Green consumers want supply chain transparency via blockchain

Chris Georgen, founder of the social impact-focused blockchain company Topl, believes that many consumers are unaware of the consequences of their buying habits.

“Forced labor, deforestation, the destruction of endangered habitats… As responsible citizens of the world, we wouldn’t knowingly support, condone or participate in anything like this,” he tells Magazine. 

“Unfortunately, too often, what we buy can lead to this (and sometimes worse). Whether we know it or not, the things we buy profoundly impact the lives of others and the health of our planet.”

Blockchain may not be able to solve these problems directly, but it can play a significant role in supply chain transparency and rewarding ethical behavior.

Mesbah Sabur, founder of Circularise — a blockchain company tackling traceability solutions for a more circular economy — stresses the importance of consumers making greener choices:

“As consumers, we should be more informed about where the products we buy come from, what they are made of, and how they impact people and the planet. Consequently, making choices towards more ethical options and signaling the market a need for change.”

“The rise in global challenges signifies our collective responsibility to reverse the rate of environmental degradation,” says Sabur.

Many believe that tracing the origin of products allows people to better understand the impact of their products and make more informed choices.

“We can trace the coffee beans in our morning latte across continents to see exactly what a local farmer was paid. We can even use blockchain technology to begin to unpack what are known as Scope 3 carbon emissions and better understand the climate impact of the goods we buy,” says Georgen.

The public is increasingly concerned with the values of businesses. How the company treats its customers, its employees and its raw materials make blockchain-based systems a natural fit for ethical consumerism.

There are two ways that consumers could adopt — or, more controversially, be compelled to adhere to — standards of ethical consumption. The first is through regulation and enforced rules around production, which Energy Web — a blockchain-based nonprofit accelerating the transition to clean energy — believes is coming in the near future. The second is by embedding technology within products that afford consumers more choices when it comes to their buying behavior.

More robust tracking of product supply chains and broadening access to carbon markets are ways blockchain technology can encourage future ethical consumption.

Infrastructure for ethical product standards

To better understand the enforcement of production standards, Magazine sat down with Ioannis Vlachos, commercial director of Energy Web — one of the key stakeholders working on the EU’s CIRPASS passport, which will see end-to-end traceability of products.

EnergyWeb aims to foster and promote the transition to interoperable public infrastructure. Regulation looks set to play a key role in facilitating this transition.

New EU commercial infrastructure will include the CIRPASS Digital Product Passport, which brings together 30 stakeholders, including blockchain technologists. Vlachos explains that Energy Web acts as an open-source middleware layer within the CIRPASS project.

“We believe as an organization that if you want to create impact, you should be open, you should be public. There is no room for making money strategies based on private blockchains. Or creating vendor lock-ins. We do believe that impact comes from open-source and public things.”

The purpose, according to Vlachos, “is to lay the foundation for cross-sectoral product passports based on common rules, principles, taxonomies and standards.”

Providing information about the sustainability of different products is currently voluntary, but it will soon be regulated by the European Commission. It will be mandated that every single battery imported into European Commission member states be traced from the cradle to the grave.

“Regulation creates public awareness. If everyone is talking about this new digital passport of the European Commission, consumers start becoming more aware of why they should care,” continues Vlachos.

Morpheus.Network has also been using blockchain technology for supply chain transparency. Dan Weinberger, founder of Morpheus.Network, believes that companies will find it easier to demonstrate ethical standards if a blockchain records a product’s journey.

“By leveraging the decentralized nature of blockchain technology, companies can provide consumers with a clear record of a product’s journey from production to purchase,” he says. “Furthermore, the use of smart contracts can automate compliance and certifications, making it easier for companies to demonstrate that their products meet certain ethical or sustainability standards.”

Public locked out of the carbon market

In a 2020 report, the United Kingdom’s Food Standards Agency found that Gen Z cares most about the environmental impact of food and believes technology will play a key role in the delivery of food with low environmental impact.

Empowering consumers to partake in these trends is an issue that requires further research and practical approaches. For example, many of these solutions are spearheaded by international bodies and are often “highly fragmented and centralized,” says Alexander Mitrovich, CEO of Unique Network — a blockchain-based project building NFT infrastructure within the Polkadot ecosystem.

Deforestation is a significant problem worldwide. Source: Pexels

The current methods for recording carbon emissions and credits are coming under increased scrutiny, as credits are often bought in bulk by government agencies or large corporations. The World Economic Forum reported on the issue last year, stating that the overwhelming majority of the $851 billion carbon market is closed off from the general public.

“They have high financial barriers. The regulations around carbon markets are issued by different central bodies that often do not align. Tokenizing carbon credits on a blockchain offers an opportunity to design an emission reduction consensus in line with international treaties like the Paris Agreement,” says Mitrovich.

One potential road toward increased consumer participation is the use of nonfungible tokens that could act as receipts and divide credits so that they become accessible to daily consumers.

Mitrovich believes that carbon credit NFTs allow individuals to see the positive impact they make on societal problems.

“Tokenized carbon credits are also transparent, immutable and avoid double-counting. Using advanced NFT capabilities, various properties can be nested into tokenized carbon credits to allow various benefits and rights to vote to contributors.”

However, the public also needs to be aware of how to access these climate-positive activities, and to date, blockchain companies are not providing easy entry points for the average consumer.

Providing easy entry points

Unlocking the value of deals for carbon projects and those that buy into them is a way for the public to participate in what otherwise appears a difficult market to access. Solid World DAO wants to make carbon markets as liquid as possible by developing diversified pools of financing, increasing conscious consumers’ access to the markets. 

“This type of brand consciousness is especially important among younger people, but there are also selfish reasons to know exactly where your products are coming from because it helps you ensure that you are getting something safe and reliable,” says John Vibes, community manager at Solid World DAO.

Carbon markets are an ideal use case for blockchain. Source: Pexels

For Energy Web, it is important that the consumer can verify product claims easily.

“I would be able to verify by just pulling my mobile phone out of my pocket, scanning the QR code on certain products, and logging how the materials were sourced —without revealing any sensitive information but with the ability to validate by myself,” explains Vlachos.

Georgen says that Topl is already helping consumers make choices that better align with their values. “Consumers are able to scan QR codes on everything from tea and chocolates to their clothing to see where these products originate and what type of labor practices were used. In the future, we not only can imagine the availability of this data extending to more products, but we can even envision a world where consumers can be rewarded for shopping more ethically,” says Georgen.

With the development of easy entry points, consumers can make better choices automatically.

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