How transparency can mitigate environmental and human rights risks

Blockchain start-up Retraced was founded with the aim to make global production processes more transparent, also for the textile and garment industry. The company recently shared highlights of the year 2022, among them closing its second funding round and raising 6.5 million euros, winning three awards, expanding its team and having its platform used in more than 80 countries worldwide. Not bad for a company that is only in its fourth year of existence.

And that is just looking at the achievements on the company side. However, looking at the efforts over the course of the year for its clients, Retraced calculated that 13,700 human rights risks were mitigated and 4,050 environmental risks.

“By growing our global network of brands and suppliers, we are able to scale our impact on fashion supply chains and the people and environment within and around it. At the same time, we help our clients to become more efficient and support them to comply with all supply chain regulations,” commented Retraced co-founder and CEO Lukas Pünder in a press release.

FashionUnited wanted to know more about those impressive numbers on risk mitigation and contacted Retraced. The Germany-based company explained that the mitigation of risks is part of its popular Risk Assessment feature, which automatically gives clients a comprehensive overview on global gross risk factors based on OECD classifications and numerous indices and databases like ITUC, GRI, GSI.

Gross risk score by country assesses ESG parameters

It assigns a “gross risk score” for each country in the world for the three categories Environmental, Social, and Governance. Clients can check this score for each country they do business in, based on their supplier network, which is mapped via Retraced.

“The first step of risk mitigation is automatic – our system looks at the proof documentation that brands and suppliers already have attached to their Retraced profile, to see in how far they have mitigated global risks present in their supplier network,” explained Retraced in an email to FashionUnited.

“The next step allows for prioritisation – brands can see which areas need either improvement, and/or documentation from their network to help lower the risk. For example, there are a few countries that have a high risk of child labor. However, a brand on Retraced can see what that gross risk is, and see which suppliers based in that country have proof that they address those specific child labor risks. For those suppliers that don’t have it, the brand can follow up,” added Retraced.

“The next step of risk mitigation is therefore manual – our client brands prioritise and follow up with their supplier network, implementing corrective actions where needed, and importantly, collecting and providing relevant proof documentation to help mitigate those risks found in their initial automated assessment,” concludes Retraced.

Progress is a journey

Despite the achievements - among them being ranked as Germany’s top start-up to work for and winning the GEC Textile Award 2022, the German Prize for Environmental Economics NRW 2022, the Innovations for Tomorrow Award by Hess Natur and the Oracle Global Leaders Champion award for Retraced CTO Peter Merkert - there is still much to be done among an increasingly challenging environment.

“We continue to bring transparency to the production processes so that our partners can mitigate risks and prioritise next steps. However, the global supply chains of the fashion industry are incredibly complex and there is still a lot of work to be done. This slow progress can be frustrating and so it's important to realise that progress is a journey,” cautions Retraced.

Blockchain start-up Retraced calculated that 13,700 human rights risks were mitigated and 4,050 environmental risks in 2022 by using its platform.