Purpose and transparency build trust – lack of trust is one of the main challenges towards an open, circular and transparent apparel industry. Neliana Fuenmayor, our fashion partner and founder of A Transparent Company, takes a closer look during this year's Fashion Revolution Week at the key drivers for transparency in fashion, where the industry is heading and how technology such as blockchain can help accelerate positive impact in the apparel sector.
In the era of the internet and open source, transparency is a competitive advantage for businesses looking into building greater trust and customer loyalty. With most information a Google search away, making certain data unavailable can cost more than simply being honest. No business is 100% sustainable and that’s ok; we are all together on this journey of becoming towards sustainability. The fashion industry, in particular, is known for its ‘best-kept secrets’ which give businesses their competitive advantage, however, a collaborative mindset over the common challenges such as fair trade or proof of origin can accelerate the rate of change. The back-end of fashion operations is a low-tech infrastructure and it needs to upgrade to new technologies to catalyze positive impact.
‘Two-thirds of consumers and shareholders value purpose. 65% of consumers globally try to support brands that are purposeful. 63% of retail investors globally believe purposeful companies are more profitable (...) 55% of people globally are unable to name a company with a strong purpose'.
Globe Scan Radar 1997-2017 & Sustainable Brands Trust Research Report
The era of Open Information
The question will no longer be ‘Should businesses adopt transparency?’, but ‘Why is this business unwilling to be transparent?’
In the food sector regulations and certifications are in place to create greater trust in products that have an immediate impact on our health and environment. This sector is supported by legislation globally and is integrating new technologies such as blockchain to make claims verifiable and robust, however, in this the fashion industry lags behind. Although laws such as the UK Modern Slavery Act and the French Duty of Care are increasing pressure in the fashion industry, the movement for #radicaltransparency might be coming from the bottom up rather than imposed by legislation. The incentives for transparency in fashion are coming from different stakeholder interests: from building customer loyalty, risk and reputation management, to telling the story of products at the point of sale.
Today marks the fifth year since the Rana Plaza collapse in Bangladesh, where over a thousand garment workers lost their lives. This triggered a global movement known as the Fashion Revolution campaign, and since 2014 the #whomademyclothes hashtag has mobilised more than 2 million people, mainly millennials, demanding answers to their questions. During the past four years, companies such as H&M have seen their profits drop as they face overproductions issues worth $4.3 billion in losses as the New York Times reports. Is this an indicator of how consumer behaviour is changing - spending more on quality, and buying less in quantity? Hopefully, this shows we are moving from a week-long campaign to a constant fashion revolution.
We are all consumers, even if we are in the business of selling products. Buying is a trust game: at the moment of purchase, we place trust in the brand we're buying from; from product quality, price and delivery time. Consumers, especially tech-savvy millennials and digital natives, are becoming ever more demanding over these criteria. Is sustainability another key feature on their list?
Products can act as the bridge that connects the shopper to the story behind it, to the supply chain, making the invisible visible. By 2020 we will see more interaction between physical and digital information, from smart labels such as NFC (near-field communication - the tag behind Apple Pay) to augmented reality in store and catwalks - such as the collaboration by STEVENTAI X ILMXLAB during the latest London Fashion Week. As shoppers, we should expect ever more transparency in the supply chain behind our clothes. if we look at food packaging for ingredient information why not a garment swing tag?
Increasing transparency with blockchain technology
New concepts and technologies can take longer to integrate into sectors with complex supply chains such as the apparel industry. Last year during Copenhagen Fashion Summit we released the first pilot with fashion designer Martine Jarlgaard on how blockchain can be implemented for end-to-end traceability from farm to end product. Using Provenance software, the suppliers were able to connect and transfer assets along the chain, using blockchain technology to create the story with verifiable real-time data. Those of us who trust in the technology, we are working hard to bring new solutions to the fashion industry.
Last month we were in Brussels attending the Big Tent Convening: Transparency in the Apparel Sector, organised by ICAR and Clean Clothes Campaign, to discuss the roadmap towards achieving full traceability and how we can define transparency in the fashion industry. Some of the conclusions? Only through collaboration and the input of different expertise will we be able to thrive towards our common goal. Take for example the work of the Open Apparel Registry due to launch this summer: they are embracing open source to give unique IDs to factories, in order to connect all the data points along the supply chain in collaboration with WikiRates. Our role is to support all the gathered data and commit it to a decentralised layer that can't be tamed making it by default more secure, auditable and shared with all stakeholders including consumers.
A circular supply chain can only be achieved when all the information committed to the chain of custody is visible to all and in real time. Breaking out from siloed information stored in servers that are not interoperable between existing systems only supports opaque operations and a lack of trust. The future is transparent - where all actors of a supply chain can be accountable for the information committed to the chain of custody, and the incentive for transparency is based on a trust count or rating system that allows others to make decisions based on peer reviews.
In December 2017 the Ellen MacArthur Foundation published their first report for the textile industry, ‘A New Textile Economy’, revealing that only one percent of textiles get recycled - just 53 million tonnes. The report refers to our alpaca case study as a way to embrace new technologies that can help the circular economy to become a reality. We envision a world where we can track products into the future, claim ownership tracing how they are being rescued, re-sold, rented and ultimately recycled.
‘Digital technologies can support more accurate sorting of textiles through increased access to information, however, it is key that these are considered in the design or manufacture stage to be used effectively. Blockchain technology is an example of how digital advances improve transparency and provide sorters, collectors, and recyclers with reliable information on material composition of garments’.
A New Textile Economy Report 2017 Ellen MacArthur Foundation
A holistic approach towards a transparent future
It’s increasingly apparent how consumer power affects how products and services made. With this in mind, we are beginning to grasp the impact of every time we vote with our wallets. As the world develops towards a more connected system in which different industries rely on each other, we are entering a new era of information where trust is holistic and open. From micro to macroeconomics, it is essential to work together. If you want to take action today, you can sign the Fashion Revolution Manifesto released for this year's campaign and support the movement.