The fashion industry plays a crucial role in the global economy, constituting a wide range of businesses, from global discount retailers to exclusive luxury brands. Currently, as of 2023, the global fashion industry is valued at $1.7 trillion.1 But fashion is one of the most challenging fields, influenced by both global economic unpredictability and distinctive trends and industrial shifts. To meet the demands for growth and cost-effectiveness, numerous brands have initiated various measures to enhance their ability to bring products to market quickly and incorporate sustainable innovation into their fundamental processes of product design, manufacturing, and supply chain management.

However, the eco-conscious shift happening throughout the apparel industry has not received adequate supervision from independent corporations or regulatory bodies. Some firms have been detected engaging in greenwashing practices, for instance, deploying deceptive product labelling. Nevertheless, accurately tracing products within an expansive, global mass production structure present substantial technical hurdles. Moreover, the absence of formal regulatory frameworks further exacerbates the intricate difficulties experienced by businesses in overseeing their supply chains.

A growing area of interest is the concept of circular supply chains, which strive to extend the life of goods and materials via repurposing and recycling, and simultaneously tackle waste and pollution through inventive design approaches. Until now, the fashion industry has faced challenges in effectively implementing and scaling circular business models. A significant obstacle for brands and their circular business partners has been the absence of infrastructure to properly identify and handle products post-sale. The industry lacks the necessary systems to efficiently manage products throughout their lifecycle, including processes such as resale, repair, recycling, and more.

A key feature of the circular economy is trackability, which facilitates the recognition and oversight of materials across their comprehensive life span. In a bid to boost authentication, transparency, and sustainability, as well as address long-standing challenges like counterfeiting, brands are planning to allocate resources towards implementing digital solutions that facilitate the maintenance and sharing of product information.

New York-based company Eon Group, for example, recognised a unique opportunity to leverage clothing labels as a means to introduce transparency and accountability to the fashion industry. By utilising an existing component of garments, it devised a solution that contributes to making the fashion sector more sustainable through digital ID and harnessing the Internet of Things (IoT).2 Eon’s technology has been adopted by many reputable fashion brands like Coachtopia by Coach, H&M, Outerknown, Pangaia, Chloé, Net-a-Porter, Nanushka and many more.

What is digital identity and digital passport?

These two phrases are often used interchangeably and are related, but they also have a stark difference. A digital twin or virtual replica of a physical product refers to a digital representation that allows the storage of product information digitally and provides online accessibility. It does not necessarily relate to a finished product, but digital ID can be of a material, a fabric, accessory also. This can be done simply by attaching a QR Code to the item, which will contain basic information such as the producer, manufacturing location, who produced it, where, who worked it, etc.3

But ‘digital product passport’ is a digital identity that includes all the data of every other component and material of the finished product. Similar to passports, these provide a comprehensive record of the product’s journey including details like the material composition, where garment was made, the working conditions in the associated factories, amount of water used to make the item, environmental impact, and point-of-sale. On the other hand, in addition to historical and material information, the digital ID also offers consumers with care instructions, repair guidance, and resale options specifically tailored to the individual item. These additional features have the potential to prolong the lifespan of a product and prevent it from being discarded in a landfill.

Product passports employ advanced technologies such as blockchain, QR codes, RFID, and NFC to allocate a distinct identifier to each article of clothing. This distinct identifier allows for valuable data storage and easy online retrieval of this information. It offers enhanced visibility to environmentally and ethically aware partners and consumers. It allows to follow up on all the physical interactions that a product has undergone with stakeholders across the value chain alongside providing authenticity guarantee or product authentication.

The digital product passport signifies the underlying technology for a new paradigm in the fashion industry’s economy. It transitions from a linear model of consumption (buy-wear-throw) to a circular one (buy-wear-recycle, resell, or rent). However, achieving this shift is only possible when customers have access to detailed information, empowering them enough to make informed decisions regarding the product’s lifecycle. Furthermore, upstream in the process, brands must employ a traceability system within the supply chain to collect and organise the necessary data relating to each product.

In the longer run, assigning a digital ID for each product will open up limitless possibilities for brands, including building loyalty by enhancing consumer trust. Brands will be able to track their products comprehensively, from beginning to end, enabling them to explore and expand new business models. This technology enables availability of the product data on the cloud and facilitates greater transparency and efficiency in the industry. Additionally, they can instantly authenticate their products and engage customers long after the sale. This technology is poised to take on a significant role in shaping the future of the fashion industry. Governmental entities, such as the European Union, are currently assessing proposals to implement this technology in consumer goods.