More Companies Turn to Blockchain for Sustainable and Authentic Supply Chains

Blockchain – the technology that underpins the digital currency bitcoin and is essentially a digital database of time-stamped records or transactions, which are unchangeable and decentralised – is becoming increasingly popular as a track and trace tool for physical supply chains and to guard against counterfeit goods.

In the last few weeks, three new initiatives have been launched or expanded that aim to deploy the technology for sustainable sourcing, anti-counterfeiting and brand protection.

Sustainable palm oil sourcing

One is from Unilever, which is trialling a blockchain solution in partnership with SAP to enable it to digitally track palm oil across the supply chain, ensuring that the oil does not come from sources linked to deforestation.

The consumer goods giant is a massive user of palm oil, which has become an important ingredient in many food, personal care and other consumer products. But it is known to be a big driver for clearing of some of the world’s most diverse forests, destroying the habitats of endangered wildlife and emitting carbon from the soil, thereby contributing to climate change.

Unilever first used the solution by SAP, called GreenToken, in Indonesia, last year for a proof-of-concept project covering 188,000 tonnes of palm oil fruit. During that project, suppliers were able to create digital tokens capturing information on the palm oil’s origin and its journey across the supply chain. Following its success, Unilever will now scale the use of GreenToken more widely.

For palm oil, SAP has highlighted the fact that raw materials from verified and non-verified sources are often mixed in the supply chain, making it difficult to ascertain origin information. It claims that, with GreenToken, companies can assess what percentage of palm oil products they purchase is from a sustainable origin and track it to the end consumer product in near real time.

This is not the first time Unilever, which says it is committed to achieving a deforestation-free palm oil supply chain by 2023, has deployed blockchain as part of its sustainability strategy. In 2018, it began using a blockchain-enabled retail platform to enable customers to offset the carbon footprint of Ben & Jerry’s ice cream purchases.

It has also collaborated with Sainsbury’s, Barclays, BNP Paribas and Standard Chartered to use blockchain to improve social and environmental practices in tea supply chains.

Protecting the gold diggers

Meanwhile, two gold industry associations have launched a pilot that will use a blockchain-based ledger system to register and track billions of gold bars, in a bid to prevent trade in counterfeits and introduce traceability into the sector.

London Bullion Market Association (LBMA) and the World Gold Council (WGC) are collaborating on the project, which aims to provide ‘an international system of gold bar integrity, chain of custody and provenance.’ This first phase of the project will see two blockchain companies – aXedras and Peer Ledger – demonstrate how their technology can register and track bars to create an immutable record of their place of origin and chain of custody.

‘Over time, this will help consumers, investors, and market participants to trust that their gold is genuine and has been responsibly and sustainably sourced,’ said the two trade organisations in a statement.

Despite recent volatility, the price of gold has gone up in recent years, giving criminals an opportunity to capitalise on the increase by introducing counterfeit products into the market.

LBMA and WGC said that over time, the plan is to encourage all major participants in the gold industry to adopt the technology, ‘so that all gold bars are registered and tracked across the entire supply journey from mine to vault, and ultimately to end consumers such as jewellery manufacturers.’ 24 companies involved in the gold bullion trade have already signed up to participate in the project, according to the trade bodies.

Hennessy joins Aura

And in another high value sector, cognac specialist Hennessy has become the first spirits producer to join the Aura Blockchain Consortium, developed to provide an authentication platform for luxury goods.

Aura was set up last year by Richemont’s Cartier unit, LVMH and Prada Group with the aim of providing a single global blockchain solution that can be used by luxury brands worldwide and allow purchasers to access a product’s history and obtain proof of authenticity. It also wants to help brands show their customers that they are engaged in sustainable development.

Aura’s platform takes the form of a multi- nodal private blockchain, secured by ConsenSys technology and Microsoft, that can be accessed by brands for an annual licensing fee and volume-based payments, with the proceeds reinvested into the platform.

Each product is given a unique ID after manufacturing that is recorded on the blockchain. When customers purchase a product, they get a login to the platform that will provide a unique certificate of ownership and provenance, as well as other information which could include product history, a warranty and care instructions, for example.

‘Hennessy has demonstrated true leadership and a commitment to sustainability and responsibility within the luxury sector for years and we are delighted to onboard them to the new opportunities available to transform their business with our blockchain solutions,’ said Aura’s Secretary General, Daniela Ott.