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23 May 2022

Sustainable Fashion and Blockchain: 5 Characteristics You Need to Know

Blockchain can bring great benefits to the textile and fashion industries.

Indeed, they are among the most polluting activities, but more and more consumers are asking for sustainable manufacturing processes. This pushes companies to find ways to demonstrate and guarantee their ecological and social commitment.

What Is Blockchain

IBM defines the blockchain as:

a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.

In simple terms, it is a database of blocks of digital information stored on countless computers.

How Does Blockchain Work?

  • Every transaction involving an asset (for example, a garment) is recorded as a "block" of data. This block contains various types of information on the asset: manufacturer, origin of the raw materials, processing site, shipping, smart contracts, etc.
  • Each block is irreversibly connected to the ones before and after it.The alteration is almost impossible. If someone tried to modify a block, some of its characteristics would change, making the alteration immediately visible. Conversely, only authorized users can access the data or add new blocks.
  • Finally, consumers can inspect information on the asset simply by using their smartphone. Smart labels, QR codes or NFC microchips provide access to the blockchain.

4_How does blockchain work

5 Characteristics of Blockchain Applied to the Fashion and Textile Industry

1) Traceability and Transparency

Blockchain allows the traceability of raw materials and finished products. It also guarantees the transparency of the entire manufacturing process.

In other words, it collects the entire history of a product: from design to the purchase of raw materials, from places and stages of processing to logistic.

2) Competitiveness

Customers are asking for more sustainable fashion. Therefore, the companies that respond to this need will improve their reputation, attract and retain new customer more easily.

Furthermore, blockchain allows brands to profile consumers, to improve their marketing actions and to respond quickly to market changes.

Finally, the digital transformation of the production process allows for the tracking of materials and activities and to identify and correct inefficiencies along the supply chain. This benefits both the ecological footprint and budget management, without affecting the quality of the products.

3) Anti-Counterfeiting

Counterfeiting is a plague in the fashion industry, especially when it comes to luxury brands.

After all, globalization has spread technologies, knowledge and skills for replicating bags, shoes, clothing and more. But traceability and transparency along the supply chain make life difficult for counterfeiters.

4) Positive Effects on the Whole Supply Chain

Blockchain fuels the virtuous circle of environmental sustainability.

In fact, a brand that adopts blockchain will have to ask its suppliers to adapt to certain environmental and social standards. Alternatively, it will have to find better ones.

This will push companies at every level of the supply chain to adopt more environmentally and socially respectful business models.

5) Increased Consumer Awareness

Although many consumers want to buy sustainable products, many others are not yet aware of the effects of their purchases. This is especially true for Fast Fashion consumers.
But the adoption of blockchain will lead them to make better choices.

Furthermore, the traceability and transparency of the blockchain combines well with the new business models that include reuse, recycling and resell. Indeed, in the near future 20% of the brands' revenue is predicted to come from second-hand products. 

Why Blockchain Is Particularly Useful for the Fashion Industry

Greenwashing, or "green sheen", is a misleading marketing strategy that gives the impression that a company pays attention to eco-sustainability. In reality, their ecological activism is just an excuse to reduce some costs or improve reputation.

The transparency of blockchain allows to check the real commitment of companies towards sustainability. In fact, companies can upload the documentation that proves their sustainability without waiting for third party certification bodies.

Moreover, by creating a more reliable and transparent supply chain, blockchain support circular business models. This is also in line with the objectives of the EU which, with the New Circular Economy Action Plan (CEAP), asks textile companies for greater commitment in terms of environmental protection.

But…

Blockchain is a great opportunity for supporting companies’ sustainability strategies.
But we have to face reality.

At the moment this technology is not very sustainable. In fact, it relies on a large number of computers that consume a lot of energy. Therefore, solutions will have to be found to mitigate its ecological impact.
Meanwhile, companies that want to implement it should check whether the benefit given by blockchain is not jeopardized by the negative effects of energy consumption.