The Fashion Ledger

How Blockchain Can Hold Supply Chains Accountable

Climate change is no longer imminent. Melting ice caps, extreme heatwaves, rising global temperatures and surging sea levels are all clear signs that our planet is changing. Adopting sustainable practices can no longer be a choice but a necessity for our survival. According to the United Nations, if global warming continues at its current pace, we could reach an irreversible tipping point by 2030, with dire consequences for both ecosystems and human societies.

The fashion industry is one of the major drivers of this crisis, contributing to water pollution, excessive waste and the depletion of natural resources. From the overproduction of garments to the toxic dyes used in textile manufacturing, the fashion industry’s environmental footprint is immense. Without urgent and meaningful change, the damage will only keep getting worse, pushing us further towards a point of no return. However all hope is not lost, according to IBM’s US retail index for 2020 sustainability has become so important that investments in environmentally responsible businesses and projects have grown by 68%, reaching over $30 trillion globally. Caring about the environment has now become a big factor in how people and businesses make decisions, and consumers are changing their buying habits because they are more conscious of ecological and environmental issues.

The Accountability Gap in Fashion

Eco-conscious consumers are demanding transparency and accountability, pushing brands to rethink how they track and share their sustainability efforts. However, the fashion industry’s supply chains are notoriously complex and opaque, often spanning multiple countries, involving countless suppliers, and relying on intricate networks of manufacturers, logistics providers, distributors and retailers. This makes it difficult to verify ethical sourcing, labour practices and environmental impact, leaving room for misinformation and greenwashing (where brands claim to be more ‘green’ than they actually are). Enter blockchain, a technology more commonly associated with cryptocurrencies, but one that holds transformative potential for fashion. It is a digital ledger that could revolutionise how supply chains are managed, monitored, and held accountable. Blockchain provides an immutable, decentralised record of all supply chain processes that enables real-time tracking of materials, verifies ethical sourcing, and offers proof of sustainability claims. In an era where consumers demand authenticity and regulators tighten sustainability reporting requirements, blockchain is paving the way for a more accountable and trustworthy fashion industry.

So How Does Blockchain Work?

There’s a growing need for digital provenance as brands strive to be more transparent and blockchain technology addresses this. But how does it really work? Let’s break it down.

Imagine you have a shared document accessible only to authorised stakeholders of a project, similar to how Google Docs works. Each participant can add information in real time and make updates, however, unlike a regular document, once an entry is made, it becomes permanent and cannot be altered. Every stakeholder sees the same unchangeable record, ensuring transparency and preventing misinformation. Any attempt to modify past entries would be futile, making it impossible for anyone to manipulate or conceal data.

Blockchain works in a similar way. Every time a new transaction occurs, it is recorded as a block of data. This block contains details about who was involved, what took place, when it happened, and where it occurred. In the context of supply chains, this could be information about where the cotton used to make a simple shirt was sourced, when it was processed, and more. Each new block is linked to the previous one, forming a continuous chain of verified information that cannot be altered, hence the name blockchain. To maintain decentralisation, the blockchain is distributed across a network of computers called nodes. These nodes work to make sure that data remains encrypted while preventing false or fraudulent information from being recorded.

Blockchain in Action

While blockchain’s potential in the fashion industry is still being largely explored, its impact is already being felt. Some brands and organisations have already begun integrating blockchain to enhance supply chain transparency and ethical sourcing.

Luxury fashion houses like LVMH, Prada, and Cartier have embraced blockchain through the AURA Blockchain Consortium- a platform that allows consumers to verify the authenticity and sustainability of their purchases. By scanning a QR code, eco-conscious customers can trace a product’s entire journey, making sure that what they buy aligns with their values.

Patagonia and Stella McCartney are also utilising blockchain as part of their sustainability efforts to track the provenance of organic cotton and sustainable wool, providing verifiable proof of ethical sourcing. In the resale market, businesses like the Vestiaire Collective are exploring blockchain to authenticate second-hand luxury goods, ensuring that circular fashion remains transparent and trustworthy.

Solving The Problem of Greenwashing

Greenwashing, where brands exaggerate or lie about their sustainability efforts, has become a major problem in the fashion industry. By creating an unchangeable record of a product’s entire supply chain, blockchain is making it impossible for brands to manipulate or falsify their sustainability claims.

For example, if a fashion brand claims to use only organic cotton but sources cheaper conventional cotton, blockchain records would reveal the discrepancy. Similarly, claims about fair wages or carbon-neutral production could be verified through decentralised tracking systems.

Challenges in Implementing Blockchain for Fashion

Despite its potential, blockchain adoption in the fashion industry faces some key challenges.

• Many smaller fashion brands lack the wherewithal to implement blockchain technology at scale. Unlike major corporations, they may struggle with integration costs and the need for digital infrastructure.

• While blockchain ensures data cannot be altered once recorded, it still relies on the accuracy of the initial data input. If suppliers or manufacturers input false information, even if accidentally, blockchain cannot automatically detect fraud without external verification.

• The fashion supply chain is vast and complex, involving thousands of suppliers, manufacturers, and distributors across different geographical locations. For blockchain to be truly effective, it must be adopted industry-wide and integrated into existing logistics and regulatory systems. It is not enough for only a few businesses to adopt it.

The Future of Sustainable Fashion is Smarter Supply Chains

As blockchain adoption grows, its potential integration with artificial intelligence could unlock even greater efficiency and reliability in fashion supply chains. AI could analyse blockchain data to detect irregularities in sourcing patterns, helping to identify potential ethical or environmental violations. It also has the potential to predict supply chain disruptions caused by climate change, economic instability, or political unrest, enabling brands to source materials more sustainably.

The future of fashion is one where eco-consumers can buy with confidence and the knowledge that their buying habits have little to no negative environmental impact. Blockchain technology has the power to revolutionise the fashion industry by providing the accountability consumers demand. As environmental concerns grow and regulations tighten, brands that fail to embrace blockchain risk falling behind.