Garrigues Digital_

Legal innovation in Industry 4.0




Interview to Neliana Fuenmayor (A Transparent Company): the importance of being open and honest

Cristina Mesa (senior associate of Intellectual Property and Fashion Law Practices).

Neliana, why does transparency matter?

Purpose drives trust — however the lack of trust is one of the challenges towards transparency. Global Scan Trust reports that ‘Two-thirds of consumers and shareholders value purpose. 65% of CONSUMERS globally try to support brands that are purposeful (…) 55% of people globally are unable to name a company with a strong purpose” This is an indication of lack of transparency by companies that still are in the business as usual mindset and was lacking behind new opportunities by embracing openness and engaging with new consumer segments such as digital natives who are drive by looking for purpose and having an impact in the world. In the era of the internet it is really hard to hide certain information, as is very difficult to control every piece of data, so why not be honest, no business is perfect, and by collaborating across sectors, e.g. fashion and technology new solutions can be designed for old and new problems such as textile waste.

How do you help companies in the transition from a linear to a more circular business model?

I think there is a shift happening in the fashion industry. As I am writing this I am on my way to the Copenhagen Fashion Summit, the largest annual gathering of the fashion industry to discuss the state of fashion, measure the progress and impact as well as setting new parameters. A year ago we presented the first case study implementing blockchain technology in a UK alpaca supply chain with Martine Jarlgaard x Provenance. What this means a year later, is that it has served as an example for businesses who are looking to transition from opaque and silo’d supply chains into open and circular, by embracing transparency and blockchain technology as a tool to achieve full circularity. We are working with partners just as Agroloop and Circular Systems to integrate our solutions to their existing recycling systems as we are a vision for a transparency and circular fashion industry. Many global brands are looking at how the implementation of blockchain can help them transition but as their supply chains are so complex and often low tech, there is a bigger job to be done, as well as a mindset shift to collaborate more with MSI’s, trade unions and tech companies. I would say we work with the pioneers and we help those who want to pioneer to discover and design new solutions in order to pilot. We are focused on long term results rather than short term fast fashion profits.

Do you think that nowadays “sustainability” is an actual factor taken into account when making a purchase decision?

The ‘S’ word, I think has been counterproductive for the movement of better fashion, hence I talk about transparency, as it places sustainability in terms of natural capital and ethical practices at the same level, I believe both are interdependent of each other. If a river gets polluted that will be bad for the community using that water, and if a worker doesn’t get paid fairly, means we are buying swap shop clothing even thought we may be buying organic food. So, the ability to sustain, is just how an ecosystem operates. In business we talk about sustainable business as in, is making a profit not a loss, but its not related to how the business has a positive impact in the sector or environment. Again, silo’d and fragmented mindset does not help towards a very much needed holistic approach.

How do you see the future of “smart labelling”?

I am in two minds with this, on one hand I love the fact that products will come with real time information where we can interact with it, know the origin of the actual t-shirt I am buying or the fish I am eating in a restaurant. That is how we can then be sure about things. On the other hand, it means more time looking at our phones especially in social spaces, but I see that it can be a great way to trigger conversations as well. Tapping with your phone an NFC tag on your dress to show your friend who just complemented you outfit and you can share and also educate people on the story of your garment is a powerful way to bring to life the resources both natural and human that took to make a garment. I also think smart labels will enable circle economy, otherwise, I have no clue how textile will truly giving a second life cycle without incinerating it or ending in land fields.

“Trust” is the keyword for a more transparent fashion industry. How do you secure clients’ trust?

Trust is what we are all looking for, as we are more and more understanding the power we have as consumers. We are all consumers and we want to get what the package says! We won’t buy the same brand if we get some and is not what we thought it was. We are becoming more savvy consumers and regardless of sustainability, understanding that we are voting with our wallets every time we buy into a service or product, is becoming a more powerful movement fuel by the lack of trust. With you trust there is not sustainable business.

Can you give us some examples of actual applications of the blockchain technology within the fashion industry?

Well, there are not many. We tracked the world’s first garment on the blockchain with our tech partners Provenance who have developed since 2013 a software to use a very complex technology with an incredibly accessible software. There are others in the space who are also piloting blockchain in fashion such as Loomia or Lusko who are raising an ICO. We believe blockchain is not about the hype for a new technology that will solve everything overnight, we believe the underlying technology of crypto is about the movement from centralised to decentralization and keeping accountability of claims of origin or authenticity.

Is the fashion industry ready for the digital revolution?

Well, if it is not, it will happen anyway. Artificial intelligence for instance is not something of the future, is the present and is moving fast. It will make fashion re-thinking the way is done, we are still using the 20th century systems and ways of producing. A dress will always be a dress but the design thinking process is where innovation meets technology. We need to embrace digital an evolutions towards new solutions fit for the 21st century.

What is your advice for those fashion companies which are willing to undertake their digital transformation?

The advice I always give is to be more open and collaborative, to be ok with not being perfect and to communicate it. People build trust in business that are open and honest, is not the same publishing a press release to say ‘sorry’ after the damage is done. So in terms of adopting new technologies such as blockchain or AI is about understanding that is a journey, but the goal has to be set at the start with a strong purpose to not get lots on the way.

Do you think that Spain has a say in the FashionTech industry?

I think Spain has already given a great lesson to the fashion industry by how Inditex built their operations and supply chains, by rethinking the way it was produced and where, being able to react to consumer behavior. I think that was the key of their success, placing the consumer at the heart and that is what tech companies do too. Costumer centered solutions can help a great deal the fashion industry that is known for ignoring a part of the population e.g. plus size fashion. So what is next, I think, in Spain there is a huge gap between Zara and smaller brands like Adolfo Dominguez (who are a vegan brand) in terms of annual revenue and customer reach, but both have their USP, and maybe a consortium of Spanish brands who want to share their challenges towards sustainability, innovation and transparency could be a great way to bring Spain closer and make a stronger more impactful fashion industry.