How blockchain is bringing transparency to fashion supply chains

Joel Wray & Alvaro Llobet
December 14, 2021

The Consumers and the new reality report by KPMG revealed that across all sectors, net trust fell from pre-COVID-19 levels. Non-grocery retail sees an 8% drop in consumer confidence as we approach the new normal. This new wave of consumerism calls for brands to work harder if they are to address the concerns of the market.

Transparency in the global fashion industry

Fashion brands are looking to operate more sustainably in response to rising demand from consumers and stakeholders. Despite this, fashion supply chains are typically diverse and complex, often spanning areas with very little governance or regulation. Thus, it is challenging for brands to confidently prove the materials they use are sustainable or ethically sourced. 

This issue is especially prevalent across some of the biggest fashion leaders in the world, including fast fashion and the luxury goods market. Given the size and scale of their operations, they often have little to no visibility past their tier 1 suppliers. The issue here is: how are these companies giving their consumers the confidence and assurance that their products are sustainable? As it stands, many can’t.

According to the Fashion Transparency Index 2021, which looked into 250 fashion brands,  over half of the world’s largest fashion brands fail to disclose their suppliers. Additionally, 14% of major brands failed to report the overall quantity of products manufactured each year, making it difficult to understand the scale of overproduction.

The issue of transparency is not one companies can resolve on their own by changing their practices; there are many stakeholders that must gather and share data throughout the entire value chain.

The power of honesty

From a corporate perspective, we are seeing a shift to transparent fashion supply chains, since the interest in this topic, powered by consumers, has aligned governments, investors, and regulatory agents. However, there is much work to be done in this field to reach the goal of a truly transparent fashion industry.

The Synthetics Anonymous report studies 46 brands on their actions and conversations regarding their reliance on synthetic fibres. Synthetic fibres represent 69% of all materials used in textiles today, a number that is expected to increase over the next 10 years. 

In 2019, the global fashion industry accounted for around 10% of the world’s global carbon emissions. One of the largest contributors to this is the use of low-cost materials like synthetic fibres, which pollute landfill sites dumped after a few uses. Synthetic fibres are the main contributors to fashion pollution globally. In the world of fast fashion, products are produced and sold cheaply, deemed to be low-quality and often discarded quickly despite the climate emergency. That is the reason some of the major brands are looking into other types of materials and also circularity to reuse materials. 

Investigation findings from the Synthetics Anonymous report

The meaning of making claims

Other instances that were discovered in the investigation included brands intentionally flouting guidelines or providing claims about their offerings that sometimes they were not able to substantiate. Out of 4,000 products produced by 12 brands’ Spring/Summer 2021 collections, 39% of them had somewhat of a sustainability claim. However, of those, significantly less than half (38%) had a third-party certification to support their claims. 

This issue is further desecrated by the ambiguity of certifications and disparate sustainability criteria. One of the instances highlighted in the report showed that certifications used on product pages point to the wide use of standards such as Better Cotton Initiative (BCI) – a scheme that fails to disclose how and whether the cotton is indeed better sourced. This points to the fact that brands are aware of a need to address climate, quality and sourcing sustainability issues; but face difficult challenges when trying to take action and implement sustainability strategies. 

What can fashion brands do now?

The fashion industry has to do more to build a rapport with their customers through trust, which is imperative to brand success. Beyond sustainability labels, the foundation of good brand-building stems from ethical practices and culture. There are a wide array of issues to address here, beginning from the way raw materials are sourced as well as from a labour and workforce perspective. 

Using blockchain to bring transparency to fashion supply chains

A sustainable fashion supply chain will require multidirectional sharing of information between brands and their consumers, with transparency throughout the whole manufacturing process. This includes end-to-end oversight on processes such as sourcing materials and ethics associated throughout to the packing and delivery of finished goods.

The increased demand for sustainability from consumers needs to be addressed from a digital perspective, leveraging all the efforts from the sourcing, manufacturing and operations. As such, brands are now relying on new technologies like Blockchain to address the gaps in the fashion supply chain. Blockchain essentially enables brands to verify the materials and practices used in the production process, offering transparency in a bid to build consumer trust.

Blockchain as a driver for transparency

Given the complexities of the fashion supply chain, fashion brands often find themselves managing a vast network of global suppliers, freight forwarders, customers and more. This increases the risk of misinformation as each stakeholder passes information to the subsequent point in the supply chain.

Blockchain creates a digital record for every transaction and forms an immutable chain that is visible to relevant parties. This enables a fully transparent and traceable supply chain, so consumers or brands can verify the raw materials and practices that go into making the finished products.  Furthermore, thanks to its ability to digitally trace the assets of the supply chain, such as garments, secondary materials or packaging, it creates a single source of truth that sets all the boundaries for sustainable production, enabling the transition towards a circular economy. 

To support these changes, there must be a level of transparency to showcase brands actions and demonstrate the paradigm shift in the retail industry. Digital provenance will essentially incentivise responsible behaviour, such as sustainable production, ensuring that recycling and repurposing take place in future production.

Blockchain enables the protection of data against manipulation. It goes a long way in preventing issues such as fraud, as it will be visible to all participants of the network. Blockchain allows brands that uphold their responsibility to ethical production to gain a competitive advantage - while dishonest brands are weaved out.