How Blockchain Is Powering Transparency in the Fashion Supply Chain

03/08/2020 | by Morgane Nyfeler

Image: QR scanning using circular.fashion’s circular.ID technology, Credit: circular.fashion

Blockchain technology is giving consumers the power to understand the entire lifecycle of a garment, simply by scanning a QR code or NFC chip. Could this be the future of transparency in the infamously convoluted fashion supply chain? Morgane Nyfeler finds out.

When looking at a garment’s journey from raw material to the owner’s closet, there are so many entities involved in manufacturing, producing and selling clothes that the whole process becomes a complex and obscure affair. It’s no surprise, therefore, that the fashion industry has a problem with transparency.

With globalisation and the offshoring of factories, most brands have no idea where their products come from and who has made them so communicating this information to their customers is an even more daunting task. Since the Rana Plaza factory collapsed in 2013, shedding light on the inhumane working conditions of garment workers, Fashion Revolution has been releasing the Fashion Transparency Index each year to rank brands according to their level of transparency. This year again, the average score for 250 brands and retailers resulted in 23% out of 250 possible points, showing that there is still a long way to go.

According to a study from McKinsey & Company, it is imperative for brands to build trust and transparency with their customers, as 75% of them consider it to be an important purchasing factor. But how do we get there? The solution might then lie in technology and open information as we move towards a more digitalised and data-driven world to reconnect with people and places involved in making our clothes.

Images: Diesel use QR codes for their DIESEL UPCYCLING FOR 55DSL capsule collection to tell the story behind each product, Credit: Diesel

lablaco is one company guiding brands through their shift to a circular economy with the help of blockchain technology. Simply put, this digital method of tracking and recording information can trace every step of an item’s journey from farmer to consumer. With each item tokenized, the data is brought into the hands of the customers so they can make informed decisions based on a decentralised technology that makes information transparent and easily accessible to all.

Through a QR code or NFC chip, customers can scan a product with their phone and immediately know where it comes from and who was involved in the production at every step of the supply chain. Not only can they trace the item’s journey, but they can also understand how much water and CO2 has been used to produce it, making blockchain an important tool to acknowledge our shopping impact on the environment. More importantly, it is impossible to counterfeit the data as it is secure and open source, which will ultimately put pressure on brands to take responsibility for their actions.

Images: Martina Spetlova uses NFC chips inside each product, which can be picked up by a smartphone to reveal the making process behind each product, Credit: Martina Spetlova

Provenance – an app powered by blockchain and open data – has been working with London-based designer Martina Spetlova as she restructured her business to concentrate on handwoven leather technique for her new MWoven brand. “The technology allows me to engage with the shopper’s values as more customers now require from the brands to be committed to positive social and environmental impact,” she says. “My products resonate with these values in store and long after purchase”. Thanks to blockchain, the designer can bring to life the processes of her supply chain, supported by data and evidence, as these stories live on the pieces forever with the scannable chip.

From Syrian women artisan refugees in Turkey to the gold rated European tanneries boasting strict ethical and environmental policies, every step and community involved in the making of Sptelova’s pieces is recorded via the platform through powerful storytelling. “I have come to realise the narrative of each product and the importance of sharing its journey not only from conception to design but also how it has been made, where it has travelled and how it ends up with the consumer,” explains the designer. Blockchain allows to showcase these stories and to add an extra layer of authenticity to the products, hence building trust and a deep connection with consumers as well as producers.

Thanks to blockchain technology, customers are no longer passive buyers of goods but have become an active component in the supply chain and afterlife of each item. Through this continuous stream of data, brands can know who is buying into their products and call them back for recycling or reselling once they reach their end of life. This then helps fashion items to stay in a closed loop system and avoid waste by recirculating products to save both water and CO2.

lablaco co-founders Lorenzo Albrighi and Shih Yun Kuo, together with Global Fashion Exchange founder Patrick Duffy and sustainable designer Patrick McDowell, launched Swapchain in February during London Fashion Week. The event powered by blockchain enabled users to scan each second hand garment to see its history, impact and previous ownership, and can be repurposed worldwide creating a major global action.

“It’s a very simple concept that is accessible to anyone and we’re making the technology exciting so that people want to use it,” says Lorenzo Albrighi. Each product is ranked by categories according to an impact calculation developed by the Fashion Footprint Foundation which uses existing data and on the web to give an estimation of water and CO2 used for each category.

“We help users really understand that what they’re buying is beyond a t-shirt; they’re buying into resources and this is changing the perception and shopping habits of consumers,” Albrighi adds.

And now more than ever before, the fashion industry needs to embrace circular practices with the help of technology. Sustainable design agency circular.fashion adds another entity to the chain which is of the recyclers that receive transparent information about the materials used in order to recycle garments effectively.

Through the circular.ID, every stakeholder in the fashion ecosystem is able to access material and product data alongside the item’s journey. The end goal is for designers to create with circularity in mind, consumers to know where to return clothing for recycling and reusing, and for sorting facilities to correctly identify products and their materials.

Last year, the start-up won the H&M Foundation Global Change Award and has been supported by Zalando through its zImpact programme, while already counting Hugo Boss as one of its clients. Major brands are already on board to increase supply chain transparency with the use of digital technology which could change the way we consume clothes by moving away from a throwaway culture and appreciating beautifully made products that carry a meaningful story.

As Fashion for Good Managing Director Katrin Ley explains: “Transparency and traceability are the precursors to change in the fashion industry. Knowledge about how and where our clothing is being produced, as well as knowledge about the impact this has on the environment and people’s lives, gives us the insights we need to take action.”