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'Dressing digitally' pins hope on blockchain to clean up fashion's carbon footprint

Watch: 'Dressing digitally' pins hope on blockchain to clean up fashion's carbon footprint | The Crypto Mile

The fashion industry is responsible for almost 8% of total global carbon emissions – greater than all international flights (2.5%) and global shipping (3%) combined. Can "digitally dressing" make a difference?

The fashion industry is the second biggest polluter in the world, after the oil and gas sector, according to a UN report.

On The Crypto Mile this week, Yahoo Finance hears from Louise Laing, founder of PhygitalTwin, an ecologically-minded fashion marketplace.

Laing argues that Web3 innovations can cut waste from overproduction by using blockchain-based solutions to streamline workflows and allowing customers the ability to try on clothing in virtual environments before committing to making a purchase.

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She illustrated the scale of the fashion industry's detrimental impact on the environment, stating that, "fashion brands overbuy raw materials by at least 30%, so overall there could be around 30 to 40% waste in every single order that a fashion brand creates".

"And, on top of this, 5% of the worlds landfill is from discards from the fashion industry", she added.

DHAKA, BANGLADESH - SEPTEMBER 7: Garment factory waste at a dumping site at Savar on September 7, 2022 in Dhaka, Bangladesh. Bangladesh produced 1,000 tons of textile waste in 2021, until November this year, amounting to potentially a billion-dollar worth of recycled textile, said a new global report.
Bangladesh produced 1,000 tons of textile waste in 2021, amounting to potentially a billion-dollar worth of recycled textile, said a new global report. Photo: Getty (STORYPLUS via Getty Images)

'Dressing digitally'

Laing claims that using a combination of Web3 innovations can radically reduce the amount of waste and carbon emissions produced by the fashion industry.

"At PhygitalTwin we believe that using digital technology through 3D design streamlines the entire supply chain process.

"It allows you to use digital assets to test the market, before a fashion company actually physically makes the production", Laing stated.

She explained that producing digital versions of clothing lines allows consumers to virtually wear an augmented reality (AR) overlay of an item of clothing, before committing to buying it physically.

Laing adds that recent Web3 technology developments, like Snap filters, allow consumers to "digitally dress themselves" before making a physical purchase.

This could lead to less product returns, a major source of waste within the industry. According to a study by ecommerce software company Shippo, 10% of all the clothes bought are returned, after consumers showed dissatisfaction with their purchase.

Average ecommerce return rates are said to be even higher, hovering around 20-30%, according to CX Strategies.

"Fashion producers can use these tools to see what the demand is from your consumers before actually go into production.

"This allows producers to work very closely to the market in a much more efficient and agile way", Laing explained.

Blockchain and fashion supply chains

Proponents of Web3 technology promote blockchain technology as a way to bring several efficiencies to supply chains by increasing transparency, improving traceability, reducing paperwork, increasing efficiency and improving security.

Laing suggests that efficiencies can be made across entire fashion supply chains, from raw material producers to high street stores, by digitising inventories and having orders tokenised on the blockchain.

This could allow real-time tracking of supply and demand across the globe.

And, with corporations seeking to meet their environmental, social and governance (ESG) targets, this would create a constant record of the origin, location, and movement of goods to assess their ethical and environmental impact.

In regard to their textiles and fabrics, H&M (HM-B.ST) has committed to being 100% sustainable by 2040, and Levi’s has stated it would cut its greenhouse gas emissions in its global supply chain by 40%.

"With the blockchain you can transparently track every stage of the supply chain.

"You can show the water usage and how many CO2 emissions have been emitted to produce that product, where the fabric was farmed, where it has been made, like a digital label showing the source of the product, like you get on food", Laing added.

Blockchains and and counterfeit fashion goods

Tracking and recording every transaction within a supply chain can greatly improve an industry's efficiency and, because blockchain ledgers are transparent for all to see, they can reduce the risk of fraud.

Counterfeiting is a major problem for the fashion industry, data from Statista reveals that In 2020 alone, the fashion industry lost more than $50bn due to fake products.

By providing a transparent and secure supply chain, blockchains can help to protect the intellectual property of fashion brands, improve consumer trust, and reduce the amount of counterfeit goods in circulation.

"A blockchain allows you to have complete transparency and efficiency. If a fashion brand releases a limited edition product, say one of 50, then when a buyer gets their product they can see via the blockchain that it is actually that one of 50," Laing explained.

The authentication of products on blockchains is enabled by giving each batch or one of product a unique digital identity.

This identity can be used to track the product's journey from the manufacturer to the retailer, making it easier to spot counterfeit products.

So-called “phygital” authentication is a solution to combat counterfeiting and also ensure fashion brands have a presence in both the physical and virtual worlds.

Items of clothing will be sold with either a QR code attached that is linked to a non-fungible token (NFT) that is stored on a blockchain.

This authenticates merchandise using end-to-end encrypted blockchain systems and allows clothing to have a second life within the metaverse.

This new “phygital” paradigm has designs to revolutionise the fashion industry.

"When you purchase an item on PhygitalTwin, you get the physical piece of clothing, but also the opportunity to redeem the NFT, which gets printed on to the garment as a QR code.

Fashion's colossal carbon footprint

Clothes used to be worn for years, mended when damaged and not thrown out, items that became intertwined with the personality of those who wore them.

But now, most of the production activity in the fashion and clothing industry caters for high volume, quick turnaround, low-cost garments that people will wear for only a few months at a time.

This level of intense production has taken a toll on the world's environment. The fashion industry is now the second biggest polluter in the world, behind only mining, according to a report from The Global Fashion Agenda.

The industry is responsible for 1.2 billion tonnes of carbon emissions annually, every UK household, as a result of their clothing consumption, produces the equivalent emissions of driving a modern car for 6,000 miles.

Whether Web3 innovations will be adopted en masse by the fashion industry remains to be seen, but global industry and finance leaders are beginning to take ESG obligations seriously. Using he blockchain to automate many of the efficiencies needed to reduce carbon emissions could become more appealing.

Watch: Girls that Invest founder on why more women should embrace the stock market | The Crypto Mile

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