Supporting fashion's sustainable promise through blockchain

Can sustainability and profitability coexist?

Jun 07, 2019

How were my shoes made? Where were my jeans manufactured? Are my clothes and accessories made in a sustainable way, socially responsible and mindful of the environment? Can I be assured what I’m seeing on fashion labels is true?

Consumers are asking these questions and more about their popular fashion brands, but are companies delivering?

In a recent global online survey, 81 percent of respondents feel strongly that companies should help improve the environment. Further, in another study, 66 percent of global consumers say they’re willing to pay extra for those brands that deliver on sustainability. And nearly three out of four millennials—that mighty consumer group behemoth—indicated they’d pay more for products manufactured using a sustainable approach.

The demand for sustainability isn’t a new one for consumers, but over the past several years, marketplace enthusiasm has increased and smart brands are taking notice. According to a Nielsen study, corporate sustainability has been gaining steam with companies. Before 2013, just 20 percent of S&P 500 companies agreed to disclose their environmental, social and governance (ESG) policies to the public. Now, 85 percent of these companies disclose their ESG practices, and some seemingly are eager to position their sustainable efforts in a very public way.

Are fashion brands listening?

Fashion brands are also following suit. According to a Rank and Style report, there was a 450 percent increase in sales in sustainability-driven fashion companies from 2016 to 2019. In addition, among various fashion publications like Elle and Vogue, editorial mentions of the term “sustainable fashion brands” increased by 83 percent in between 2017 and 2018.

Clearly, sustainability is a huge part of the conversation and fashion companies are embracing this important commitment via living their socially responsible core values and an adherence to transparency, though there are issues and considerations that must be addressed to ensure sustainable practices are optimally integrated into business operations and systems. After all, fashion companies are businesses responsible for delivering profitability to their shareholders. Can a strong dedication to sustainability as well as profitability coexist? How can fashion brands optimally track and assess sustainable efforts through the supply chain, including sourcing of materials, manufacturing (often using several third parties), warehousing and logistics to ensure appropriate environmental and labor practices are adhered to? The answer for many companies could be found via blockchain.

Blockchain: In support of sustainability

In its most fundamental state, blockchain technology is actually a digital open ledger that shares data in a secure platform within a consensus network. So, for instance, inventory and supply chain data can be submitted, stored, tracked and evaluated—from sourcing through manufacturing and distribution to the ultimate sale to the consumer—across multiple parties and jurisdictions, all along the supply chain. This decentralized and shared approach allows for improved accuracy of data, real-time sourcing and accurate product traceability. In the case of fashion brands and sustainability, blockchain provides key tracking to ensure sustainable standards are followed, whether it be in sourcing, production or logistics. It’s an immutable record confirming sustainable practices are present and working, while also showing that all-important transparent proof to consumers that what they’re buying is truly grounded in sustainability.

This transparency is an important part of a successful sustainable formula and bond with the fashion consumer. It is one thing to say your company is committed to fair labor practices and environmental issues. Blockchain can help companies actually prove it.

The food and beverage sector has certainly seen some successes of this. From ingredient transparency to optimally managing inventory and eliminating food waste, blockchain tracks all the various ingredients from multiple sources, identifies surpluses and wastes in the digital ledger, accurately tracking ripeness and spoilage, and alerting companies of areas of excess and expiration. This intelligence improves processes, eliminates waste and also provides transparency and inroads with the mindful consumer by fulfilling a brand promise of sustainability and stewardship.

Fashion brands could adopt similar practices to support their sustainable efforts. Think of the value in being able to track, in real time, sourcing in one country, manufacturing and labor in another, inventory in still another location and finally sales in the United States, for instance. The ability to assess against sustainability standards, learn and improve upon existing practices could be invaluable for many fashion brands; however, blockchain is in its early stages with the sector. There is much to learn about this strategy and its additional value—for instance, blockchain has promise to help with product counterfeit tracking, a massive challenge for many fashion brands. Many companies are still feeling their way through what blockchain can deliver for them and ultimately their customers.

Getting started

So where should fashion brands start to learn more about how blockchain can support their sustainability commitments and other business practices? It’s essential to begin a full assessment of your core sustainable practices, sourcing and suppliers, manufacturers and other related channels. Where are there gaps, what’s working, what isn’t? As you begin to research and learn, consider these additional questions as well:

  • Is your business challenged with traceability and supply chain management issues? Do you lack efficiencies and/or effectiveness?
  • What ongoing business issues might blockchain address, i.e., supply and inventory management, value chain tracking?
  • Are your sustainable practices aligned with your operations and systems? Do you have a way of managing and assessing these systems?
  • How deep into your supply chain can you see?
  • Do you know your vendor’s vendors? When proving the source of materials, can you tell where and under what conditions they were made?
  • Do you have a standard nomenclature across your vendors to describe your materials? For instance, is everyone providing cotton using the same identifiers (i.e., GS1)?
  • Do you know where the data exists within your environment to write a single transaction to the blockchain, describing the state of your product along the supply chain?
  • Do you have internal capabilities to develop a blockchain strategy, or will you require external resources?
  • How are you promoting your sustainable practices with consumers? Do you have data to support your efforts?
Blockchain Consumer goods

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