Harnessing the potential of blockchain technology for due diligence and sustainability in cotton value chains

The United Nations Economic Commission for Europe (UNECE) has developed an open source blockchain system to advance responsible consumers’ choices and business conduct in the cotton market. Through the system, industry actors can track and trace sustainability and circularity claims for cotton made clothing, from field to shelf, based on the UN standard for traceability and transparency of value chains.

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In the garment and footwear industry, companies are being confronted with the rise of the conscientious consumer who questions the social conditions and the environmental footprint of the clothes they buy while calling for greater transparency. Hence, making responsible choices easier for both businesses and consumers is a requirement. Traceability and transparency of value chains and reliable sustainability claims can help facilitate more informed choices. However, the sector is awash with misleading labelling and complex language that makes it difficult for both business and consumers to follow through on their good intentions.

Cotton production not only affects the health of the textile workers directly, but also that of wider communities because of the environmental pollution it causes; so one major industry challenge is to improve cotton production practices and, very importantly, to link these better practices to the sustainable cotton used by brands, retailers and manufacturers. This makes traceability a central component of many of the current sustainability initiatives in the apparel sector (UNEP, Sustainability and Circularity in the Textile Value Chain.)

In January 2020, UNECE launched a pilot project to develop a blockchain system for traceability and due diligence in cotton value chains, from field to shelf. The pilot is connected to the UNECE-UN/CEFACT framework initiative called “Enhancing Traceability and Transparency for Sustainable Value Chains in the Garment and Footwear Sector” jointly implemented with the International Trade Centre (ITC) and with financial support of the European Union from 2019 until 2022. The initiative aims to provide governments and companies with a set of tools to advance traceability, transparency and sustainability in this industry (a policy recommendation, a call to action, a standard for information exchange, implementation guidelines and blockchain pilot projects).

Hence, the purpose of this first pilot is to test the UNECE-UN/CEFACT traceability toolbox in a blockchain environment that enables immutable data storage and distributed access to all the actors involved in a value chain. These tools support the identification and coding of the key data entities that need to be collected and exchanged at critical data points in order to assess the sustainability performance of products, processes and facilities.

The pilot is being implemented in collaboration with industry actors, such as brands, cotton cooperatives, certification bodies and garment manufacturers covering the entire spectrum of value chain processes from field to shelf in countries like Egypt, Germany, Italy, Switzerland, the United Kingdom and the United States.

The collaboration with partners has been developed around four streams: sustainability claims definition, key data entities identification data and information sharing and stakeholders’ cooperation. Starting from UNECE Recommendation n°46 and Guidelines, the partners provided relevant information on sustainability claims regarding the origin, the composition, the use of chemicals and OECD due diligence requirements for cotton-based products, following the EPCIS reference data model template for traceability (who, what, why/how, where, when). Sustainability claims have to be supported by evidences (e.g. inspection, audit report, shipping notes, invoices, contracts) and certifications, whereby the robustness and verification is ensured through four assessment types (self-declared, self-assessed, second-party verified, third-party verified). The purpose of such process is for value chain actors and partners to provide data to be stored in the blockchain in order to support the claims formulated along the value chain. The data provided is analyzed from a business and a legal perspective to ensure data confidentiality and privacy by design through several levels of supply chain data disclosure in the platform.

As a complement to the digital traceability, the physical traceability (connection between the physical and digital traceable assets) can be ensured by markers, such as DNA markers. Physical traceability adds an additional layer of trustworthiness supporting risk mitigation, quality control and claims enforcement.

The availability of traceable materials and transparent data enable the circularity of these materials for both cases: the pre-consumption and the post-consumption phase.

Furthermore, this pilot will also define the governance model of an open blockchain consortium which is the foundation of a blockchain platforms for the industry.

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