We see a clear trend in the US and Europe: Conscious consumers are
demanding to know how retailers produced their
clothes,
if the materials used were recycled or organic, and if the workers were paid
fair
wages
with good working conditions. More and more studies point to authentic
sustainability strategies as a key differentiator for
consumers,
making it key to competitiveness. Such buying concerns are especially important
to Gen Z
consumers
and their parents and grandparents, who are being increasingly influenced by
their savvy and passionate younger family members.
Regulators are increasingly cracking down and issuing fines for
greenwashing,
where brands are claiming products to be sustainable without providing the data
to back it up. And the US is now withholding fashion goods in 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
finding
that 40 percent of environmental claims made by fashion brands could be
misleading, there is ample room for improvement.
Despite the significant and detrimental effects fashion value chains have had in
textile hubs worldwide, in anything from soil and water pollution to unfair
wages and worker's rights, the need for sustainable transformation in the
fashion industry has been a slow
burn.
But it is only a matter of time. We are seeing the beginnings of a revolution in
how fashion is produced and consumed. As more and more consumers, brands and
regulators are pushing the agenda in Europe and the US, the topic will quickly
move from a niche concern to dinner-table conversations.
It's not necessarily the case that all brands are actively trying to avoid
dealing with this issue. In Laundering Cotton: How Xinxiang Cotton is Obscured
in International Supply Chains, experts at Sheffield Hallam University
found
that intermediaries in supply chains often concealed their true origins from
companies further up the chain. And if your audits and verification systems rely
on external parties that visit 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 we change a system that is fundamentally broken?
Without traceability, there can be no sustainability. If we do not know
precisely what is going on at every level of the supply chain — in every remote
corner of the
world
— and if you do not know where things are going wrong, how would you ever be
able to right them?
Getting to this granular level of knowledge can be a daunting task when working
with something as complex and opaque as fashion supply chains — with as much as
95 percent of the value chain data locked up in documents, in paper or
electronic form. But it must be done; and digital technology holds the key to
doing it at the scale necessary to make a real difference.
It may have been difficult to imagine a couple of years ago, but today there are
tools in place that can help brands develop a complete understanding of their
supply chain from raw material to finished goods. With digital traceability, it
is possible to collect data throughout the supply chain on not only a company or
product level, but down to individual batches. This is obviously helpful for
compliance; brands can confidently make sustainability
claims
and meet consumer and regulatory requirements for transparency, as they have the
data to back it 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 it.
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
fundamental knowledge in place, decision-makers can start drilling down to see
how their suppliers are performing on ESG (environmental, social and governance)
parameters. They can visualize dependencies and risks in their supply chain and
do "what-if" planning. To this end, brands will need to invite and incentivize
suppliers to disclose information through the system — from facts about
themselves, such as how they treat and compensate workers; to which suppliers
those suppliers source materials from; to whether the materials, with
validated
evidence,
meet certain standards.
Providing this information to brands has historically been a painful and
time-consuming
process,
with little motivation for suppliers to participate other than to keep their
customers happy and keep the orders flowing. This is changing as more and more
brands become dependent on reliable data to measure supplier ESG performance.
Providing such information is becoming a prerequisite for doing business; and
suppliers should not only take it seriously but see it as a way to distinguish
themselves in the marketplace. Because as traceability and transparency gain
momentum, the growers, spinners and weavers that have previously operated in the
shadows are now under the spotlight.
More and more brands will start defining their working relations not only based
on price, but on whether these relations live up to the expectations of their
customers and regulatory bodies. They will need to prove that all the garment
workers have living wages and good working conditions — or if they find that
they do not, the brands will be held accountable to help their suppliers fix
this.
Traceability is the great enabler. If consumers have historically paid a premium
on an organic T-shirt, we can be almost 100 percent confident that that premium
has never reached the garment worker.
Now, when we can track the whole supply chain for individual products and
batches, this discrepancy will become visible and can no longer be disregarded.
Factories that ignore health and safety will no longer go unnoticed.
Traceability is the foundation upon which we can truly revolutionize the fashion
industry, revealing the actual costs of products and ensuring that the wealth
generated from production gets redistributed more fairly.
A recent McKinsey
report
deemed that $3.5 billion per year is needed to hold global warming to 1.5°C
above preindustrial levels, potentially limiting the most dangerous and
irreversible effects of climate
change.
No one company, government or bank will be able to foot that bill.
Cross-industry collaboration is needed to produce the financing and the
solutions required to fill the gap between where we want to be in 2030 and where
we are today.
For this collaboration to succeed, all industry players — 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 targets and
track and communicate progress — no matter where it happens in the supply chain.
I do not doubt that traceability will change the world of fashion forever — and
for the better — especially for the millions of men and women working in
production. I aspire to accelerate sustainable transformation by supplying
brands with the data needed to fully understand their supply chains and take the
proper corrective action to realize these changes. I hope all those working in
the fashion and textiles industry will contribute by sharing their data and
knowledge.
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Shameek Ghosh is CEO and co-founder of TrusTrace — a market-leading platform for supply chain transparency and traceability within fashion and retail.
Published Mar 10, 2022 7am EST / 4am PST / 12pm GMT / 1pm CET