Blockchain technology has long promised to democratize information. New legislation might finally push the fashion industry into a new era of transparency.
In 2017, attendees at the Copenhagen Fashion Summit were presented with a capsule collection called “Fragile; A State of Emergency” from the designer Martine Jarlgaard. With a quick snap of a QR code, curious industry professionals could see a blockchain-powered map of how the modern knit pieces on display had moved through the supply chain, starting with the shearing of alpaca at the British Alpaca Fashion farm, through spinning at a British mill to knitting at a British factory, and finally to Jarlgaard’s studio in London.
The technology was powered by a startup, Provenance, which had started pitching itself to fashion journalists like me two years earlier, calling itself, “one of the first projects to build on revolutionary blockchain technology to log and trace the life cycles of products.”
But an entirely British supply chain was not a problem that needed solving.
The real problem was (and is) that most fashion brands cannot tell you where their products are made. Beyond Tier 1 (cut-and-sew factories) in loosely-regulated countries with which they directly contract, the majority of brands could not (or would not) tell you where the materials for their products are grown, milled, woven, or dyed. Even in Tier 1, the industry is rife with subcontracting to factories that engage in wage theft or have serious safety violations. And most premium sustainable fibers—such as recycled polyester, organic cotton, and ethically sourced wool—are still verified entirely through paper certificates that can be altered, duplicated, or fabricated.
The legislation presumes that anything made in whole or in part in Xinjiang was done so using forced labor. It also blocks any shipments from Chinese suppliers that have been linked to forced labor. Brands and retailers then have to produce documents proving that their products are clean.
This opaque system is of particular concern when it comes to cotton. In 2009, wide-scale organic cotton fraud was discovered in India. In 2016, Welspun, a large Indian textile supplier, was caught selling fake “Egyptian” cotton to retailers including Target, Walmart, and Bed Bath & Beyond, leading to a spate of class action lawsuits against the retailers from customers unhappy that they had overpaid for just regular old cotton.
“I don't think I can compare [fashion] to any other industry that I’ve seen, to be completely honest, where you really don’t care where things are coming from. I was shocked,” says Marianne Uddman, head of sustainability and innovation at TrusTrace, which she joined in 2017 from the food industry. This fashion traceability software startup was founded in part because a cofounder saw his family’s farms in Coimbatore, India, destroyed by dye house pollution. Uddman noted: “I was very surprised at how little companies know about their supply chain––not just traceability but in general, who produces what and how, under what circumstances.”
Web3 comes to fashion
The promise of blockchain technology—an ecosystem of public digital ledgers that cannot be meddled with—seemed to be a perfect solution for an industry rife with labor exploitation, deadly accidents, toxic pollution, fakes, and fraud. “Technology will be what helps to reconnect us to the people and the places involved, and that information will increase consumer expectations, which will put more pressure on the big companies,” the designer Jarlgaard told Forbes.
In 2018, an Ethereum veteran and founder of a self-described fashion-blockchain startup called Lukso gave a talk titled “How Blockchain Will Change the Fashion Industry.” He promised that what we now know as Web3 could provide a way to verify the provenance of luxury fashion goods, and tamp down on fashion forgeries, which are often filled with toxic chemicals or are used to fund international crime syndicates.
There are many similarities, if you look closely, between the growth of Web2 platforms like Spotify and Instagram and the growth of organic textile certifications and auditing. The money flows to the big actors—like GOTS and the Control Union—whose internal workings are kept secret, and which reap all the financial rewards. GOTS, a German nonprofit, provides a label to cotton products certifying that they are organic. And the Control Union, a global power player, audits factories and farms for a wide menu of ethical and sustainable concerns, reaping millions in fees from the world’s largest brands eager for a stamp of approval they can show to governments and customers.
The complicated and easily-gamed cotton supply chain means that many farmers who grow organically don’t get any of the price premium for their efforts––much as musical artists get pennies on the dollar for streaming, and visual artists furiously churn out content hoping to be discovered, driving ad revenue toward Instagram.
Web3 promised to break this monopoly, decentralize power, and ensure that artists control their art and also get a bigger financial cut, even as it gets sold and repackaged and reshared across the web. And when it comes to fashion, the hope was that designers, farmers, and factories could get paid fairly for their more sustainable and ethical practices.
The quickest way to get a shipping container full of product released is to pay for a rush isotope test, which looks for soil signatures linked to the Xinjiang cotton-growing region.
Four years on, these utopian promises of a clean, ethical, and transparent industry have not come to pass. Greenwashing by fashion brands is, if anything, worse. Lukso has moved into Non-Fungible Tokens, or NFTs; Jarlgaard moved out of designing physical products and into metaverse projects that support tree planting; and Provenance now only works with beauty and food brands.
It was simply cheaper and easier for fashion brands to not know. “At the beginning, people wanted traceability, but they didn't want to pay for it,” says Kai Hughes, executive director of the International Cotton Advisory Committee. “They wanted something that was as cheap as possible. If they had a paper-based system in place, that was fine, so long as they could tick a box.”
Now, quite suddenly, the world’s largest brands are very interested in investing in the most robust and advanced traceability technology available. What changed? A little piece of legislation called the Uyghur Forced Labor Prevention Act (UFLPA).
A dirty stain on fashion’s image
The Uyghur ethnic minority has long been persecuted by the Chinese government, which has forced it from its homes in Xinjiang Province into concentration camps for “reeducation” programs that are, in actuality, torture and forced labor. Designed to strip Uyghurs of their Muslim religion and cultural practices, this genocidal campaign picked up speed in 2017, but it took until 2019 and 2020 for fashion’s role to become clear, at least to average Americans.
China grows a huge portion of the world’s cotton, most of it in Xinjiang Province, and accounts for a third of America’s apparel imports. A 2020 report by the Australian Strategic Policy Institute said many leading brands—including Abercrombie & Fitch, Adidas, Calvin Klein, Carter’s, Gap, H&M, L. L.Bean, Lacoste, Nike, Polo Ralph Lauren, Puma, Skechers, Tommy Hilfiger, Victoria’s Secret, and Zara—all sourced from factories using forced Uyghur labor. One supplier to Nike had guard towers and barbed wire, like a prison.
Many brands cut ties to these suppliers, but a November 2021 report called Laundering Cotton from the Sheffield Hallam University's Helena Kennedy Center for International Justice showed that the five leading Chinese suppliers that have sourced Xinjiang cotton now ship their raw goods off to dozens of intermediary factories in other countries, where it’s mixed with cotton from other areas. These factories then supply more than a hundred well-known international brands, many of the same that had already been warned of the risk in the earlier report. While some brands had clearly put in some effort and only had one or two weak ties to Xinjiang, others, like Gap and PVH Corp., had a dozen ties back to Xinjiang cotton.
FibreTrace is now testing its physical tracing technology with four international fashion brands in nine cotton gins across Australia and India.
Of the fashion brands that responded to the allegations in the report, most essentially said that they had no evidence of forced labor, and pointed to various auditing programs they employ, which, again, can be and have been systematically faked, especially in China.
While importing goods using forced labor was illegal under federal US law, enforcement was difficult. Up until this summer, US Customs and Border Protection needed specific evidence proving links to forced labor in order to block a shipment, as it did for baby carriers by Costco in October 2019.
Fashion as a political football
This situation all flipped with the passage of the Uyghur Forced Labor Prevention Act, which went into effect in June of 2022. The legislation presumes that anything made in whole or in part in Xinjiang was done so using forced labor. It also blocks any shipments from Chinese suppliers that have been linked to forced labor. Brands and retailers then have to produce documents proving that their products are clean.
“At least for the United States, many people in my field consider this moment a huge turning point for holding companies responsible for knowing where their goods come from,” says Dr. Laura Murphy, the lead author of Laundering Cotton and professor of human rights and contemporary slavery at Sheffield Hallam. “The day is over when they can simply say, oh, yeah, we couldn’t possibly know. Because now CBP says you must know.”
The legislation caught many brands unaware. Shannon Mercer, CEO of the Australian startup FibreTrace, says brands have been coming to him in a panic, sharing stories about shipments getting stuck at the port. “The noise level around brands actually doing something now, particularly the last six months, 12 months, has increased,” he says. While before he was taking meetings with the sustainability and corporate social responsibility teams—which are often underresourced and siloed within fashion brands—now his meetings are with the procurement and risk compliance teams—the big guns.
“In this port, the volume of detentions under UFLPA has already surpassed the volume under the previous Withhold Release Orders protocols,” assistant port director Ed Fox told me during my visit to the Newark Marine and Air Port. When I visited in August, a table in the examination warehouse displayed a white linen–cotton–polyester quilt from a brand I had never heard of, made in China. The CPB had pulled it because it was from the Xinjiang Autonomous Uyghur Region. “This is being tested for cotton,” a port official said. The importer was trying to get the shipment released by saying the quilt was mislabeled.
The quickest way to get a shipping container full of product released is to pay for a rush isotope test, which looks for soil signatures linked to the Xinjiang cotton-growing region. “We're seeing and hearing about them paying ridiculous amounts of money, like $20,000 a test, to get products off the wharf,” Mercer says.
But isotope testing can only tell you where the cotton was grown. It doesn’t say where it was processed or made into a garment. Hughes points out that the legislation currently seems to demonize cotton, while turning a blind eye to other materials that could be manufactured using forced labor, such as polyester. He also said that there probably isn’t much forced labor in the fields—at China’s large cotton farms, it’s harvested using machinery. The forced labor probably starts with processing in the gins.
FibreTrace is now testing its physical tracing technology with four international fashion brands in nine cotton gins across Australia and India. (Its representative can’t say which brands until they’re satisfied it works, sometime early next year.) A bioluminescent marker is added to cotton at the gin so it can be scanned at each step of the supply chain. So if marked cotton is mixed with unmarked cotton, the scanning technology will show it. The information is then uploaded to a blockchain ledger managed through FibreTrace’s software.
This blockchain-supported software product, FibreTrace Mapped, will be made available free to any fashion brand that wants to try it this fall, sans the physical tracing technology. Ostensibly, once a fashion brand uploads all its transaction certificates and whatnot to the blockchain, it could print out a document detailing the entire journey of a cotton garment and hand it over to Customs and Border Protection. It’s not as airtight as having a physical marker, but it’s better than trying to gather up all the photocopied PDFs that currently live as attachments in emails.
Professor Murphy tentatively likes the idea. “One of the things that would be useful about an open-source, public, freely accessible, blockchain tracing system would be that any of us could look to see if the products that we're buying are made with forced labor or made in regions that we're perhaps boycotting,” she says. “I just don't know whether or not that actually works.”
Unfortunately, in the case of cotton tracking, Mercer says it’s up to brands to make their blockchain tracking public.
Fashion’s future footprint
Because the physical marker needs to be added to the textile, right now it’s less of a tool for preventing unwanted fiber and more for keeping premium fibers segregated and pure through the supply chain, such as recycled polyester and organic cotton. But with the United Nations condemning China’s treatment of Uyghurs in an August report, and the EU planning on banning the import of products made with forced labor (according to draft legislation leaked on September 9), all international brands—not just the dozen or so that have shown an interest so far—are going to have to get to know their supply chain. And to do that well, Web3 tools will be required. “Blockchain and traceability need to go hand in hand,” Hughes says. “Five years down the line, nobody will be complaining about it at all, because it will be just mainstream.”
But Hughes isn’t convinced that Web3 will actually see benefits of sustainability and ethics finally accrue to the least powerful in the supply chain. “The big farmer in the US, that’s possible. The smallholder farmer in Africa will never get anything, because they get screwed every time.”
Murphy is similarly jaded. “So far, [brands have] been allowed to pretend to know nothing about where their goods come from, and to intentionally obfuscate their supply chains,” she says. “Even the specter of probably what is the most egregious systematic human rights violations that we’ve ever seen in our lifetimes, full knowledge of what was going on there, and their connections to it, all of these companies did nothing until they were told they had to abide by the law. And even then, many of them are spending more of their trial time trying to get out of it, than to actually just do the right thing.”
“Let’s be real,” Mercer says. “Brands, they don’t do this because they want to do it, they do this because they have to do it.”
Alden Wicker is an independent journalist who writes about fashion sustainability, and the founder of EcoCult, a leading international information hub for shoppers and industry professionals. Her book To Dye For: How Toxic Fashion Is Making Us Sick, will be published in June 2023. Sign up for her weekly newsletter to go deeper on the ethics of fashion’s supply chain.