The clothing industry and Blockchain on first glance appear to be two polar opposites, yet it seems they actually go hand-in-hand. Both have evolved exponentially since their introduction and their combination may lead to a more transparent, efficient and environmentally friendly fashion industry.
The power and transparency of Blockchain as a decentralized distributed ledger can be used to track the sustainability of supply chains, the welfare of factory workers, the manufacturing process and countless other areas.
Blockchain and fashion made their debut together at the Shanghai Fashion Week in 2016. A clothing line was embedded with chips that had a unique identity code that were stored on Blockchain. This allowed for customers to verify if the clothing was genuine, by merely using their smartphones.
The time is fast approaching where we will scan a T-shirt and discover its total lifecycle. This will allow customers to be confident in their fashion choices, and for those that wish, choose only sustainably and ethically produced clothing. Blockchain has the potential to ensure transparency for the totality of the supply chain on a global scale. With transparency, comes consumer trust in a brand, which is vital for the successful promotion of goods, found a study conducted by PwC.
The clothing industry is also being ranked on their Environmental, Social and Governance ("ESG") credentials by the Fashion Transparency Index. The vast negative impact of fast fashion on the environment highlights how transparent and accurate data is needed to improve the clothing supply chain and inform consumers and shareholders accordingly. This Blockchain derived data can be used as evidence alongside a company's ESG claims and ensure credibility.
We have already seen that the additional ESG disclosures for investment management firms were investor-driven. Perhaps we will see a further push from this generation of investors for the use of Blockchain in areas where transparency is required and desperately sought after. It seems this is the way of the future – investors are forcing companies to re-think how they conduct their business and Blockchain is an indispensable tool to do so.
Where will Blockchain turn to next? The possibilities seem endless.