Author: Roslyn Akel | UC Berkeley School of Law | J.D. Candidate 2019 | Posted: November 27th, 2018 | Download PDF
While blockchain is typically associated with crypto-currency, recent innovative uses for this technology in different sectors has the potential to transform corporate sustainability efforts.
Walmart can prevent food waste by using blockchain to quickly and cost effectively track the movement of their fresh produce in the event of a contamination. Partnering with IBM and using IBM’s blockchain technology, Hyperledger Fabric, Walmart ran successful trials on tracking the supply of mangoes from Mexico and pork from China. Most recently, Walmart announced that it utilized blockchain technology to track its lettuce supply chain in order to determine where potential outbreaks of illnesses may be coming from. Thus, Walmart was able to rely on this technology for the health benefits of its consumers. Typically, when there are reports of spoiling or contamination with a product, distributors and retailers such as Walmart are forced to pull all products off the shelves. The complexity of tracking the supply chain means that products are often pulled off the shelves even if those products may not actually be contaminated as a precautionary measure because it is unclear where the contamination originated and how far it reached. The New York Times reported that by this time next year, Walmart will require over 100 of their farms to input detailed information on a blockchain.
The benefits of utilizing blockchain technology in a supply chain touch all actors in a consumer driven economy. Since blockchain data can be made readily available to auditors and other third-parties such as compliance officers, this ultimately aids consumers as it will lower the cost of research to support sustainable brands. This in turn helps bridge the gap between self reported behavior preferences and actual consumer behavior.
Economic incentives for the companies adopting blockchain for tracking are not to be overlooked. While the cost of implementing such a process will vary widely by industry and by complexity of the product, several companies have seen successes in this wave of transparent production. One such company is John West, which “started including codes on their tuna cans to enable a consumer to trace the product back to the fisherman; this initiative alone added £17m to the brand’s sales.” As consumer pressure for sustainability and supply chain transparency continues to mount, companies implementing this technology stand to benefit by positioning their brands as not only responsible and responsive to consumers, but as influencers within their industries for innovative use of technology.
Benefits for increased food safety are not the only practical application that comes to mind with using Blockchain technology for uses other than crypto-currency. The garment industry could substantially benefit from the use of such technology. With highly complex supply chains, spanning multiple locations, with hundreds of stages, the troubling reality is that this murkiness and complexity of tracking masks human rights abuse and unethical labor practices. However, the use of blockchain technology in the garment industry has the potential to drive companies to take a closer look at their process by making it feasible and cost efficient to track this supply chain. In addition to supporting ethical sourcing in the fashion industry, the use of blockchain could help to authenticate goods and root out counterfeit ones.
Although blockchain and Bitcoin seem to be synonymous to many, I believe that recent innovative use of the electronic ledger will quickly change this misconception. As a technology, blockchain may very well be the tool that drives sustainable business practices and enables international corporations to manage their supply chains.