Applications of Blockchain Technology in Sustainable Fashion Supply Chains: Operational Transparency and Environmental Efforts

Abstract

Using environmentally friendly materials is a popular business practice in the fashion industry nowadays, which can affect both a fashion product's cost and its environmental impacts in the manufacturing process. Given the growing social consciousness of the public, the integration of environmentally friendly materials can also influence the market demand of fashion products. This article studies the information disclosure games over the environmental efforts in fashion supply chains. We consider a fashion retailer, which is the Stackelberg leader, orders sustainable fashion products made from environmentally friendly materials from a manufacturer. The fashion retailer can choose either to affix the eco-label or to adopt the blockchain technology, to declare the environmental quality of the fashion product to consumers. Meanwhile, given that the environmental quality is unobservable to the fashion retailer and the consumers, the manufacturer with credibility concerns can have the actual environmental quality of the fashion product discounted. We discuss how the application of the blockchain technology influences the information disclosure games over the environmental efforts in the fashion industry. Findings in this article advance the understanding on the application of the blockchain technology in sustainable practices in fashion supply chains.