If you’re unfamiliar with the term, I like this explanation of blockchain technology from Wikipedia:
A blockchain"…is a distributed database that is used to maintain a continuously growing list of records, called blocks. Each block contains a timestamp and a link to a previous block. A blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. By design, blockchains are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority."
Essentially, the application of blockchain technology in a product supply chain would collect any history associated with a product or the material used in the product in multiple “blocks” that are encrypted, cannot be modified, and are added to one another as the product or material moves through the supply chain.
While I am not a blockchain expert, I do believe that this technology can be applied in commodity supply chains by creating “responsible networks” and rolling up and reporting impact data. I have provided a very basic sketch of my ideas on how such an application could work based on “responsible network” membership criteria—for example, conducting due diligence of suppliers and the material they provide using the OECD Due Diligence Framework—and product-level or operations-level criteria—such as reporting water use and greenhouse gas (GHG) emission footprints of their operations.
First, we would need to create a blockchain network of supply chain actors who will adhere to, or have been audited against, “responsible network” criteria (e.g. conducting due diligence of suppliers). Once an entity qualifies as a network member, it would then be able to buy and sell with other, similarly qualified members. In addition to fulfilling obligations to become a member of the blockchain network, some entities also may be required to upload data related to their water use or GHG footprints, depending on the types of operations and significance of their impacts. As material is processed, mixed with material from other origins, and split into production lots, the water use and GHG footprints would first be combined and then allocated appropriately.
While I do have a lot to learn about the actual mechanics of a blockchain and how it could be applied in responsible supply chains, I do believe such an approach would be an improvement over the current supply chain model, which is disaggregated, with brands conducting their own due diligence and trying to collect (and then make sense of) numerous data points along several complex supply chains. As we try to shift entire industries to more responsible behavior and require individual actors to report on their impacts, we must explore blockchain. I am eager to learn more about it.