Editor’s Note: This story was first published by Retail TouchPoints

Businesses today are constantly looking for ways to improve their sustainability and reduce their carbon footprint. After all, studies show that consumers care more about the environmental impact of their purchasing decisions than ever before. For example, 60% of customers say they would be willing to pay more for a product with sustainable packaging, so it is paramount that businesses stay with the times and account for these shifting consumer preferences.

One industry with a particularly negative environmental impact is the retail industry. Textile production accounts for approximately 20% of global clean water pollution and 10% of global carbon emissions — a number that is only expected to get worse in the future. In fact, some even project that the negative impact of this industry will double by 2030.

The solution may be a small but mighty technology that is already developed and in use: RFID chips.

What RFID Technology will do for the Retail Sector

RFID stands for “radio frequency identification.” It is a technology that uses radio waves to read information stored in an antenna — at retail, this is most commonly placed in a sticker or tag — without requiring physical contact or a line of sight. RFID technology has been around for decades, used for purposes like car keys, employee identification, security access cards, toll billing and more, but retail businesses are beginning to find exciting new ways to integrate this technology into their operations.

One of the most environmentally destructive aspects of the retail industry is the supply chain. From production in factories to transportation to storefronts, each part of the supply chain has an environmental impact that adds to the overall destruction caused by the industry.

As a result, businesses are beginning to find ways to understand the consequences of each step of their production and distribution processes, allowing them to paint a more holistic picture of their carbon footprint.

RFID Technology and Sustainability

RFID technology is the key for retail businesses to unlock greater sustainability and efficiency in their supply chain management. Using RFID technology, retailers have end-to-end visibility on products through their entire lifecycle—from when the product is produced to the moment it leaves the store in a customer’s hands—allowing them to better understand and control their products, adjusting processes as necessary to maximize efficiency.

The critical insight RFID technology provides is whether or not a product is successful. Analyzing the data on the number of products entering and leaving a distribution center or storefront can provide a snapshot of the demand for said product. If this data makes it clear that a product is not selling well, the retailer can order or produce less of this product, reducing waste at the source. In this way, RFID technology can allow retailers to manage their inventory better and ensure that resources are only being used for products that sell.

One of the other environmental benefits of using RFID technology for inventory management is that it will reduce retailers’ use of transportation, cutting down on a significant source of greenhouse gas emissions. Especially in this era of fast fashion, most retail products are produced overseas and shipped thousands of miles to their destination.

The airplanes, ships and trucks used to transport these materials consume significant amounts of fossil fuels, which are tremendously bad for the environment.

Benefits to Businesses

Businesses also will likely see economic benefits if they effectively incorporate RFID technology into their operations.

For example, retailers can use RFID technology to curb retail theft. Considering that retail theft has reached more than $100 billion, a small investment in RFID technology could lead to more money coming back into the pockets of retailers. After all, some RFID tags are as cheap as 4 cents a unit, meaning they can be significantly cheaper than the potential loss.

For those worried about the potential environmental impact of the technology itself, the materials used in RFID chips are thankfully sustainable in and of themselves. Standard RFID tags are made of small pieces of metal and polyethylene terephthalate (PET) plastic — both recyclable materials. There has also been a push toward creating even more sustainable RFID tags using sustainable materials like paper, which would allow RFID technology to have even more of a positive environmental impact.

RFID tags may be small, but their potential to make a difference in the sustainability of the fashion industry cannot be overstated. This technology allows retailers to manage their inventory better and make adjustments as necessary to cut back on waste at the source.

The insight RFID technology provides is a tremendous first step to empowering retailers with the information they need to make more sustainable operational decisions.