When most people think of blockchain, popular cryptos such as Bitcoin and Ethereum along with all the sudden shifts in Ethereum price or the staggering highs reached by the crypto leader come to mind. That’s to be expected since digital currencies represent the most popular use case of this innovative technology. It’s also understandable that the crypto craze which has taken over the world in recent years has conditioned us to see crypto everywhere. With all the buzz created around these newly emerged assets, not a day goes by without hearing about cryptocurrency in the news or on social media.
However, it would be wrong to believe that blockchain’s applicability is limited to the cryptoverse. If we delve deeper into the topic and take the time to look beyond Bitcoin, Ethereum and the rest of the altcoins that are populating the crypto market at the moment, we can see that blockchain has many other use cases and can be employed across a range of industries and sectors that have nothing to do with digital finance.
Not many would associate blockchain with the fashion industry, and yet it appears there are converging points between these two sectors. The fashion industry could benefit greatly from using blockchain-based solutions, especially when it comes to sustainability, which has become a major point of concern for companies around the world.
The issue with sustainable luxury
We all know that fashion is not precisely the most environmentally friendly industry. In fact, we can safely say that the fashion sector has a huge sustainability problem considering it’s responsible for nearly 10% of all greenhouse gas emissions. What’s more, it is estimated that 20% of global water pollution comes from the dyeing of textiles in the fashion industry. So, it should come as no surprise that nearly 52% of consumers these days expect companies operating in this sector to become more sustainable.
However, it should be noted that while fast-fashion companies received most of the backlash and criticism for their considerable contribution to global pollution, as well as for their greenwashing tactics, luxury brands are also a big part of the problem. Let’s not forget that not so long ago it was revealed that Burberry, Britain’s largest luxury label by sales, burned $37 million worth of products to prevent them from being stolen or sold at cheaper prices when they could have easily donated them or sent them to recycling facilities instead. And many other luxury brands fail to meet environmental protection standards and consumers’ expectations.
There’s also a common misconception that luxury brands are more sustainable than fast-fashion companies because some have factories in countries with stricter and fairer laws and regulations in place for the manufacturing sector. Unfortunately, many of the items included in the luxury category are produced in the same settings and under similar conditions as fast-fashion items. Therefore, high-end and luxury brands need to be held at the same level of scrutiny as the rest of retailers when assessing sustainability.
Furthermore, we can’t ignore the fact that sustainable luxury is a bit of an oxymoron. Manufacturing luxury items implies labor-intensive processes as well as the use of expensive materials that come from finite and non-renewable sources. This runs in direct contradiction with sustainability practices, which focus on the ethical sourcing of materials and more conscious use of goods and products. So, luxury brands have a bit of a dilemma on their hands as they struggle to reconcile these opposing principles.
Advancing sustainability with blockchain-powered solutions
Addressing sustainability issues in luxury fashion should start by implementing changes in the supply chain. At the moment, most luxury brands rely on outdated, increasingly complex and highly inefficient supply chains that are not able to keep up with consumer demands for sustainable luxury. Fortunately, blockchain technology can deliver the much-needed makeover and change the game in supply chain management for luxury goods brands.
As a digitally distributed and decentralized public ledger that allows for the irreversible recording of data and transactions, blockchain technology offers the perfect solution for luxury labels to ensure the ethical sourcing of the materials they employ and track their items throughout their entire lifecycle, from raw materials to production, sales and beyond.
Thus, high-end fashion companies can use blockchain as a tool to provide a record of their practices and ensure greater traceability and transparency. And it’s not just materials and final products that can be traced with the help of blockchain to certify ethical standards are met, but labor practices as well. Knowing where and under what conditions luxury goods are manufactured is equally important for ensuring transparency. Blockchain can help in this respect as well through the implementation of blockchain-based worker wellbeing systems that anonymously measure and track employee wellbeing levels in different manufacturing locations.
Blockchain-powered digital product passports have become a popular solution implemented by luxury brands to prove their sustainability and earn clients’ trust. These passports which operate through non-fungible tokens (NFTs) allow customers to learn about the origin of the products they purchase and trace their journey across the supply chain, thus making it easier for them to verify authenticity and see if the items meet the expected sustainability standards.
Blockchain’s huge potential to boost sustainability in the luxury fashion industry has been recognized by many high-end brands already. Luxury companies such as LVMH, Richemont and Prada are among the first brands to use blockchain technology in the form of digital passports that enable easy and convenient tracking of their products. Switzerland-based luxury goods holding company Compagnie Financière Richemont which owns many high-end brands including Cartier, Jaeger Le Coultre, and Piaget, has also jumped onboard with the use of digital passports for the reselling of their products.
There’s no denying that blockchain technology has the capacity to transform many areas of the economy, and luxury fashion is one of the industries that could greatly benefit from it. While the technology is still in its early stages of development and cannot solve all the sustainability-related issues in high fashion, innovations such as digital product passports represent an important step towards creating a more ethical and responsible luxury sector.