How blockchain is enabling the fashion industry to prove its sustainable and ethical credentials and combat the counterfeiting of goods.
Blockchain and fashion are not the most obvious of bedfellows. But, as society increasingly demands more transparency in supply chains and a greater desire to buy from, and support, retailers who run sustainable and ethical businesses, how can companies prove their credentials and provide the transparency and traceability desired?
Blockchain may be the answer.
Blockchain technology is one way for brands to differentiate themselves, demonstrating a sustainable and verifiable supply chain and showing the environmental and social impact of their goods. However, blockchain is not only useful for traceability and transparency in the supply chain, but can also be a weapon in the fight against counterfeiting.
What is Blockchain?
Blockchain first came into prominence as the technology underpinning cryptocurrencies. However, it has been increasingly adopted outside of the financial sector and, in particular, by the fashion industry. Blockchain is a decentralised digital ledger of verified transactions (or blocks) “chained” together. The ledger is distributed across thousands of computers held by different custodians and, as each chain is verified against all of those iterations, it is very difficult for the ledger to be tampered with. Therefore, in principle, blockchain provides a level of security and integrity not available in other databases.
Physical products using this technology would be embedded with NFC chips or have a QR code printed onto them, which could be scanned, allowing an individual to see the digital history of that unique product via the ledger.
Linking the Supply Chain
Blockchain technology is starting to be adopted by companies keen to promote ethical supply chains. It is unsurprising that high-end fashion is one of the sectors taking the lead where their consumers may be more willing to pay extra to ensure the goods in question have minimal environmental and social impact.
Sarah Regensburger, a sustainable and vegan fashion brand, is working with VeChain to put NFC chips into garments, creating an interactive experience with the customer. The NFC chip, supported by blockchain technology, includes certificates for the raw materials, PETA approval, details about how the garment has been produced, care instructions and an insight into the design process for each garment.
Similarly, fashion brand Alyx is piloting a blockchain powered programme whereby products have tags featuring a QR code displaying the entire supply chain for the item: this includes where the raw materials were sourced, where manufacturing took place and where the product has been shipped to. This gives customers greater insight into the goods.
A limitation of using blockchain as a means of verifying sustainability is that whilst it is not possible to edit an earlier block, there is inevitably an assumption that the block was authentic in the first place. If, for example, an entry on the blockchain for a garment states that is was handmade in the UK the entry itself cannot be changed retrospectively. However, there is no guarantee that the entry itself was originally accurate. As adoption of this technology increases there is likely to be greater third-party certification which should minimise this risk.
Anti-counterfeiting and control of grey goods
Whilst blockchain’s use in verification of sustainability is interesting, there is clear potential for its use in combating counterfeiting through authentication of a product and its personal history. For example, Vacheron Constantin provides a blockchain supported certification process whereby each new watch is provided with a digital authentication certificate and every time that the watch is serviced, or transferred to a new owner, the blockchain is added to. As these watches cost tens of thousands of pounds and are likely to become heirlooms, there is a clear value to the owners of the watch in having its history immutably recorded and the existence of the digital ledger makes it more difficult for counterfeit watches to be passed off as the legitimate product.
In a similar vein, LVMH has partnered with blockchain software developer ConsenSys and Microsoft to create the traceability platform AURA where details of a particular individual item can be checked to confirm its authenticity and its location, confirming whether the item is genuine. Such technology has equal benefit in combating grey goods, as the ledger can include information about who is authorised to sell the product and in which countries.
The use of blockchain in the fashion industry is still in its infancy. It is likely to remain the preserve of high-end goods purely because the costs involved are only justified where the value of the goods is also high, or it is crucial to use this technology to prevent counterfeiting. This technology provides brands a way of connecting with consumers whilst also protecting their products and the more that consumers experience the technology, the more they may come to expect it