How Blockchain Supports Fair Trade and Ethical Supply Chain Practices
Blockchain technology has been used in business and logistics for a number of years now. But only recently has the technology started to become more known about, largely due to the rise in popularity of opinion-splitting use cases such as cryptocurrency and non-fungible tokens (NFTs).
As a result, some may argue that blockchain’s reputation has taken a bit of a hit. Unfairly, the technology is often tarred with the same brush as scams and Ponzi schemes. However, by digging a little deeper, we can unearth that there is far more to blockchain technology and often its use cases are in fact for the better.
One area where blockchain is expected to have a big impact in the coming years is that of supply chains. This article will explore how blockchain technology could lead to cleaner, fairer, more ethical supply chains.
What is Blockchain Technology?
Before understanding how it can impact supply chains for the better, we must first understand how blockchain technology actually works.
Blockchain technology uses decentralised, public ledgers to store information such as transaction data. The main difference between a blockchain and more conventional alternatives is that no single entity has control. Instead, ownership and control are distributed across everyone involved in the chain.
Another key feature of blockchain technology is its enhanced security. Once information has been stored, it can’t be altered or tampered with, which makes for a much more transparent system. For these reasons, blockchain’s use cases are predicted to reach areas such as banking, voting, and, as already mentioned, supply chains.
Blockchain Applications in Fair Trade and Ethical Supply Chains
Enhancing Traceability
One issue in current supply chains is the lack of transparency when it comes to the sourcing of materials. This presents a variety of issues for businesses, workers and consumers. A blockchain-shaped supply chain goes a long way to solving this. With an immutable and public record, consumers will have clarity over the way in which a brand sources materials and products.
Being able to publicly trace the life of a product would put pressure on companies to clean up their supply chains and ensure they are following Fair Trade policies.
Ensuring Authenticity and Certifications
Whether it’s through consideration for workers, animals or the planet, consumers are actively becoming more ethical. As a result, more and more brands are demonstrating ethical behaviour through practices such as going more organic or sustainable.
However, when a brand claims that one of its products is made from recycled materials or created from organic produce, we put our faith in the governing bodies that verify these claims. Despite this, we still see instances where companies are warned or punished over misleading claims.
Moving forward with a blockchain-based system, businesses would be unable to get away with false claims as they could be instantly checked on a public database.
Fostering Accountability
As touched upon, transactions uploaded to the blockchain can’t be tampered with or deleted. This feature fosters accountability and holds parties responsible. For many years, workers have been exploited through extremely low pay.
In 2019, Oxfam revealed that farms supplying major UK supermarkets were victims of poverty pay and gender discrimination, amongst other issues. If transactions between buyer and supplier had been recorded on a blockchain database, the parties responsible would have been held accountable.
As it is, issues like this are commonly swept under the rug and kept out of the public eye.
Blockchain Use Cases
Walmart
Walmart is one of the largest corporations that has demonstrated a commitment to harnessing the power of blockchain technology to improve transparency around the life of its products. Despite blockchain being a buzzword in the current business world, Walmart has been using blockchain-based solutions since 2016, along with the help of IBM.
The results of this partnership now allow Walmart to trace the journey of more than 25 products. Initially, Walmart could trace the origin of their mangoes in under 3 seconds using Hyperledger Fabric.
Going forward, Walmart has announced plans to make it a requirement for suppliers of fresh leafy greens to track their products’ journey.
BHP
The mining industry has long been questioned over ethics. That’s why it’s interesting to see one of the world’s largest mining companies invest in blockchain technology in an attempt to clean up its supply chain.
BHP has run several trials using blockchain with the aim of reducing fraud, increasing compliance and also streamlining the company’s sustainability efforts. In one notable trial, the company was able to trace nickel shipments from Western Australia to Tesla’s Gigafactory in Shanghai.
The trial gave greater clarity to all those involved in the supply chain, but was also able to identify if any raw materials had been diluted throughout transport.
FairTrade International
FairTrade International is one of the largest non-profit organisations that’s committed to improving the lives of farmers and workers through fair trade. The organisation has recently turned to blockchain to assist with its mission.
Recent plans indicate that a blockchain-based platform will be used to connect producers in developing countries with global buyers and will feature a marketplace, certification system and educational resources. It targets sectors like agriculture, handicrafts, flowers, and mining.
The goal is to remove costly intermediaries to support small businesses in industries like agriculture and mining.
Article by Toby Patrick
Author bio: Toby Patrick is a freelance writer and marketing graduate who covers the latest goings on in the business world. He is currently undertaking an internship with a digital marketing agency in Manchester.
