How can blockchain prove supply chains are environmentally friendly?
As climate change and resource scarcity change how we live and do business, technology offers a way for organisations to respond. In particular, blockchain can provide businesses with a way to prove their sustainability credentials - and that of their complex supply chains - to meet the rising awareness of their customer base.
When we think of climate change, thoughts usually turn to China as the largest emitter of greenhouse gases. However, if you look more closely at the statistics, China exports the majority of products produced but has a relatively low per capita consumption-based (environmental) footprint. It is household consumers who are creating the product demand and in turn account for approximately 60% of the world’s greenhouse gas emissions, and 80% of the world's water use.
However, consumers are becoming increasingly aware of the impact their purchasing has on the environment. This is especially true for the younger generation who are reluctant to support brands that are harmful to the environment. Consumers have the right to know if their products are ethically and sustainably sourced and produced and organisations are clearly responding to this consumer-led demand. In a recent PwC report, 80% of companies surveyed set out a clear sustainability strategy. Furthermore, 71% describe how their key business activities link to sustainability. The ways in which consumer products are improving sustainability is extensive and complex. We have seen eco-packaging, terms such as organic appearing in fashion ranges, locally sourced materials, and even low impact beef.
An example of this is in the palm oil industry which has long been portrayed as having a significant impact on the environment. Manufacturers who use sustainable palm oil or alternative oils tend to push this to the forefront of their brand’s key attributes. In 2018 a large supermarket chain was praised when they committed to stop manufacturing labelled products containing palm oil. However, the backlash was swift when it was discovered they simply removed their brand label from a number of products instead of the palm oil.
Building consumer trust through transparency
How can organisations reliably demonstrate to consumers the green credentials of their products in a way consumers can trust?
Providing consumers with visibility into your end to end supply chain can provide a big step toward this. You may have designed a perfectly sustainable product but it could require very specific transportation that counteracts your sustainability efforts and damages your brand.
Underpinning your supply chain solution with blockchain technology provides transparency and immutability making it the perfect solution to address some of the challenges of demonstrating sustainability through the entire supply chain of a product. Many organisations have succumbed to ‘Greenwashing’ in an attempt to convince consumers they are environmentally friendly. However, by employing a blockchain-based supply chain solution, organisations who are implementing sustainability measures can confidently provide consumers with a clear audit history for all the components of a product through all stages of its lifecycle. Organisations themselves will also gain a greater understanding of where further improvements could be made and greater awareness if their sustainability strategy is violated, allowing them to proactively resolve any issues.
Blockchain technology can provide the means for reliable transparency into the practices of organisations. As consumer demand for sustainable products grows it will be corporates who are transparent and truly embrace sustainability at the heart of their organisations who have the edge.
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