Can NFTs Make Fashion More Sustainable?

The fashion world is abuzz with talk of NFTs. But what exactly are they and how do they stack up when it comes to sustainability? There is great hope that this new technology will reduce fashion’s environmental impact by offering customers a new way of shopping - one that is not reliant on the constant creation of a ‘physical’ product. However, this may not be the full story. Let’s dig a little deeper to find out exactly what NFTs are and whether they can live up to expectations. 

What Are NFTs?
An NFT (non-fungible token) in the most simple terms is a digital asset that is stored on the blockchain and can be traded and sold using cryptocurrency.  

• A digital asset is anything a designer or brand has created in digital format. For example it could be a piece of digital art, music, video clip or in this case a fashion garment or accessory.   

 

• Blockchain is a digital ledger which records and stores transactions of cryptocurrency in such a way that it cannot be changed or hacked. It is maintained across a network of computers that are linked. 

 

• Cryptocurrency is a form of digital currency that is recorded and stored on the blockchain. There are several different types of cryptocurrency - Bitcoin and Ethereum are the most common. 

The important thing to remember is that a piece of ‘digital’ clothing is in itself not an NFT. The item needs to go through a computing process called ‘mining’ during which it is assigned a value and is embedded into a blockchain network. This ‘mining’ process stamps the digital item with details such as the time and date of creation, the designer or creator, and the number in circulation on the blockchain. While other pieces of digital fashion (that are exactly the same) may exist, only one has been ‘mined’ as an NFT and is therefore authentic.  Therefore the value of NFTs lies in their 'authenticity'. 

Potential social and environmental benefits of NFTs in fashion
NFTs have the potential to disrupt the fashion industry bringing about changes in they way fashion is produced, consumed and sold. There are a number of social and environmental benefits that may come out of this including:    

• Improved traceability -  NFTs that are linked to a physical product in the 'real' world could be embedded with information that authenticates ethical and sustainable production processes throughout the supply chain. Details of the raw product (e.g. organic or recycled fiber content), ethical and sustainable production processes (including certifications), distribution method (e.g. use of recycled packaging or carbon offsetting) and even end of life (whether the product was recycled, reused or composted)  could be stored on the blockchain for the consumer to access. Having this information readily available at point of sale would enable consumers to be more discerning when purchasing clothing and really 'shop their values'. 

 

• Fair distribution of wages - royalties can be programmed into the lifespan of an NFT so that the designer, supplier and garments workers are paid a fair cut of any future sales or trading.  In essence, NFTs could serve as a 'virtual contract' ensuring fair payment of all workers in the supply chain.   

 

• Reduce physical production and waste - NFTs provide an avenue for consumers to buy 'virtual' fashion thus reducing the resource consumption (land, water, energy) and waste generation (chemical, plastic and textile) associated with producing a 'physical' product. 

Environmental impact of NFTs
This all sounds great, however, there is a huge hidden environmental cost to NFTs…energy consumption. This is because the blockchain computing processes required to ‘mine’ an NFT and verify cryptocurrency are incredibly energy intensive. This energy is largely derived from non-renewable resources such as fossil fuels which of course produces carbon emissions. Calculations have shown that one transaction of the cryptocurrency bitcoin (which is one form of cryptocurrency used to buy NFTs) equals the power consumption of a U.S. household over 71 days.  And this is just bitcoin, there are several other cryptocurrencies that are used to buy and sell NFTs! The good news is that not all blockchain processes are so energy intensive. We won’t go into all the confusing details in this post but this is a great article on less energy intensive forms of blockchain technology if you are interested in learning more.

Sustainable NFT options for brands to keep in mind
If you're wanting to dabble in NFTs but concerned about their environment impact, here are a few things you can consider: 

• Do your research - know which forms of blockchain technology are least energy intensive and/or use renewable energy. 

 

• Offset your energy expenditure - try to offset NFT energy expenditure in other parts of your physical supply chain.

 

• Reduce physical production - by using NFTs to (1) - test demand for a product before going into production, (2) enable customers to purchase on demand and/or (3) replace rather than an add to your physical product range.

     

• Harness NFTs for social good - create NFTs where a percentage of the profits goes towards a social or environmental cause. Check out H&Ms Billion Dollar Collection for inspiration. 

 

• Utilize traceability - use NFTs as an adjunct to a physical product to enable customers to verify ethical and sustainable production processes throughout the supply chain. 

 

• Be transparent - with your customers on how much energy NFTs use and what your brand is doing to reduce your energy consumption. 

NFTs are the shiny new thing in fashion at the moment and there is great hope that they may help relieve fashion of its burden of overproduction and waste. However, virtual fashion still has an environmental impact we cannot see as easily. As a brand, it is your responsibility to approach NFTs with same due diligence as you would with any new product in your physical supply chain. If you do your research, work within the realms of your sustainability goals and communicate honestly with you customers you are on the right track to embracing this new technology responsibly. 

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