Aeropostale, Inc. (ARO): The Ethical Questions of Uzbekistan’s Cotton Industry

Is this just the way the world works?

In our globalized capitalist society, where publicly traded apparel retailers fight tooth and nail to preserve their margins while offering competitive fashions and prices, demanding retailers to change their supply chain overnight is impossible. Although bad PR is likely to result in some industry-wide pledges, the Uzbek cotton industry won’t go away soon.

The European Union has taken some actions, such as the refusal to extend a bilateral trade agreement with Uzbekistan, but the U.S. has actually increased bilateral ties with Uzbekistan over the past two years. These increased ties were part of an effort to expand the U.S. military land network into Uzbekistan’s neighbor, Afghanistan.

The Foolish bottom line

I expect the use of Uzbek cotton to be a divisive issue for many years to come, even as larger retailers pledge to “not knowingly” use cotton sourced from the region. This brings us full circle back to my opening statement – that ethical investing presents a dilemma for many people.

Should we chide Aeropostale, Inc. (NYSE:ARO) for purchasing the cheapest products possible when both its top and bottom lines are crumbling? Should we applaud Disney because it made a bold statement that is fairly inconsequential to its top line growth? Lastly, is there really any way to escape this conflict of numbers and ethics in the world of investing?

Leo Sun owns shares of Walt Disney. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney.

The article The Ethical Questions of Uzbekistan’s Cotton Industry originally appeared on Fool.com.

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