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8 Aug 2024
Sophie Benson
As cryptocurrency boomed, blockchain was initially understood by most as the technology that enabled the likes of Bitcoin and Ethereum (even if people didn’t know exactly how it enabled it). But it soon began to spring up in other areas as a way to facilitate more transparent supply chains. So what exactly is it, how does it work, where is it best applied, and what does the future hold for this technology?
A blockchain can be imagined as a database. Each piece of information or data is a block and when gathered, those blocks form a chain. As a shared data ledger, everyone who needs to add data or information to the blockchain has access to it, in the same way that everyone invited can have access to a shared Google Doc. But what makes blockchain unique and particularly useful for transparency and traceability is that no one person can delete or edit data; it is an “append-only ledger”.
Blockchain is decentralised; a peer-to-peer network shared across multiple computers (which you may see referred to as “nodes”), and it functions on consensus. So rather than one person being able to go into the system and add or edit information, the majority of nodes must verify any block before it can be added to the chain. Further strengthening the chain is the fact that each block is time stamped and contains information from the previous block, which reinforces the linear nature of the chain and prevents tampering.
If we imagine this in the context of a supply chain, a cotton trader records that they have received cotton from a GOTS certified farmer and then records its sale and transportation to a ginning facility. The ginning facility then records that they have received X tonnes of organic cotton from the trader. If that ginning facility was less than scrupulous and wanted to say that they had in fact received double the amount so they could fraudulently pass off conventional cotton as organic and make more money, they could not then go back and edit that earlier record meaning anyone that dived into the data could spot the misrepresentation easily.
A host of blockchain-based platforms and initiatives have launched in recent years, which focus on increasing transparency and authentication within supply chains. Wholechain was founded as a spinoff of Envisible, which specialises in procurement and visibility within food supply chains. Accessible via tablet, laptop, mobile, and app, Wholechain’s blockchain-based technology is designed to be simple for all supply chain actors to use. Events that can be recorded on Wholechain include commission and decommission (when a product comes into or exits a supply chain, e.g. harvest and then final consumption); aggregation and disaggregation (when products are grouped together e.g. for storage and then broken back down into individual units e.g. for sale); shipping and receiving; and transformation (when one traceable item is transformed into another, e.g. raw cotton becoming yarn). The supporting data for those events includes date, time, location, serial numbers, purchase orders, quantities, and units. A consumer-facing element then allows brands to share key traceability details, such as where a raw material was sourced, with consumers.
OpsChain, by EY, allows users to make similar records, making use of notarisation and tokenisation to validate information and assets. Aura Blockchain Consortium was created by LVMH, Prada Group, and Cartier. The non-profit aims to provide a single blockchain solution to all luxury brands in all sectors. By utilising Aura, members have been able to create digital twins for products to record entire lifecycles from raw material to post-purchase repair, provide certificates of authenticity, activate NFT-based campaigns and launches, communicate transparency details to consumers via digital certificates, and allow access to warranty and insurance information. Provenance, meanwhile, uses blockchain to verify brand claims by logging the evidence to support the claims or allowing partner bodies and organisations to check the accuracy of certifications referenced.
Just as a database can hold many forms of data, blockchain can facilitate many different solutions, from tracing raw materials to their source, to authenticating finished luxury garments and showing secondhand buyers histories of previous purchases, warranties, and repairs.
Let’s look at a few specific examples of how blockchain is being used today:
Cult Beauty x Provenance
After a survey revealed that Cult Beauty’s customers prioritised transparency when shopping online, the beauty retailer partnered with Provenance to place ‘Proof Points’ on product pages within its ‘Cult Conscious’ line. If a product is claimed to be Leaping Bunny Cruelty-Free, for instance, shoppers can see via the Proof Point that the claim has been verified. For further information, they can click on the Proof Point to see how the claim was verified, and by whom, and when it is valid until. The extra curious can also see the permanent record on the blockchain if they so wish. For claims that have been evidenced via information a brand has submitted themselves, shoppers can view that evidence. For example, a brand may say its product has been scientifically tested. Proof Points allow a customer to see a lab test confirmation document that confirms that. By using Proof Points, Cult Beauty drove a 35% higher purchase rate and 5% higher shopper sentiment.
“We use blockchain because we don’t actually want people to trust Provenance. We don’t want to be a third party that you need to trust. We’re a system that allows you to independently verify the information. That’s important because if you need to trust us, we're corruptible, we could game the system,” says founder and CEO of Provenance, Jessi Baker. “We’re trying to create a system that eliminates greenwash from sustainability and to do that we felt that we should make the whole thing open-source, immutable, and fully auditable and inspectable by anyone.”
ChromaWay x BLK DNM
Blockchain tech company ChromaWay acquired Swedish-American fashion brand BLK DNM in 2023 and relaunched it as a luxury entity. At its AW23 event in Paris in June, the brand launched digital garment IDs for its leather goods. Physically, the IDs are tiny chips embedded in garments. Digitally, they provide each garment with a unique, recordable identity and grant consumers entry to the BLK DNM Society. In the ‘real world’ this means authentication and enables the brand to reward society members for ethical behaviour such as caring for and repairing garments, while in the metaverse a so-called ‘digital reflection’ of the physical garment can be worn in various virtual settings. In a further interesting move, society members will also be able to vote on certain brand decisions, echoing the decentralised nature of the blockchain in the brand DNA.
Birla GreenTrack
While a blockchain is an immutable ledger, it still follows the ‘garbage in, garbage out’ rule, whereby there is opportunity for someone to input incorrect or low quality data at the start of the process. Birla is tackling this by combining blockchain tech with a molecular tracer that's embedded into the fibre at the production stage. Its GreenTrack platform traces cellulosic fibres from the forest to finished garment and to test the authenticity of the fibre and ensure it's from where the record shows it's from, brands, makers, and mills can send samples to Birla’s labs for testing and certification.
As regulations ramp up, blockchain can be a great way to gather and show evidence that you are compliant. For instance, Provenance helps its brand clients comply with the UK’s Green Claims Code, the EU's Green Claims Directive and the FTC’s Green Claims Guidance by allowing them to supply evidence and verify their claims.
However, the solutions do not have to be blockchain-based. For instance, product cloud platform EON is not blockchain-based, however the backend of its service has a compliance tool. “We will input policies, and then from a data perspective, you can check whether or not that product is compliant, why or why not, and which data points you would need to input in order to be compliant,” says associate director, partner development, Claire Bates. The tech allows brands to get ahead of legislation such as AGEC and Digital Product Passports. Blockchain is one traceability solution for compliance, but it’s not the only one.
Beyond complying with regulation, blockchain can be a useful tool for communication. “There's so much potential for connecting the story of a product with verifiable data so that the value is that you are selling a product that's true to its label,” says Neliana Fuenmayor, blockchain expert and founder and CEO of A Transparent Company. “And your customer keeps loyal to your brand because they know that you're not greenwashing.”
In tracing your supply chain you can tell stories of growers and ethical practices, in authenticating your product you can strengthen your brand foundations, in facilitating repairs and resale you can communicate your investment in circularity. It’s easy to get caught up in the tech, but looking at blockchain as a communication tool too immediately widens the scope and adds value to your product.
Blockchain is certainly a very useful tool for numerous traceability and transparency operations, but it is not a perfect solution. “There's no way it can be completely trust-less because somebody needs to enter the data in the first place for it to then be transmitted to somebody else,” says Baker. However, she adds that “in the supply chain space, we are getting more things like satellite data sensors, so it's becoming more machine and less human, in which case you could say it's becoming more trustworthy.” This type of progression and others, like molecular and DNA tracers, will help bolster the integrity of blockchain traceability, but we’re not there yet.
Another issue is that not all blockchains will ‘talk’ to each other. You can forward a WhatsApp or Signal message you have received to a contact who is signed up to the same service but not to someone outside the network, and it’s similar with blockchain, there is no guarantee that you can exchange data between one blockchain and another. Imagine if an organic cotton merchant was using one type of blockchain to track the harvest and shipments of its raw materials that couldn’t communicate with the blockchain a brand was using to trace its supply chain. Immediately the concept of end-to-end traceability and transparency is compromised.
TrusTrace was initially built on blockchain but has since moved away from the technology. “We started out having the whole platform built out on blockchain but what we realised was for blockchain to work you need to have a network that has agreed on certain standards and rules of engagement and that doesn’t really exist in fashion,” says head of marketing Anja Sadock. “We have it ready to go but it’s not being used today. Today it’s much more AI-based.”
The idea of blockchain can be intimidating because it’s often presented as though you need to know exactly how it works in order to use it, but that's not the case. “The bottleneck is that people don’t know exactly what it is because it’s something that's not tangible,” says Fuenmayor. “But it’s like the internet. You don’t know how the internet works, you just use it.”
Deciding whether to use blockchain is more about deciding which platform or service is the right choice for your product or material. Consider whether you want end-to-end traceability, claims verification, or authentication, for instance, and choose accordingly. Many platforms have worked hard on user experience so you don’t have to be a web3 native. In many cases it’s as easy as taking a photo of a document, uploading a PDF, or submitting a file. “It’s as simple as training and onboarding. You’re saying ‘hey this is a new software we’re going to use instead of Excel sheets'. It’s all part of the digital transformation,” Fuenmayor continues.
Blockchain has certainly become embedded in many supply chain traceability solutions, but it hasn’t quite boomed in the way it was expected, with some platforms even moving away from the technology. Others, like Provenance, have simply stopped using the term within their marketing. “People used to fixate on it and get a bit scared by it, it used to be a real distraction,” says Baker. “All that really matters is that you can trust the information and how it’s shared. So, we don’t talk about it very much now at all and it’s been transformative for our business.”
The experts we spoke to are confident that in the future, blockchains will be more interoperable and be able to ‘talk’ to each other more freely, making the flow of data much easier. We will likely see that progress and see the capabilities of blockchain expand, but for now rather than focusing on the technology facilitating transparency and traceability, it’s perhaps best to focus on transparency and traceability themselves, choosing the best solution for your company or product, regardless of whether it’s blockchain-based or not.
Blockchain, like any emerging technology, is nuanced. One solution will work for one brand but not another, so be thorough in your analysis of the market before diving in.
As demonstrated here, blockchain technology is complicated. Consumers may not understand, or be put off by the more technical language of the system so prioritise clarity when communicating your efforts.
Be the first to use blockchain technology to map the full lifecycle of plastic, being transparent about the impact of plastic use and what's needed to change the narrative. Encourage your consumer to use your data to demand something new.