by Shameek Ghosh
We see a clear trend in the U.S. and Europe where 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. Two-thirds of consumers say they now consider sustainability when making a purchase, making sustainability key to competitiveness.
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 transformations 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 consumers, brands, and regulators are pushing the agenda in Europe and the U.S., the topic will quickly move from a niche concern to dinner-table conversations.
Digital Traceability Can Help Better the System
Without traceability, there can be no sustainability. If we do not know precisely what is going on at every level of the supply chain, at 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 has to 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 the individual batches. This is helpful for compliance, where brands can confidently make sustainability claims and meet consumer and regulatory requirements for transparency, as they have the data to back it up. 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.
Changing 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, like 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 brands become dependent on reliable data to measure supplier ESG performance. It is becoming a prerequisite for doing business to provide such information, 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.
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.
Working Together to Fight Climate Change
A recent McKinsey report deemed that $3.5 billion per year is needed to hold global warming to 1.5°C above pre-industrial 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.
Shameek Ghosh is CEO and Co-Founder of TrusTrace, a market-leading platform for supply chain transparency and traceability within Fashion and Retail, which is behind some of the most ambitious sustainability programs in the world.