Originally created to deliver traceability, proof of provenance, and a new system of authenticity to the diamond supply, Everledger recently made headlines in fashion with its work on Alexander McQueen’s MCQ label.  There, in partnership with Temera, Everledger showcased how a permanent digital record of every garment can generate new kinds of customer engagement at the same time as offering a new method of certifying authenticity.

As a capstone to our blockchain coverage, The Interline spoke with Leanne Kemp, Everledger’s Founder and CEO, about whether blockchain could – or even should – replace traditional systems for tracking products up and downstream.

The Interline: We’d like to start by quantifying the problems that a lack of accountability, proof, and transparency are causing within consumer-facing industries like fashion.  In your experience, are the primary catalysts for change coming from the consumer side, or from brands and retailers’ own challenges?

Leanne Kemp: It’s all of the above.  But the major thing to note is that it’s a clear and unambiguous trend in the right direction: the complex network of global suppliers to the apparel and footwear industry is already much less opaque than it was a few years ago.

There are, though, still clear challenges – particularly around human rights.  The world still vividly remembers the disaster in Bangladesh, and other atrocities that have occurred within the global supply chain.  But there are also simplistic things that can be put in place to help avoid these kinds of things re-occurring.  Knowing your factories is a key one, since it allows labour abuses and other issues to be identified quickly, and it gives apparel companies, labour organisations and even human rights groups the ability to intervene early.

But of course the direct manufacturer is only the tip of the iceberg in the apparel supply chain; you’ve also got spinning, knitting, weaving, ginning, dyeing and all those other activities.  It’s a very different prospect to the diamond industry, where you’re effectively just mining a rock out of the ground, cutting it the single location where 90% of stones are cut and polished, then sending it to be graded and shipped to retail.

The other thing to bear in mind is that, yes, Gen Z consumers are asking more questions about the environmental and ethical footprint of the things they buy, but there are also serious initiatives driving this trend from a financial perspective.  Capital markets are now asking similar questions about supply chain transparency and corporate responsibility, and investors will be wary of putting money into businesses that can’t make confident statements.

The Interline: Thinking about that sort of due diligence, it’s interesting how much of product provenance we currently take at face value, because it’s underwritten by a third party or given a certification.  If we consider a badge like Fair Trade, or the Global Organic Textile Standard, how is the kind of provability you’re talking about different, and why is third party assurance not future-proof?

Leanne Kemp: There’s a parallel there between what the financial world is currently doing with KYC (Know Your Customer), which involves looking at the transparency issue from the perspective of entities – whether they’re consumers or organisations.  What we’re proposing is KYO (Know Your Object), which is a very different prospect, because it’s visibility at the object level, without any abstraction, from the point of origin.

And that object could be rare earths and minerals, which would be given an identity when they’re extracted from the ground, or in fashion’s case it could be raw materials at the point of farming.  Either way, the point is that no certification programme has that level of granular visibility at the moment.  They’ve been effective at laying out the rules of the road, so to speak, but they can’t tell who’s actually driving the car.

The big problem with tracking and certifying suppliers rather than objects is that many brands today rely on buying agents or other intermediaries who negotiate with suppliers on their behalf, and then source materials and labour from suppliers and sites whose identities they might not disclose to the brand.  In these cases – which are very common – the brand has zero visibility and a lot of exposure.

This doesn’t automatically mean that agents who do not disclose their suppliers are purposefully circumventing codes of practice, mind you – they may simply worry that opening their books with lead to brands placing orders directly with the factories, and cutting them out of the equation.

The key consideration, though, is that there are leading companies – Aldi, Clark’s, and Kings of Indigo to list just a couple of examples – that are now starting to move away from indirect sourcing.  This is where blockchain and secure, object-level data sharing will allow the industry to make massive steps towards transparency: we can start to say with total confidence that a material, or a finished garment has passed through an environment where a clear code of practice is being adhered to.  And third party certification bodies can still carry on auditing those environments; the difference will be that we’re tracking the items they handle, rather than the environments themselves.

The Interline: You’ve hinted at an important question there: why blockchain?  What is it about supply chain visibility and sourcing transparency that can’t be done – or at least not done to the standard the world is going to soon demand – with a centralised database and an application layer?

Leanne Kemp: Really there’s nothing to say that it can’t be done that way.  Blockchain alone is not a supply chain traceability or provenance solution – it has to be part of a symphony of different technologies that come together.  Practically speaking, any industry is always going to have on-chain and off-chain data, so blockchain will not “take over” the entire task of transparency.  Instead, we’re building towards a world where machine-readable events can facilitate searchable, accessible online data storage and secure sharing.

If we were able to trust every person and every corporate entity, then we’d be able to throw the blockchain away.  But the reality is that blockchain, as a technology, does double duty: it enables a level of trust that just doesn’t exist in inter-corporate relationships right now, and it also provides for very strong cryptographic sequencing that doesn’t necessarily exist in off-the-shelf databases today.  So for me, blockchain provides a technical environment that’s different – not superior – to other technologies that exist, but it might be an environment that’s better-suited to applications such as supply chain transparency, where there’s a mismatch between the level of proof that shoppers and regulators are going to demand and the level of proof that person-to-person trust can provide.

Copyright MCQ

The Interline: Let’s go back for a moment to that “symphony of technologies” you mentioned.  That links to an important issue: the matter of what data is collected at source, before it enters the blockchain record, and how reliable it is.  In luxury goods this might be relatively straightforward, given that the supplier could be one craftsperson or a cadre of artisans.  But for a mass market garment you could be looking at collecting accurate information from, as you said,  a cotton grower, a dye house, a finished fabric supplier, a proximate manufacturing partner and so on.  How do you see that hurdle being overcome?

Leanne Kemp: I’m glad you mentioned that, because there is actually already an open data standard for the apparel sector (ODSAS), which is designed to make factory disclosures machine-readable and usable.  So the framework for having easily searchable data events is already falling into place.

In the diamond industry, we’re quite fortunate because we don’t need to attach anything to a stone to read its object identity – each diamond actually has unique physical features that various different scanning technologies can read, which makes it straightforward to create an exact digital twin.  It’s a very different prospect in textiles, where you need to identify cotton, for example, at its source, then maintain that identity as it goes through its ginning and spinning processes.  But there are ways to manage that at an object level, or even a DNA level, and I think soon you’re going to see much more in the way of scanning and machine vision technology making its way into the hands of factory and supply chain users. 

Because you have to remember that this isn’t the 1980s, and factories around the world – not just the near-shore ones – have come a long way in their own technical knowledge and capabilities.

Like I mentioned earlier, collecting reliable information and then tracking it is going to require the connection and inter-operation of a lot of different technologies.  Everledger is not just a blockchain company; we have data scientists, machine vision experts, and IoT and RFID super-nerds who are all essential to making the whole thing tick.

The Interline: Where do you believe the primary value of blockchain-backed sourcing visibility lies – in internal brand use, or opened up to consumers? For some businesses, it might seem like the two have to go hand-in-hand, and that a blockchain initiative means, by definition, opening up their in-house processes to a wide audience.  Do you see that as the logical destination for blockchain – telling a different kind of story to the end consumer – or is it enough to apply the same principles in-house?

Leanne Kemp: They’re really solving different problems to be honest, and even saying “consumers” is casting a wide net.

The work we did with Alexander McQueen is a great showcase for where those two elements can come together, though.  That’s an example of Web 3.0, which is where community-driven fashion platforms, that rely on the sort of object-level identity we’re talking about, can be born.

If you think about a high-end piece of fashion, there are a lot of entities that touch it throughout its lifespan: the label, the collaborators, the influencers, the collectors, the community, and even the next owner.  These people can all meet together on a single blockchain platform, provided we make it intuitive to securely register, engage with, and trade clothing peer-to-peer.  And that’s going to have a big impact on sustainability, in my opinion, since consumers will be able to see what happens to a product after it leaves them – getting the knowledge that it’s not ending up in landfill.

The image at the top of this article includes garments copyright MCQ.