Tuesday, December 22, 2020
How Can Blockchain Facilitate Supply Chain Sustainability?

A blockchain is a decentralized database made up of ‘blocks’ of recorded transactions across thousands of computers around the world. It used to only be associated with cryptocurrency, but now it is being used in almost every industry - from healthcare to cybersecurity, and to supply chain management. With that in mind, this article will be tackling the need for supply chain sustainability and what blockchain technology can do to further it.

The Need for Supply Chain Sustainability

First, we need to explain what supply chain sustainability is. A sustainable supply chain entails responsible sourcing, starting from the acquisition of raw materials from a responsible source to the product's refinement and assembly. Companies that adhere to this practice consider social and environmental consequences when managing their relationship with their suppliers. This is done to ensure that their sourcing and manufacturing processes are sustainable in an economic, ecological, and social sense. Unfortunately, many brands don’t heed this call to more responsible, sustainable sourcing.

Problems in Textile Supply Chains

One industry with unethical sourcing practices is the fashion industry. Fast fashion brands, like Forever 21, Zara, and H&M, have supply chains that allegedly rely on cheap labor through outsourcing. In factories on the other side of the world, employees work long hours and in unsafe environments. Such an unethical means of production is far from being sustainable.

But it doesn’t end there. The clothing industry is also guilty of being one of the largest polluters in the world, with fast fashion at the forefront of this problem. You might find accusations of it being the second biggest polluter in the world, but this is not factually true, and is an accusation grounded on ambiguous terms. Be that as it may, the problem still stands. Its carbon footprint can be traced to many stages of the fashion supply chain. One root is the huge demand for cotton, which takes thousands of gallons of water to grow. Another is how the toxic dyes used in manufacturing clothing pollute the earth’s water. In addition, is the fact that discarded clothing makes up most of the world’s landfills. Again, these practices are far from sustainable.

Blockchain as a Solution

Hopefully, with more transparency and awareness in the sourcing processes, companies will be more willing to shift to greener, more ethical alternatives. Here’s where blockchain comes in. This technology can potentially pave the way to more sustainable supply chains. So, here are three different ways it can push for more responsible sourcing, while helping both the producers and consumers:

1. Traceability and Transparency

Blockchain technology provides a digital database that cannot be altered, so it is ideal for recording business transactions. This information can be forwarded to the manufacturer and even to the buyer. This way, manufacturers can ensure that they are sourcing their materials from ethical or environmentally friendly suppliers. 

And on the flip side, consumers are reassured that the brands they’re buying from adhere to sustainable sourcing practices. Overall, such a level of visibility makes it easier for people to verify whether their products were ethically produced.

2. Increased Accountability

Through blockchain, the origins of a product can be tracked from start to finish. This makes it easier to pinpoint when companies are creating items through unethical means. It also prevents greenwashing, or the use of deceptive marketing tactics to make a product seem environmentally friendly even when it isn’t. Such unethical practices have been around for so long, but blockchain technology could put a stop to it. 

Through this technology, local governments will also be in a better position to ensure that manufacturers are adopting more sustainable sourcing practices, effectively minimizing chances of oversight.

3. Using Smart Contracts

The benefits don’t end with blockchain, per se. The industry is innovating new ways to use it, and these creations make processes between manufacturers and suppliers more efficient. On the legal side of things, blockchain-based technologies like smart contracts can automate terms and conditions put forth in an agreement. Smart contracts are self-renewing and certain clauses in the contract can be wired to run themselves, without human interference. This reduces the cost of legal transactions and develops mutual trust between manufacturers and suppliers.

There’s still a long way to go before sustainable supply chains become a global norm. Until then, you can do your part by shopping for clothes responsibly. The latest fashion may look good, but sustainable fashion feels good.

Rosa Smith

Guest Writer for Threadcounts
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