VF have to drive that change and make hard decisions and make it work right.” In other words, while VF brands doesn’t expect all changes to increase short-term profitability, it sees its company and its subsidiaries as important change agents in reducing carbon emissions. In that regard, VF is part of a larger collective effort to turn back on the clock on climate change and environmental destabilization in general.

Calculating “bottom line” impact with respect to VF Brands’ regenerative agriculture initiatives is difficult; one must balance the cost savings of chemical fertilizer with the increased reliance of domestic suppliers (and becoming more invested in subsidizing their carbon credits) over foreign importers. That, in tandem with trying to account for a financial and moral benefit to society through the reduction of carbon emissions. Not even VF Brands had those figures handy.

However, Mr. Fox was emphatic that quantitative data fails to capture the full impact of the initiative:

“We can argue in a silo all day long [about the numbers], but farmers are experiencing the benefits of regenerative AG. So we made a film to really highlight that, so that we didn't have to get into like the nitty gritty of how deep to do a soil carbon sample. [But to] just showcase that there are amazing people doing this work, and we need to uplift them and we need more of them. And we need other farmers to see this and be inspired.”

In speaking to that inspiration, Ms. Shu added more context, based on her visits to some of VF Brands’ cotton suppliers in 2021. “They were so excited to know where their cotton was going,” she said, noting that normally, “It gets harvested, it goes to their gin, and then they don't have a single clue where it ends up. Now, with this program, they know, ‘Our cotton's going into the Northeast T-shirts,’ and they're really proud of that and it's just pretty awesome to have that relationship.” That is, the farmers themselves don’t become faceless and interchangeable vendors in the production of apparel, but instead get to see themselves as indispensable stakeholders in a final product, and know that their efforts contribute to a larger set of positive social outcomes.

Business benefit

Anyone who might have felt that the eco-friendliness of a business might come at the expense of the company’s financial health would have benefited greatly by spending an hour with the principals of VF Corp. Ms. Shu noted that there were a number of complementary benefits associated with regenerative agriculture beyond reduced chemical fertilizer savings. In particular, she noted the relationship that North Face had with its rubber suppliers in the southern hemisphere, including Thailand and Indonesia, where renewable agriculture has allowed farmers in the developing world to visualize a more lucrative future based on planting medicinal and fruit-producing crops rather than prioritizing all agricultural space for the production of only one commodity.

Mr. Fox also noted that investors are increasingly putting their money where their mouth is. Stockholders are more frequently demanding that VF Brands engage in “green” efforts. Reading between the lines, the companies of tomorrow that are not making efforts to pioneer regenerative practices will find themselves with clear liquidity problems. Modern investors are not only seeing green initiatives as signposts of ethical businesses, but also an indicator that green companies will eventually benefit from greater revenue and profitability.

Social and environmental benefit

As Mr. Fox explained, environmental concerns, especially among Generation Z, were vitally important to the company’s operations. “All of our insights tell us that your generation are the ones who are asking for this the most,” he said. “Sustainability and climate change are in the top three concerns of all of our consumer demographics.” With that in mind, VF Brands’ push towards regenerative agriculture is done just as much to acquire social capital with its younger customers as it has been done for the sake of the company’s bottom line.

At the same time, VF Brands’ work ties back to the calculus of carbon reduction. The amount of climate change that has been attributable to the CO2 emissions of large corporations is well-documented; the company’s efforts to reduce its own greenhouse gas production through the initiatives described above will allow, at least incrementally, for a more habitable, safe and equitable world that is more equipped to cater to the human rights of future generations.

Interviews

Patrick Fox, Senior Director, Customs & Trade Strategy

Carol Shu, Senior Manager, Global Sustainability, The North Face