Amid The NFT Craze, Is There A Place For Digital Sustainability?

    More brands are expanding into the virtual realm through games and NFTs. But can they keep their sustainability commitments in this carbon-emitting sector?
    More luxury brands are expanding into the virtual realm through video games and NFTs. But can they keep their sustainability commitments in this carbon-emitting sector? Photo: Didu, Shutterstock. Composite: Haitong Zheng
      Published   in Finance

    Key Takeaways#

    With consumers increasingly concerned about the environment, it is more important than ever for brands to make good on their sustainability promises. However, some of their digital ventures aren’t as eco-friendly as they seem.

    As brands experiment with virtual fashion, they can reduce digital waste by building off existing design templates and erasing data that is no longer needed from servers.

    Blockchains can be part of the solution, as digital passports can help brands authenticate luxury items and embrace the burgeoning resale market.

    After multi-million dollar bids on digital sneakers and artworks, it’s no wonder that luxury houses view NFTs as the next El Dorado. Beyond generating buzz, these digital tokens help brands establish online ownership and scarcity for their products — impossibilities before smart contracts provided proof of provenance.

    But like the fabled city of gold, exploring the virtual realm comes at a cost. NFTs, which are usually bought and sold on the Ethereum blockchain, require thousands of computers to validate transactions and can consume as much electricity per year as the entire country of Libya. Although the Ethereum platform recently pledged to become more energy efficient, the power needed to sustain the broader crypto market could still wreak environmental havoc and even raise the Earth’s temperature by two degrees.

    That leaves luxury in a predicament. With the pandemic elevating consumers’ focus on sustainability, it has become increasingly important for businesses to prioritize environmental protection. But as blockchains show, digital ventures aren’t always as green as they seem. Every transaction in the virtual world requires a backend or technical stack to power it into being, which, small as it might be, contributes to a company’s overall energy expenditure.

    So, how can brands continue to digitize while staying true to their CSR commitments? Cue digital sustainability.

    A relatively new term, Kelly Vero, the chief creative officer at AR company Dazlus AG, defines digital sustainability as “the balance of utilizing digital transformation in meaningful ways that don’t contribute to the overarching carbon footprint.” In other words, as tech-savvy players launch things like online lookbooks, skins, video games, and now NFTs, they should also strive to reduce the physical and virtual waste created in the process.

    Sustainability is quickly becoming “the new digital,” and it’s time for luxury to disrupt or get disrupted. Below, Jing Daily spoke with Vero and Pierre-Nicolas Hurstel, CEO of digital passport platform Arianee, about tangible steps brands can take to level up their green practices online.

    Build from digital templates#

    From Carling’s augmented reality shirts to Louis Vuitton’s League of Legend skins, more brands have jumped on the virtual fashion trend — and for good reasons. In addition to pushing creative boundaries and engaging new audiences, digital clothing offers a much cleaner option than traditional cotton pieces. Multi-brand retailer Dress-X found that producing one digital item emits 97 percent less carbon than a physical garment and saves 3,300 liters of water (enough for one person to drink 8 cups per day for 3.5 years).

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    To further shrink this impact, brands can consider building articles from existing templates on 3D design platforms such as CLO3D, Marvelous Designer, Browzwear, and Optitex. Because many garments, such as T-shirts, pants, and shoes, have essentially the same shape, creating over the top of a stencil rather than starting from scratch saves both time and energy. “Stop trying to reinvent the wheel guys,” Vero said. “You don’t need to draw a T-shirt out every single time. You only need to customize it and make it closer to your brand.”

    Create around seasonal events#

    But as fashion houses rush to drop the next hottest look, another complication arises. After new items or projects are released, they are typically forgotten about and left sitting on a server to eat up energy. That's why Vero suggests driving sales around large, seasonal events rather than months-long periods, looking to China as an example. “From a digital sustainability perspective, [shopping festivals] are amazing because they just get rid of everything instantly,” the digital fashion expert explained. “Once Singles’ Day is over, it is done. Everything gets taken off the server.” By focusing on online holidays like Lunar New Year, Singles’ Day, 6.18, and International Women’s Day, brands can still give shoppers something new and exciting over a shorter time frame.

    In fact, some would argue consumers don’t need new clothes every season, particularly in this post-pandemic era. Several big luxury names have already stepped away from the traditional seasonal calendar; Gucci, for one, announced last May it would “abandon the worn-out ritual of seasonalities” and show just twice a year. This practice cuts down the amount of clothing that gets churned out (and eventually thrown out) each year while also giving designers more room for creativity.

    Use blockchains to support secondhand resale#

    Although blockchains have a bad environmental reputation, Arianee proves they can actually be part of the solution. Using a more energy-efficient side chain of Ethereum called L2, the French startup has created digital passports for physical goods. According to co-founder and CEO Pierre-Nicolas Hurstel, these passports are more than just certificates of authenticity — they are also documents that help clients insure their high-end items, track repairs, and access brand features. Plus, they can be particularly useful for sustainability. "The day you are fed up with [the product] and want to resell it for something else, these digital passports will help you do that with trust and seamlessly," Hurstel added.

    Baamp;sh is one brand that works with Arianee and the resale platform Reflaunt to extend the life of its fashion pieces. Through this partnership, consumers can easily buy or sell pre-owned Baamp;sh clothes, as every piece is automatically authenticated and simultaneously posted on several marketplaces with a suggested resale price. Aside from promoting circularity, blockchains can also provide transparency into how the garment was made, from the labor certifications obtained to where the cotton was picked.

    Leave a good digital legacy#

    Granted, these strategies play a small role in mitigating fashion’s unsustainability. Ultimately, the biggest menace to the environment is the production of raw materials, which is why Hurstel says brands need to start here. The next step is making sure products can easily be resold or recycled, so they don't clog up landfills or get incinerated.

    Fortunately, many luxury brands have already begun tackling these issues, from innovating their fabrics and establishing conservation funds to investing heavily in the secondhand market. But as these companies become more digital, so too should their sustainability efforts. Not only should they use digital tools to scale back their carbon footprint, but they should also assess how their activities in the virtual world reap consequences in the real one. While El Dorado may be lost, the road to a greener future is right ahead.

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