As governments around the world crack down on companies whose supply chains are linked to forced labour and other unethical and unsustainable practices, clothing retailers that have not considered introducing blockchain technologies to help provide them with supply chain transparency stand to lose out, says GlobalData, a leading data and analytics company.

Blockchain technologies enables clothing retailers to track and trace the materials and manufacturing processes in their supply chains providing them with the confidence they need to back up claims that products originate from renewable, sustainable and ethically made sources.

Supply chain transparency is becoming a pressing issue for the fashion industry as governments take action against unethical practices. A recent report has called on the EU Commission to introduce laws that will force companies to fix labour and environmental violations in their supply chains and the German government has agreed to new legislation forcing companies to comply with social and environmental rules along their global supply chains. The Dutch government is mulling a similar bill.

While blockchain can help companies track their supply chains from ‘fibre to finish’ helping them to comply with these ever increasing regulatory requirements, according to GlobalData, just 8% of tech decision-makers claim to fully understand blockchain, making this the lowest response of all technologies reviewed in a recent GlobalData executive survey.

Hannah Abdulla, Apparel Correspondent at GlobalData, comments: “Blockchain is a game changer for the apparel and fashion industry as the technology helps companies prove the provenance of materials and manufacturing, something that is becoming more and more important to governments and consumers around the world.”

As governments take action the United Nations Human Rights Council has recently approached companies about their potential use of forced labour in China and the US has updated legislation to prevent any goods entering the country unless there is proof they do not contain inputs originating from the Xinjiang Uyghur Autonomous Region (XUAR) of China. However situations like this highlight how problematic it is for apparel brands and retailers to manage global supply chains as 20% of the world’s cotton comes out of Xinjiang, and there is no guarantee that the regions cotton is not already mixed up in clothing supply chains.

Abdulla adds: “Some apparel and footwear firms are already embracing technology solutions in their supply chain management. Calik Denim has a partnership with Aware and the ‘Fashion for Good’s’ pilot project traces eight of Bestseller and Kering’s garment styles back to the source, but the industry is far from where it needs to be on this as the situation in Xinjiang highlights, but blockchain can help companies deal with and stay ahead of these important issues.”