Driving Sustainability through Blockchain Supply Chain Management


Enterprises are now under pressure to adopt sustainable practices, not just from consumers and various stakeholders, but from state and regulatory bodies, as demonstrated by  a recent court ruling asking Shell to cut its carbon emissions by 45% from its 2019 levels.

According to a recent Oxford Economics study, “65% of companies have created a clear purpose statement around sustainability, with a further 23% saying they are in the process of doing so.”

As calls for supply chain disclosure increasingly become the norm, Chief Logistics Officers, Chief Information Officers, and Supply Chain Managers now have to look beyond supply chain optimization and deeper into challenges that have to do with transparency, traceability, and sustainability.

Amid these challenges, blockchain technology emerges as a powerful solution, offering promising ways to address these pain points through blockchain supply chain management.

Blockchain Technology in the Context of Supply Chains

Blockchain technology, at its core, is a decentralized and immutable ledger system. It allows for secure and transparent transactions, providing a level of trust and reliability unparalleled by conventional methods. In the context of supply chains, this means improved visibility into the product journey, from raw materials to finished goods. Each transaction, each handoff, is logged in the blockchain, creating an unalterable record that all parties can trust.

Leveraging Blockchain to Drive Sustainability

Beyond operational improvements, blockchain supply chain management can be a powerful driver of sustainability in multi-party supply chains. Since blockchain provides a new level of traceability, accountability, and efficiency, it  can substantially contribute to more sustainable practices in the following ways:

Improved Traceability: Blockchain’s immutable and transparent recordkeeping allows for enhanced traceability of products and materials throughout the transparent supply chain. Companies can verify that goods were produced and transported sustainably, ensuring that each step aligns with their sustainability commitments. For instance, a clothing brand could confirm that its cotton suppliers are using sustainable farming practices, or a coffee roaster could verify that beans are sourced from farms that pay fair wages.

Transparent and Reliable Reporting: With blockchain supply chain management, sustainability reporting becomes more transparent and reliable. Stakeholders can independently verify a company’s sustainability claims by accessing the blockchain, reducing the reliance on potentially biased third-party audits. This improved transparency and supply chain visibility, facilitated by blockchain, can boost stakeholder trust and encourage companies to adhere to their sustainability commitments.

Smart Contracts for Sustainability: Blockchain’s smart contracts can automate and enforce sustainability-related agreements. These self-executing contracts trigger actions (like payments or transfers) once certain conditions are met. For example, a company could set up a smart contract that automatically pays a premium to a supplier when they provide proof of sustainable practices. This can incentivize sustainability and ensure that commitments are fulfilled.

Reduced Waste and Improved Efficiency: By providing a clear and accurate record of goods as they move through the supply chain, blockchain supply chain management can help identify inefficiencies and reduce waste. For example, overproduction or unnecessary transportation could be flagged and addressed, contributing to a more resource-efficient and sustainable supply chain.

Collaboration and Shared Responsibility: Blockchain’s decentralized nature can foster a sense of shared responsibility among all parties in the supply chain. Everyone has access to the same immutable information, creating an environment where each party is accountable for its role in the chain. This can encourage more sustainable practices across the entire supply chain, rather than in isolated segments.

Challenges and Recommendations

Despite these incentives, implementing blockchain supply chain management in multi-party supply chains is not without challenges. It requires significant collaboration and standardization between parties. Interoperability between different blockchain systems can also present hurdles. 

With these challenges in mind, #dltledgers has developed Proteus, a low-code, blockchain-based application development platform for Multi-Enterprise Collaborative Networks (MCN). Proteus opens up the possibility for rapidly deploying blockchain technology in multi-party supply chains with the least change management. Since Proteus’ launch in early 2018, the platform has facilitated over $3 billion in live trade finance transactions, with more than 20 enterprises, 65 banks, and other partners using blockchain to participate in the supply chain transactions.

More importantly, #dltledgers already has an App Hub with ready-to-deploy solutions specifically developed for various industries including Manufacturing, Finance, Commodities, and Logistics. 

The potential of blockchain supply chain management for driving sustainability in multi-party supply chains is undeniable. As CIOs, CLOs, and Supply Chain Managers navigate an increasingly complex and sustainability-conscious business landscape, blockchain emerges as a promising tool to enhance transparency, traceability, and sustainability. The journey may be complex, but the potential rewards — for businesses and the planet alike — make it an exploration worth embarking upon.

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