In the late 1980s, we started to hear about ‘sustainable fashion’ when founders of companies like Patagonia and Esprit started to notice the negative impacts of the clothing industry on the environment.
In parallel, the 1990s saw a wave of democratization in fashion. Due to the rise of globalization, fashion became cheaper and more accessible than ever, and Fast Fashion was at its highest. It wasn’t until the 24th of April 2013, when the Rana Plaza collapse happened, that the world really started to realize how bad the fashion industry had become.
The United Nations (UN) has had Sustainable Development on its agenda for a while now. To that effect, it adopted Sustainable Development Goals (SDGs) in 2015. The purpose was to trigger a universal call to action to end poverty, protect the planet, and ensure that by 2030, all people enjoy peace and prosperity.
The UN had defined sustainability as ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs. It’s a way to outline a Business Plan for the planet.
By now, you may be wondering what all of this may have to do with currency, to which the answer is simple: Blockchain. Blockchain is a transparent and secure ledger that uses a decentralized system to enable secure transactions, often used with cryptocurrencies. Some argue that blockchain technology is ‘disrupting everything’ and ‘could change the world’. This has brought many governments and central banks to embrace the cryptocurrency revolution. To put that into more practical terms, on a regional level, as early as 2018, the Central Bank of Bahrain tackled the possibility of launching the digital version of the Bahraini Dinar.
But one of the founding principles of cryptocurrency is that it’s decentralized and unregulated. This doesn’t come without resistance from major governments. We’ve lately noticed drastic action taken by the Chinese government in that respect. The SEC has even hinted that additional cryptocurrency regulations are expected to come into play. Another anecdotal issue with cryptocurrency lies in its potential impact on the environment. According to Digiconomist’s Bitcoin Energy Consumption Index, Bitcoin’s impact on the environment is comparable to the huge amount of energy used by countries like the Netherlands or Pakistan. Some even went as far as to describe it as a ‘dirty currency’.
Tesla’s CEO, Elon Musk, was one of the most prominent figures to have shed light on this particular issue. Musk single-handedly led to the fall in the value of Bitcoin after tweeting about the toll the mining of the digital currency is taking on the environment.
But how conceivable is the idea of introduced sustainability regulations, to a highly unregulated industry? We’ve noticed lately huge efforts to develop a ‘green’ Bitcoin that is an ecologically sustainable cryptocurrency. Despite these recent steps towards sustainability in the industry, several critics are extremely skeptical of their significant shift towards more sustainability.
From a legal standpoint, the matter is less ambiguous. In the absence of global or coherent national legislation regulating cryptocurrency, introducing a sustainability aspect remains extremely challenging. That being said, we can expect additional formal and informal efforts to grow further towards that in the next few years.