Luxury brands explore blockchain and Web3 for sustainable business practices

Luxury brands explore blockchain and Web3 for sustainable business practices


Why luxury brands are jumping on the NFT bandwagon

From Prada NFTs to Dolce & Gabbana fashion shows in the Metaverse, Web3 is definitely on trend. As brands try to win over Gen Z consumers, they are flocking to the metaverse to capitalize on the trend and improve consumer experiences. However, brands that view this technology as a passing fad may be missing a trick, and luxury brands that want this to pay off in the long term need to think carefully about how they use Web3 and blockchain beyond simply showcasing products – from consumer experience, to increased customer participation and meeting ESG targets.

Luxury brands are facing a generation of buyers, most of whom are more faith-driven than ever before – in fact, 62% of Gen Z prefer to buy from sustainable brands. As businesses continue to grapple with the challenges of sustainability and meeting their environmental, social and governance goals, blockchain technology may be the answer. Blockchain is, by design, transparent and immutable, enabling brands to build a record of their supply chain, products and processes to reliably demonstrate their sustainability efforts, meet their ESG goals and evolve into a future-proof business.

Digital registration of material goods

Some NFT skeptics see them as an overhyped craze, where the crypto-rich pay outrageous prices for digital art. But digital art is just one example of the use of NFTs, which are simply a means of assigning a unique value to digital assets. In reality, they hold much more promise.

The same technology that provides verifiable, unique ownership of NFTs can be used to verify the ownership and origin of physical goods. Digital Product Passports (DPPs), for example, leverage the secure, transparent nature of blockchain to create a record linked to unique products, which can be used throughout their lifecycle. Everything from verifying supply chain details and tracking sustainable sourcing, to adding value to the vintage and resale market with authentication and past ownership checks, can be designed using blockchain technology.

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Blockchain technology can also be used to improve the customer experience and improve trust in a company’s sustainability efforts. By referring to DPPs, customers can gain a more detailed understanding of the entire supply chain of products they purchase, such as the source of materials and the manufacturing process.

When source materials enter the supply chain, information about where they came from can be recorded on the blockchain so consumers can check for themselves that they are made from ethical, renewable components. The production facility and its location can be registered, to prevent the covert use of unethical labor in developing countries. Instead of simple ‘Made in X’ tags on the item, each component part can have a richer, more detailed story that consumers can confirm with the push of a button.

The DPP can also be updated every time a luxury item is repaired, changed or resold. This gives potential customers a better idea of ​​the history of the item they are buying at a used market and the truth that repairs are of high quality.

Get customers involved in the conversation

Governance is another application area for blockchain that is still coming of age. Companies in the gaming sector are familiar with decentralized autonomous organizations (DAOs), but any brand can leverage this technology to bring customers into certain aspects of corporate governance. This may involve allowing luxury goods customers to participate in the decision-making process about collaborations with other businesses or designers, or in deciding where to direct philanthropic donations.

DAOs work by issuing voting tokens to customers, which can be based on the number of products owned, how long an account has been held, or how long a product has been owned. Customers can use these tokens to vote, with the blockchain storing an immutable log that ensures fairness and transparency in the outcome.

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Allowing customers to vote this way on collaborations, philanthropic recipients, or even to gauge opinion on new lines can effectively turn customers into stakeholders and more loyal brand advocates.

Blockchain provides revenue

Gen Z is already spending on Web3 – almost a quarter (23%) have already started collecting NFTs. While the ESG opportunities outlined above are compelling, there are also some promising reasons why investing in blockchain could see rapid results in the luxury goods sector, not least because of the opportunity it provides to enhance the customer experience in ways that today’s consumers value.

Blockchain could be the future of sustainable business practices. If product authenticity can be verified by a tamper-proof record stored on the blockchain, as well as ownership records, brands can seize the opportunity to resell their own vintage collections to consumers, creating a circular economy and increasing revenue. This also means the longevity and quality of a brand’s products, as well as the timeless appeal of luxury goods, which increases brand value.

With a digital product passport associated with each product that can be easily and quickly verified, counterfeits can be quickly identified, reducing value as buyers are denied access to resale markets, quality assurance and Web3 experiences from the brand.

Not only are counterfeits bad for the environment, often resulting from unethical labor practices and low-quality materials, they undermine revenue and brand value for luxury brands. Profits can therefore be strengthened by taking technological measures to make products more difficult to counterfeit.

Web3 and blockchain: Here to stay for more than one season

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Blockchain technology offers luxury goods creators a unique opportunity to not only prove their efforts to implement sustainable business practices, but also improve the customer experience – two key facets of winning over Gen Z consumers. By creating a transparent, unchanging view of their products and involving customers in aspects of governance, businesses can enable circular economies, increase transparency and trust, and promote sustainability.

As the business landscape continues to evolve, companies that embrace blockchain technology, both to enable and prove their sustainable business practices, will be well positioned to succeed in a market where social responsibility is increasingly important.

About the author

Lars Rensing is the CEO of Protokol. Protokol is a full-scale Web3 & blockchain provider offering a range of services, products and solutions. All about simplicity, our streamlined and phased approach to service delivery minimizes complexity and lowers barriers to entry for implementing Web3 and blockchain technology. Whether we act as a complete solution provider, consulting partner or systems integrator – we deliver tailored Web3 solutions in an open and inclusive ecosystem to help your business turn complex blockchain technology into concrete business results. Find out more at

Featured image: ©Lev


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