October 15, 2020

Cotton Blockchain

The objective of this pilot is to enhance the traceability and due diligence in the cotton value chain through the implementation of blockchain technology, to support a circular economy approach. Working with a range of key industry players, UNECE will develop a blockchain solution for sourcing sustainable cotton. ---- Improving transparency and traceability has become a priority for the garment and footwear industry to increase its ability to manage its value chains more effectively; identify, mitigate and address labour and human rights and sustainability impacts; combat counterfeits; and manage reputational risks. Today, many companies have a limited view of the network of business partners within their value chain. Most can identify and track their immediate (Tier 1) suppliers, but information is often lost about the suppliers of their suppliers – a UNECE study demonstrates that only around 30% of fashion companies implement tracking and tracing in their supply chain – and most of these reach Tier 1 only. Nonetheless, the implementation of traceability in supply chains is a complex issue because it requires the collaboration of all stakeholders and the deployment of shared, reliable technical solutions. The global fragmentation of production is a key feature of the fashion industry which is further complicated by the prevalence of subcontracting and informal work, especially in lower supplier tiers. As a result, it has been difficult to provide consumers with information about product provenance Advanced technologies (distributed ledgers such as blockchains, AI, machine learning, Internet of Things) can enable fashion industry actors to improve supply chain transparency across a variety of ecosystems by making available all information about product origin in a transparent and trustworthy manner by assigning a digital identity to the product. Cotton is a key sector for the textile and garment industry because it is the world’s most widely-used natural fiber, with an approximate yearly global production of 20 million metric tonnes. It is a vital industry and a critical source of economic growth which contributes to the livelihoods of more than 350 million people, mainly smallholder farmers in developing countries. Nonetheless, cotton production has substantial environmental and social impacts which are increasingly interconnected and trickle down to negatively impact cotton producers. Many companies have already engaged with global cotton sustainability programmes and have started to shift from the use of conventionally-grown to organically-farmed cotton. In this context, and in connection with the UNECE project for advancing transparency and traceability of sustainable value chains in the garment and footwear sector, a first pilot will focus on a blockchain solution in cotton value chains. The pilot will be implemented in collaboration with experts from brands, manufacturers, raw material providers, standard-setting bodies and technology providers. It will cover all the production steps of the value chain along with relevant business data and sustainability data elements identified in a mapping conducted by UNECE and UN/CEFACT experts, and a selection of certificates linked to specific hotspots of the cotton value chain (i.e. certificate of origin, certificate of organic cotton, and certificate of zero discharge and hazardous chemicals substances), to ensure the traceability of a product type (i.e: a shirt/a suit, TBC) and assess the pilot’s scalability to other textile fibers.

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