Alternatives to Extended Producer Responsibility: Industry-Wide Strategies

Description

Digital Product Passports (DPPs) are like virtual ID cards for fashion products. They contain essential details such as where a garment was made, the materials used, and the processes involved in its production. These passports allow stakeholders to track the full lifecycle of a product, from raw materials to the final garment and even to recycling or disposal (Mattaba & Fatahi Valilai, 2024; Stodt et al., 2024).

Blockchain technology acts as a secure, digital logbook for these passports. Think of it as a shared notebook where every update about a product—like when it’s dyed, shipped, or sold—is written down permanently. This notebook is decentralized, meaning no single person or organization controls it, and every entry is tamper-proof. This ensures all information is trustworthy and accessible to everyone involved, including brands, suppliers, regulators, and consumers​ (Mattaba & Fatahi Valilai, 2024; Blok, 2024).

While EPR focuses on assigning responsibility for the end-of-life management of products, DPPs and blockchain offer a proactive approach by embedding traceability and accountability throughout the supply chain. Instead of simply mandating waste collection and recycling, this technology ensures that garments are made with sustainability in mind from the start. For example:

• DPPs provide brands with a clear record of the materials and production processes, making it easier to comply with regulations and manage post-consumer waste effectively (Stodt et al., 2024).
• Blockchain ensures transparency across the supply chain, preventing greenwashing and holding stakeholders accountable for meeting sustainability standards (Mattaba & Fatahi Valilai, 2024; Blok, 2024).

By offering real-time data and traceability, DPPs supported by blockchain can make the entire supply chain more efficient, helping brands identify wasteful practices and improve resource use.

Benefits

• Improves Transparency: DPPs combined with blockchain technology provide full visibility into a product’s journey, from raw material sourcing to end-of-life disposal, ensuring that brands and consumers have access to trustworthy and tamper-proof information (Mattaba & Fatahi Valilai, 2024; Stodt et al., 2024).
• Supports Regulatory Compliance: With detailed lifecycle data, brands can easily meet sustainability regulations like the European Green Deal reducing the risk of penalties (Stodt et al., 2024).
• Prevents Greenwashing: Blockchain’s immutable ledger ensures that sustainability claims are backed by verifiable data, enhancing trust between brands and consumers​ (Mattaba & Fatahi Valilai, 2024; Blok, 2024).
• Encourages Sustainable Practices: The visibility offered by DPPs helps brands identify inefficiencies or unsustainable practices in their supply chains, encouraging proactive changes that reduce waste and environmental impact (Stodt et al., 2024).
• Facilitates Circular Economy: DPPs track materials and their potential for reuse or recycling, supporting circularity by making it easier to repurpose garments or manage them at the end of their lifecycle​ (Mattaba & Fatahi Valilai, 2024; Stodt et al., 2024).
• Empowers Consumers: By providing detailed and accessible information about a product’s sustainability credentials, DPPs enable consumers to make informed purchasing decisions that align with their values (Stodt et al., 2024).
• Reduces Administrative Burden: Automated data updates via blockchain streamline reporting processes for brands, making compliance and supply chain audits more efficient (Blok, 2024).
• Cost-Effective in the Long Run: While implementation requires initial investment, the streamlined data management and reduction of inefficiencies can save costs over time​ (Mattaba & Fatahi Valilai, 2024; Blok, 2024).

Challenges

• High Initial Investment: Implementing DPPs and blockchain technology requires significant upfront costs, including software development, infrastructure upgrades, and staff training (Mattaba & Fatahi Valilai, 2024; Stodt et al., 2024).
• Complex Integration: Integrating blockchain into existing supply chain systems can be challenging, especially for brands with fragmented or poorly documented supply chains​ (Blok, 2024; Stodt et al., 2024).
• Knowledge Gaps: Many stakeholders, including suppliers and smaller brands, lack the technical expertise to adopt and manage blockchain systems effectively (Blok, 2024).
• Data Standardization Issues: Ensuring that all supply chain participants collect and input data consistently can be difficult, particularly in global supply chains involving diverse stakeholders​ (Mattaba & Fatahi Valilai, 2024; Stodt et al., 2024).
• Energy Consumption: Some blockchain systems, especially those relying on proof-of-work protocols, can be energy-intensive, raising concerns about their environmental impact​ (Blok, 2024).
• Privacy Concerns: While blockchain offers transparency, ensuring that sensitive business data remains secure and private can be a challenge, particularly in competitive industries like fashion​ (Blok, 2024).
• Adoption Barriers for Smaller Brands: Small and medium-sized enterprises (SMEs) may struggle to afford the technology or lack the resources to participate fully in blockchain-based systems (Mattaba & Fatahi Valilai, 2024; Stodt et al., 2024).
• Consumer Accessibility: While DPPs provide valuable data, making the information understandable and actionable for consumers requires additional effort in terms of design and education (Stodt et al., 2024).
• Dependence on Collaboration: Blockchain systems require participation from all supply chain actors to function effectively, which can be difficult to achieve in industries with competing interests or limited trust​ (Mattaba & Fatahi Valilai, 2024; Blok, 2024).

Potential Costs

• Technology Development: Developing and implementing DPP and blockchain systems require significant investment in software, hardware, and IT infrastructure.
• System Integration: Integrating blockchain into existing supply chain management systems may involve costly upgrades and custom solutions to ensure compatibility.
• Training and Education: Brands, suppliers, and other stakeholders need training to effectively use blockchain and DPP systems, adding to implementation costs.
• Ongoing Maintenance: Regular updates, system monitoring, and troubleshooting for blockchain networks and DPP platforms incur continuous expenses.
• Data Standardization: Ensuring consistent data collection and input across global supply chains may require investments in harmonized protocols and tools.
• Supplier Participation: Supporting smaller suppliers in adopting blockchain systems might involve subsidies or incentives, especially for those lacking resources.
• Energy Costs: Blockchain networks, particularly those using energy-intensive protocols, may lead to higher operational costs for electricity and infrastructure cooling.
• Privacy Safeguards: Implementing additional measures to protect sensitive business and consumer data could increase costs, especially in competitive industries like fashion.
• Consumer Engagement: Designing user-friendly interfaces and educational campaigns to make DPP information accessible and actionable for consumers may require marketing and development budgets.
• Scaling the System: Expanding blockchain-based traceability systems across all product lines and regions involves incremental costs as more nodes and data are added to the network.

Examples

• The Aura Blockchain Consortium, established by luxury groups including LVMH, Prada Group, and Cartier, offers blockchain-based solutions to enhance transparency and traceability in the luxury industry, enabling consumers to access a product’s history and verify its authenticity.
• Provenance collaborates with fashion brands to implement blockchain technology, enabling consumers to trace a garment’s journey from raw material to finished product.
• The Organic Cotton Traceability Pilot, a collaboration between the Organic Cotton Accelerator, Fashion for Good, and partners like C&A Foundation, Kering, and Zalando, tested the effectiveness of combining blockchain technology with various tracer techniques to track organic cotton from farms to consumers. The pilot demonstrated the feasibility of a transparent system that verifies the origin and authenticity of organic cotton fibers in garments.