This emerging technology is making it easier for consumers to assess the social and environmental impacts of the products they buy.
How environmentally friendly is the coffee you drank this morning? The clothes you’re wearing? What are the social impacts of the chair you’re sitting on? Perhaps you’ve tried to find the answers to questions like these from retailers, but got no response, or just a vague “commitment to sustainability” statement?
A desire for products to be clean and green rather than drive climate change, wildlife destruction or modern slavery is a growing trend, particularly among younger consumers. But shopping ethically is often more easily said than done.
A poll of 20,000 people across five countries by consumer goods company Unilever last year found that 33 per cent of respondents choose to buy from brands they believe are doing social or environmental good, with 21 per cent saying they would actively choose brands if they made their sustainability credentials clearer on their packaging and in their marketing.
At the same time, many people are increasingly skeptical of claims made by media, politicians and business. A 2016 survey by product transparency company Label Insight found that 75 per cent of respondents did not trust the accuracy of food labels.
An increasing number of business leaders are realising that they need to find a way for consumers to verify their product’s story. If a consumer can use a smartphone app to discover what country a product came from, what certifications it holds and even the name of the farmer or miner who produced it, those business leaders believe, that product will not only have the edge over others, but also reduce adverse environmental and social impacts of supply chains as ethical companies gain market share over those that are not.
Benefits of blockchain
Blockchain technology is emerging as a powerful way to do this. Best known for being the programming protocol behind cryptocurrencies such as Bitcoin, blockchain is essentially a digital ledger. Information is held not by a central authority or organisation, but in an encrypted, distributed computer network, making it secure and shareable. The technical explanation is complex, but experts say blockchain essentially makes data tamper-proof, so it cannot be erased or manipulated by any one party.
Say a food company wanted to be able to convince you that its meat was produced in a way that meets benchmarks for animal welfare and sustainable agriculture. It could set up a blockchain platform that each member of its supply chain could view and upload information to.
Each participant in the chain would submit the information for its respective part in the process to the blockchain as a block of data—be it raising the animal, butchering it, or packing, transporting or selling the meat. Selected parties in the supply chain, as defined by the contract, would each see an encrypted code that represents the block of data added.
If all agree they are seeing the same code, then the information is deemed accurate and written to the blockchain — that is, included as part of the verified description of the product. This process, called “consensus,” ensures accuracy and maintains whatever level of trust was originally bestowed on the members of the blockchain without the need to share the actual data with everyone on the blockchain.
Only the direct parties that are trading together, such as a processor sending packaged meat to a retailer, will see the actual information for their transactions. (With one exception: a regulator could see all the information on the blockchain.)
The information would be embedded in a QR code on the meat’s packaging, which consumers could scan with a smartphone app. They would then be able to see who raised the animal, how it was raised, how many animals were raised in its batch, who the butcher was and how the animal was butchered.