Insights / Fashion-tech
”Making transparency front and centre in the business invariably results in superior end products”
On how to create a carbon-negative fashion supply chain — without buying carbon offsets
25 Apr 2023

Who are you?

— My background is in the technology sector and in my last venture I was focused on bringing transparency to complex financial markets, says Wessely. I’ve founded Sheep Inc together with Edzard van der Wyck, who had founded another clothing brand and saw the impact of fashion first-hand and the immense level of intransparency in the fashion sector. So, we got together with the idea of creating a new model for how a fashion business could behave and help drive awareness around fashion’s impact.

Edzard van der Wyck and Michael Wessely.

What makes you so unique with Sheep Inc?

— When we launched, we built the whole brand off a central question of ’how do you set up a fashion brand for the 21st century?’ We wanted to fundamentally change how we view and purchase clothing and find a way to create knitwear that is sublime in wear, but also unprecedented in impact. For that reason, we have created fashion’s first naturally carbon-negative supply chain. So every product we produce has a negative CO2 footprint, which has been independently verified — meaning in its creation we naturally take more CO2 out of the atmosphere than we produce. And importantly, this is not achieved by buying carbon offsets. In detail, this means that we source the finest Merino wool in New Zealand from sheep stations that are at the forefront of the regenerative farming movement. They manage land in a way that results in more CO2 getting taken out of the atmosphere, through the natural plant and soil sequestration, than the amount of total CO2 that gets produced on farm. Including, for instance, a sheep’s methane output. So the wool we source has a negative CO2 footprint of -14kg CO2e. They also conform to the highest animal welfare standards worldwide and the rest of our suppliers are equally aligned and committed to having a positive carbon impact. With all our manufacturers working with solar electricity and committed to other innovative sustainable manufacturing methods that mean the entire manufacturing stage accounts for only around 0.5kg CO2e.

And you’ve also included an on-garment NFC tag — the ’Connected Dot” — on the pieces. What is that?

— We did it to bring full transparency and traceability both to our internal operational processes and to the end consumer. For this end, we developed a proprietary piece of software that integrates with our suppliers and tracks the unique provenance journey of each knit we produce, meaning we can track everything from where the wool came from to who finished the garment. On top of the provenance information, we also register CO2 impact and run a full, third-party validated, life cycle assessment to keep track of impact at every stage and to make sure that this information is independently verified. ​​So the Connected Dot is like a door into our supply chain and offers the customer a digital experience around the provenance of the knit, allowing us to use it as an entertaining education piece for the customer. We also connect customers with a real sheep from the same farm their sweater’s wool is from. As a way of humanising the story behind the product, and making it a fun engagement piece.

What else can you say about the software behind it?

— The starting point was that we wanted to use technology to get full visibility into our supply chain to have maximum control over quality and impact, Wessely explains. And we wanted to drive customer behaviour change by reconnecting customers with the things they wear. So we developed a proprietary software that creates a digital end-to-end supply chain twin. Our manufacturers and supply chain partners use an app and desktop system and every process step is logged on the platform — where the garment was produced, with what inputs, when, by who, and what is the environmental impact per stage. We then clip a custom NFC tag onto each garment that can retrieve all this information via the Connected Dot — a simple tap with your smartphone gives customers access to this information and connects you back to the farm your garment’s wool is from. The Connected Dot has resonated very well in the market and has become a truly unique brand signifier and an interesting digital content portal. So we recently introduced some additional features, ranging from a ’Farmflix’ module that provides content about farms and manufacturers, to a gamification element for how you can interact with the farm your garment’s wool is from. And we have worked with our New Zealand partners to deliver on-farm sheep facial recognition software to bring ’Sheep Selfies’ to our customers. This is the joy of offering a digital experience alongside a physical product, as we can constantly update and add to the experience without customers having to change the physical product. 


Yes, what else can you say about the reasons why you made it?

— We hope that by giving each garment this unique digital fingerprint and presenting the information in a fun and engaging way will condition people to ask more questions about the provenance of their clothes before purchasing. We have become so disconnected from the fact that there is a story and impact behind everything that we buy. The importance of making this information entertaining is something we spent a lot of time on. Sharing information on supply chains with the end consumer can feel a bit dry. And this will lead to a lack of engagement, meaning it won’t spark people’s interest and not bring the awareness and behaviour change needed. So when we launched Sheep Inc. we really thought about how we could bring a fun, emotional touch point to it. This is where the idea to adopt a sheep from the same farm the sweaters wool is from, came from. Due to the RFID tags in the sheep’s ear, we can track the sheep’s individual goings on a farm and also track general flock whereabouts and share this information with our customers. It’s a fun engagement piece around the provenance, but I think it also does something important. It casts your mind back to the genesis of the garment. Our hope is that the next time our customers pick up a garment in a shop, they ask themselves ’Where did this start? What kind of journey has it taken before it got here into my hands?’. 

What was the most challenging when creating it? What did you learn?

— One of the most challenging aspects was to design a process where we could ensure every single garment has its own unique fingerprint, accessible via an on-garment NFC tag. The other key aspects were to identify the most seamless integration with our manufacturing and production partners. In terms of data, the most interesting process was the carbon accounting analysis that was done on farms and across our supply chain. We were keen to not do this work ourselves but to have independent auditors validating the information independently. So, the underlying environmental impact data from our product footprints comes from an independent auditor called Carbon Footprint Ltd and is done on a cradle-to-grave method that aligns with the Carbon Neutral protocol.

Sheep Inc.

Tell us more about your traceability work.

— Traceability is central in everything we do. More traceability and transparency of fashion supply chains are imperative if we want to see real change. The fashion industry is built on secrecy and convoluted supply chains with most brands not even knowing where their raw materials come from so that we don’t know enough about the impact our clothes have on the planet and people. The lack of transparency and traceability makes it almost impossible for brands to ensure fair working conditions for people in their supply chain. If you don’t know how and by whom your clothes are made, how can you be sure that human rights are being respected and our planet is being protected? asks Wessely. He continues:

— By tracking and analysing our knitwear’s journey and impact we can understand where we need to focus our attention to constantly improve from a sustainability standpoint. For example, we know that around 70% of the fashion industry’s emissions come from upstream activities such as material sourcing and processing. The remaining 30% are associated with downstream operations, the use-phase and end-of-use activities.

— And we even go one step further and have a unique fingerprint for each item we produce, allowing us to identify sales and return patterns depending on production inputs, treatments, or washing settings, and therefore creating a continuous feedback loop.

— All in all, the rewarding aspect of mapping and understanding your entire supply chain is that you get an in-depth understanding and reading of where the biggest impact lies. For the average fashion brand, 97% of its emissions come from scope 3, so mainly the supply chain. So visibility down to the raw material is the only way to really be able to control your impact, as well as the quality of your products. And it is critical for any brand that wants to take accountability for its actions to start with this, to aim for continuous improvement. Both from a quality and environmental perspective. Make sure you team up with experts in the field and don’t be shy to reach out to whatever you think could help you on your mission. We have received a huge amount of valuable insights from various places, and are also strong believers in knowledge sharing across the industry with like-minded brands and individuals. 

How will you continue this work?

— We have received several inbounds from brands to understand how our supply chain setup and our technology work. And based on these conversations we have identified the most valuable developments that we will add to our software. The most exciting current development is certainly the addition of a fashion-specific carbon accounting model with focus on scope 3 emissions. This would allow other fashion brands to understand and measure their emissions down the supply chain, compare the emissions with best practices, simulate different carbon accounting scenarios and ultimately enable them to make better decisions. The plan is to launch a beta version to market early in 2024, says Wessely. He adds:

— Making transparency front and centre in the business invariably results in superior end products.  It highlights the strong and weak spots in your setup and pushes you and your partners to find more optimal solutions and leads you to continuously challenge the norm. If you, for instance, look at our recently launched T-shirt, we started with the simple question to design a wool garment that could challenge the hegemony of the classical cotton T-shirt. Basically, we wanted to create a product that can replace your everyday cotton T-shirt, but with true longevity designed into it. One that is incredibly soft in hand feel, is perfectly temperature regulating, extremely durable, low in maintenance and maintains its vibrancy of colour and its shape over time — all of which are degraded each time you wash a standard cotton T-shirt — and is naturally carbon negative based on our supply chain. So today, I would argue that we haven’t only matched the cotton T-shirt, but we ended up with a product that’s significantly superior to your standard cotton T-shirt. Which is the really exciting aspect of what we try to do — challenge the status quo and break misconceptions, in the hope to discover new and better ways of doing things.

Key takeaways

— Around 70% of the fashion industry’s emissions come from upstream activities such as material sourcing and processing. The remaining 30% are associated with downstream operations, the use-phase and end-of-use activities.

— For the average fashion brand, 97% of its emissions come from scope 3, so mainly the supply chain.

— Offering a digital experience alongside a physical product makes it possible to constantly update and add to the experience without customers having to change the physical product.