“Fashion is the second most polluted industry”. “No, it’s the fifth”. In both cases, what matters is that fashion is characterised by profound ethical, environmental and employment issues. As a consequence of the rapid acceleration of globalisation, the fashion industry has a highly competitive structure that not only puts pressure on costs, but also on the ability to offer the “newest” possible trend to the customers.
This is particularly evident in the fast fashion industry, where responsiveness to the market demand, characterised by high pressure on the order cycle, and need for process efficiency lead to a hyper competitive market based on unsustainable practices. Specifically, the supply chain requires shortened lead-times and faster inventory turnover, to have the customer visiting the store more often.
But what are the consequences of such practices? Job wise, the relocation of manufacturing sites had a negative impact on traditional European industries like spinning and weaving, resulting in unemployment for European textiles and clothing industry workers (Turker et al. 2014). On the other side, due to the lack of controls, new manufacturing sites are often characterised by poor, unsafe working conditions. For instance, the Rana Plaza disaster in 2013, in which over 1000 underpaid Bangladeshi garment factory workers lost their lives when a building collapsed in Dhaka, brought issues of workplace safety and cheap labour crashing into the mainstream.
These sites are known also for their environmental impact. According to Greenpeace, approximately 70 percent of China’s lakes and rivers are contaminated with bleaches, solvents, acids, alkalis, dyes, inks, resins, softeners and fluorocarbons. The textile industry is considered by far the main culprit of this phenomenon that leads to fatalities for both humans and animals.
Green Fashion Week, spreading the coolness of sustainability
During my research, I had the chance to interview Mikel Dolci on the topic. Three years ago Mikel founded, and still runs, the Green Fashion Week (GFW), a nonprofit that promotes sustainable development models within the fashion industry. The goal of Mikel and his team is to educate and spread awareness on sustainable ways of doing fashion. They are doing so by organising fashion events (e.g., Rome 2017) in which they reward small fashion designers from all over the world. Rewards depend on the designers ability in mixing beauty and sustainable practices of several kinds (figure 2).
Mikel explains that “the market demand for sustainable clothing is rising, forcing big brands to reconsider their practices. This is also encouraged by increasingly strict policies and regulations that try to change industry’s habits”. In this regard, recent studies observe how the attention of practitioners is moving from generic corporate sustainability initiatives to the actual intervention on specific layers of the supply chain. In the attempt of adopting a circular economy, H&M has collected several thousands of metric tons of old clothes from their customers since 2013, sending most of them to second hand stores or turning them into rags or fiber material for insulation. However, that’s still a limited market, in which a cost-effective way to turn the rewon and remade fiber into new clothes hasn’t been found yet (Washington Post, 2016). Mikel also observes how the “fast fashion industry often takes initiatives that have only partial impact on the environment and that we can hardly measure”. This is due to the complexity in tracking the practices along a sophisticated supply chain composed of a variety of partners. For instance, Levi’s has more than 500 suppliers in Mexico, China, Pakistan, Haiti, Egypt, Poland, Turkey and Bangladesh, making it almost impossible to track of all the chemicals being used.
In the luxury industry, where cost-effectiveness could be less critical, sustainability is increasingly perceived as a value proposition. “When something is beautifully and consciously made and is of the highest quality, it is not meant to be thrown away and will not be destined to end up in landfill,” high-end heavyweight Tom Ford recently told Vogue. More explicitly, Stella McCartney, a staunch vegan and animal advocate, utilizes leather substitutes for her clothes and accessories. Kering, the French fashion group Stella McCartney belongs to, has positioned itself as a leader in sustainability in the luxury sector (Upsider, 2017).
But should we trust the fair practices argued by fashion brands, even when they admit that controls are hard? Is there a way to make their statements verifiable and therefore transparent?
Blockchain is NOT only about Bitcoin
We believe that blockchain technology could turn the Green Fashion Week concept into a quality and sustainability label for fashion designers, suppliers and, ultimately, for fashion brands. You mean Bitcoin? No, the potential of blockchain goes beyond cryptocurrencies. Blockchain is a digital, distributed ledger in which every transaction is chronologically recorded and publicly visible, avoiding the supervision of a single entity in the network. Uh?! In other words, if you buy a t-shirt from a brand that adopted the blockchain technology along its supply chain, you could verify where and how this t-shirt was produced, from the source of the cotton to the final step of the logistics – basically the full journey of a specific item is described. This is critical information to verify the actual sustainability of the practices of a brand.
But what is the role of GFW in this network? Together with the blockchain technology providers, such as Ethereum, Mikel and his team could provide an online platform where designers and their suppliers agree on making their processes fully transparent. In this sense, every company joining the network makes its transactions publicly visible. Contrary to non-verifiable statements by fashion brands, blockchain is currently the most effective way to make sustainability explicit.
However, in industries like fast fashion, where cost-effectiveness is critical to success, blockchain can lead to a major adaptation of processes and IT infrastructure, raising the prices of final products and therefore probably decreasing the market share of those brands that embraced transparent practices.
For this reason, we argue that GFW should initially focus on luxury fashion, typically less affected by cost-pressure. In this market segment, GFW can work as a platform where a pool of designers and their suppliers adopt blockchain technology along their full supply chain – this would enhance customer trust in items transparency and quality. In order to show off their sustainable practices, luxury fashion brands can partner up with these designers, joining their network (the distributed ledger).
These brands typically rely on influencers (e.g., celebrities, bloggers, etc.) to communicate their value propositions. Influencers are indeed the ones that can highlight how “sustainability is cool”. Their followers, especially the ones having low purchasing power, would demand clothing that are verifiable, forcing the fast fashion brands to rapidly adopt a more transparent and sustainable supply chain – suppliers included.
Value for the fashion ecosystem
In the medium term we expect this solution to positively impact not only our environment, reducing water pollution and increasing the circular economy, but also on three key stakeholders.
Consumer – Nowadays we get lost in endless, non-verifiable sustainability projects announced by the fashion brands – as well as countless allegations of unsustainable practices against them. This leads the consumer to confusion and misunderstanding. Blockchain can change this setting, providing a unique, open, verifiable source of information on the origin of an item. As a consequence, the consumer can take an informed decision.
Government – As part of the distributed ledger, governmental offices find in the blockchain a powerful tool to monitor the actual adoption of their polices in the supply chains of the fashion industry. It is important to highlight that the government can play the role of regulator in the fashion industry but it is not an entity supervising the distributed ledger. European governments, thanks to the transparent and traceable work of their local craftsmen, e.g., Made in Italy, which is of great value for the luxury fashion, can boost the local employment in the industry.
Fashion Brand – For luxury brands, the adoption of the blockchain technology along the supply chain works as a verifiable guarantee of both sustainable production and authenticity – critical factors for such market. As a consequence of the higher customer demand for verifiable “sustainable and cool”, the fast fashion brands have finally a stronger incentive to invest in the blockchain technology.
Credits: Icons in problem tree and solution bridge: Tomas Knopp, The Noun Project