By Dave Sandor, CEO and Co-founder of Allinfra
The fashion industry has increasingly come under fire for its negative impact on the environment. According to the UN, the fashion industry is responsible for
8-10% of global emissions. And thanks to the trend of fast fashion – inexpensive clothing produced rapidly by mass-market retailers – it’s not surprising that between 2000 and 2014, clothing production doubled with the average consumer buying 60 percent more pieces of clothing compared to 15 years ago.
In response to the changing ESG landscape and consumer demand for green choices, certain fashion retailers have released collections marketed as sustainable – such as the “Responsible Edit” from Asos, Boohoo’s “Ready for the Future” range and “George for Good” at Asda. However, these three UK fashion retailers are under investigation by government watchdog group Competition and Markets Authority (CMA) on whether their green claims were exaggerated.
Fashion brands currently make up 25% of greenwashing complaints to the CMA – complaints that organisations are making false or exaggerated claims that their products are more environmentally-friendly than they actually are. This creates an investment risk, as Morningstar rates ASOS with a medium ESG risk and Boohoo with a high rating.
Even though some of these brands, such as ASOS, have made public net zero commitments, mass-market fashion retailers are still being called out for using vague marketing language around ‘conscious,’ ‘sustainable’ or ‘green’ collections without backing up any of these claims.
It will likely be a long transition from where we are now with fast fashion to a net-zero future, but the brands that are truly committed to ESG goals could start actual sustainable collections with verifiable, transparent claims. One solution to the fashion industry’s greenwashing problem could be to leverage blockchain technology.
As software developers for blockchain-based ESG and climate finance technology, we believe a three-step layered approach could help fashion companies achieve this – where each step builds on the previous one – of tracking, calculating, then offsetting.
First, there needs to be provenance of the supply chain. The distributed ledger aspect of blockchain technology can enable transparent and accurate end-to-end tracking of product information throughout the manufacturing process and supply chain, and enable consumers to monitor how garments progress from raw materials to finished goods.
Once the brand has verifiable information on the inputs, it can then confidently calculate the carbon footprint caused by the production of these garments by recording data on scope 1 & 2 emissions – direct greenhouse gas emissions that occur from sources that are controlled by an organisation and indirect emissions associated with the purchase of electricity, steam, heat, or cooling.
This can be done reliably with limited manual work on a blockchain-based system supported by IoT (Internet of Things) devices. This would mean collecting climate-relevant data (e.g. energy consumption) directly from smart devices or systems in the manufacturing process and recording that data in a way that is verifiable, auditable and tamper-proof.
The final step of this approach is to offset emissions associated with the sustainable collection. To truly show evidence that a line of garments is ‘green’ or ‘sustainable,’ a brand can use the accurate climate-relevant data it has captured to offset any negative environmental impact.
Imagine walking into a store and being able to scan a code to view the carbon credits purchased by the retailer that offset the creation of the ‘conscious’ collection. Because the data has been collected in granular, auditable detail, brands could use blockchain technology to show to customers – down to the individual batch level – which carbon credits they have retired to offset its carbon footprint.
This three-step strategy is not the only solution and it may not be right for every fashion company, but it does demonstrate how technology can help fashion retailers not only be more sustainable, but also show customers – and investors – that they are ready to be more transparent. Many investors have their own ESG targets to meet in terms of the companies they invest in, and consumer sentiment is only going one way. Those fashion businesses able to truly reduce their carbon footprint will be rewarded with customer loyalty over the long term – making them both better investments and better for the planet.