Blockchain tech could support supply chain transparency

The University of Cambridge Institute for Sustainability Leadership (CISL) has developed a collaborative project called Trado along with a number of investors including Sainsbury’s, BNP Paribas, Unilever and Barclays. The project intends to enable a sustainability “data-for-benefits” swap between buyers and suppliers in the supply chain. The access to data will be used to help gather finance as a reward for first mile producers who provide sustainability information. Information on first mile sustainability practices can often be difficult to discern, due to a lack of reporting systems and infrastructure in production facilities and farms in developing regions. The Trado project intends to solve this problem through peer-to-peer data sharing technology. Small suppliers upload production system data onto the peer-to-peer blockchain which can be accessed by other members of the supply chain. In exchange for the data, the buyer provides lower financing rates to be applied to working capital financing of the supplier.

The project was tested in a Malawian supply chain. Malawian tea producers exchanged data about the production processes and sustainability in exchange for financial benefits like cheaper borrowing costs. The data was uploaded to an encrypted blockchain platform to be reviewed and assessed by other members along the supply chain. According to Jacques Levet of BNP Paribas, a banking group involved in the Malawian tests, "the new technology has potential to offer better data, and therefore better oversight of transactions. […] Improved access to sustainability data could also help to attract clients wishing to demonstrate social and environmental leadership." The success of this experiment has made investors hopeful that Trado could improve supply chain sustainability transparency while supporting smallholder producers and suppliers.

The system is said to have no impact on production costs, benefitting both suppliers and buyers at every level of the supply chain. In regards to the benefits to the smallholders who provide the sustainability data, Erwin Vroom of Unilever has stated: “Making more affordable working capital available to smallholders will enable them to increase investments in their farms to enhance their productivity. This is a critical step to building transparent sustainable supply chains.”

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