How Fashion Can Build Up Transparency with Blockchain

Sustainability

Aug 3, 2020

As the fashion industry is pushing towards greater traceability and transparency, blockchain could be the solution to tracking fragmented supply chains.

Today, the majority of blockchain activity is centered on fintech applications, such as Bitcoin. But supply chain management, authentication and traceability could be the ideal way to derive the maximum value from the technology, according to the CEO of TextileGenesis. On a recent webinar hosted by Textile Exchange, executives from the two companies covered the applications for blockchain within the apparel sector.

Compared to the automotive and electronics industries, in which the top 10 brands account for between 80 and 95 percent market share respectively, fashion’s players are more spread out. The top 10 fashion brands represent only 10 percent of the total business, and the same goes for the leading suppliers.

“The fragmentation of the industry drives the need for higher transparency and traceability, because the industry becomes far more opaque, and it’s far more time consuming and costly to create transparency and traceability,” said Amit Gautam, CEO and founder of TextileGenesis, who was formerly an executive at McKinsey & Company and Lenzing Group.

Blockchain essentially creates a singular record of data between collaborators. Once information is input to the platform, it cannot be edited. For the apparel production process, blockchain can also assist with chain of custody and transactions. Each physical asset can have a digital twin that changes hands, enabling transparency about who took ownership along the way.

“As we look ahead, we recognize that what are some of the areas where we can make our chain of custody faster, more accurate and hopefully more cost effective,” said Evonne Tan, director of data management and China strategy at Textile Exchange. “And blockchain as a disruptive technology we find could be a potential and a good answer to this.”

One of the use cases of blockchain is combatting counterfeits by ensuring authenticity of goods. Another application is increasing the traceability of fibers, enabling brands to prove that their raw materials are truly sustainable. TextileGenesis is centering its work on the latter.

While branded goods are often copied, fibers have their own problem with imposters. Up to 30 percent of sustainable fibers could be fakes. With companies chasing 100 percent sustainable fiber targets, being able to verify these claims and progress becomes both a consumer trust issue and a compliance risk.

Since 2019, Lenzing has been working with TextileGenesis to digitally trace its TENCEL™ branded fibers. As a member of Textile Exchange, we’re also committed to sustainability.

As fashion moves into blockchain, Amit suggests that companies seek out platforms that are easy to use, with flexibility and interoperability. Any platform should also be able to bridge the digital and physical through tokenization.

To make a blockchain effort successful, there needs to be buy-in from all players, including suppliers. There also needs to be a way to engage consumers through this platform.

“At the end of the day, what you want to be able to do as a brand and even some of the fiber producers, is to be able to engage consumers, to tell the authentic story around traceability,” said Amit. “To be able to share with them why this particular garment you have to pay 150 euros and not for 20 euros. It’s actually because you have put a lot of effort in creating a very strong sustainability backbone and very strong sustainability credentials.”

Watch the full discussion below, and learn more about Lenzing’s work with TextileGenesis here.