Transparency and traceability must drive sustainable fashion

Traceability is the basis on which we can truly revolutionize the fashion industry, revealing the true costs of products and ensuring that the wealth generated from production is redistributed more equitably.

We observe a clear trend in the WE and Europe: Conscious consumers are demanding to know how retailers produced their clothes, whether materials used were recycled or organic, and whether workers were paid fair wages with good working conditions. A growing body of research indicates that authentic sustainability strategies are a key differentiator for consumers, making it key to competitiveness. These purchasing concerns are particularly important for Generation Z
consumers and their parents and grandparents, who are increasingly influenced by young, knowledgeable and passionate family members.

Regulators are increasingly cracking down and issuing fines for greenwashing, where brands claim products are sustainable without providing the data to back it up. And the United States now holds fashion products at customs unless the importer can prove that they do not contain cotton from the xinxiang region of
China. With the International Consumer Protection and Enforcement Network
discovery
that 40% of environmental claims made by fashion brands could be misleading, there is plenty of room for improvement.

Despite the significant and detrimental effects that fashion value chains have had on textile hubs around the world, from soil and water pollution to unfair wages and workers’ rights, the need for a sustainable transformation in the fashion industry has been slow. But it’s only a matter of time. We are witnessing the beginnings of a revolution in the way fashion is produced and consumed. As more consumers, brands and regulators push the agenda in Europe and the US, the topic will quickly shift from a niche concern to table conversations.

This is not necessarily the case that all brands actively try to avoid dealing with this problem. In Cotton Laundering: How Xinxiang Cotton is Masked in International Supply Chainsspecialists in Sheffield Hallam University
found that intermediaries in supply chains often hide their true origins from companies further up the chain. And if your audits and verification systems rely on external parties visiting factories once a year, it won’t be easy to know who your suppliers are sourcing from. But as the researchers wrote, “They can no longer afford not to know.”

So how do you change a system that is fundamentally flawed?

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Without traceability, there can be no sustainability. If we don’t know precisely what’s going on at every level of the supply chain – in every remote corner of the world – and if you don’t know where things are going wrong, how could you fix them?

Achieving this level of granular insight can be a daunting task when working with something as complex and opaque as fashion supply chains – with up to 95% of value chain data locked away in documents, in paper or electronic form. But it must be done; and digital technology holds the key to doing it at the scale needed to make a real difference.

It might have been hard to imagine a few years ago, but today there are tools that can help brands develop a complete understanding of their supply chain, from raw materials to finished products. Thanks to digital traceability, it is possible to collect data throughout the supply chain not only at the company or product level, but also down to individual batches. This is obviously useful for compliance; brands can confidently make sustainability claims and meet consumer and regulatory transparency requirements because they have the data to back them up. But more importantly, to create fundamental change in the fashion industry, traceability gives brands a baseline for their actual sustainability performance, so they understand where and how to improve.

Traceability will fundamentally change fashion – for the better

One of the basic functions of a traceability system is to help brands get an overview of their supply chains and create a digital map of suppliers, allowing them to track their performance and document their certifications. With this foundational knowledge in place, decision makers can begin to analyze their suppliers’ performance on ESG (environmental, social and governance) metrics. They can visualize dependencies and risks in their supply chain and do “what if” planning. To that end, brands will need to invite and incentivize suppliers to disclose information through the system – from facts about them, such as how they treat and compensate workers; to which suppliers
those suppliers source from; whether the materials, with validated evidence, meet certain standards.

Providing this information to brands has always been a painful and time-consuming process, with little motivation for suppliers to participate other than to keep their customers happy and orders flowing. This is changing as more and more brands are becoming dependent on reliable data to measure supplier ESG performance. Providing such information becomes a prerequisite for doing business; and suppliers should not only take it seriously, but also see it as a way to distinguish themselves in the marketplace. Because as traceability and transparency gain ground, winegrowers, spinners and weavers who previously worked in the shadows are now in the spotlight.

More and more brands will begin to define their working relationships based not just on price, but on the relevance of those relationships to the expectations of their customers and regulators. They will have to prove that all garment workers have a living wage and good working conditions – or if they find that they don’t, brands will be held responsible for helping their suppliers solve this problem.

Traceability is the great catalyst. If consumers have always paid a premium on an organic t-shirt, we can be almost 100% sure that this premium has never reached the garment worker.

Now, when we can track the entire supply chain for individual products and batches, this discrepancy will become visible and can no longer be ignored. Factories that ignore health and safety will no longer go unnoticed. Traceability is the basis on which we can truly revolutionize the fashion industry, revealing the true costs of products and ensuring that the wealth generated from production is redistributed more equitably.

A recent McKinsey
report
estimated that $3.5 billion a year is needed to keep global warming to 1.5°C above pre-industrial levels, potentially limiting the most dangerous and irreversible effects of climate change. No company, government or bank will be able to pay this bill. Cross-sectoral collaboration is needed to generate the financing and solutions needed to close the gap between where we want to be in 2030 and where we are today.

For this collaboration to succeed, everyone in the industry – from consumers and brands to factories and auditors – must work together and trust each other. Real, objective data enables trust, allowing brands to set ambitious goals and track and communicate progress no matter where it happens in the supply chain.

I have no doubt that traceability will change the fashion world forever – and for the better – especially for the millions of men and women working in production. I aspire to accelerate sustainable transformation by providing brands with the data needed to fully understand their supply chains and take appropriate corrective action to make those changes happen. I hope everyone working in the fashion and textile industry will contribute by sharing their data and knowledge.



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