Fishy Business: Can blockchains provide supply chain transparency?

Transparency of product supply chains has become a key issue in recent years. Increasingly, we want to know what’s in a product, where it’s from, how it was made and by whom – just think the horsemeat scandal, stricter EU food labelling standards, and the creation of the UK National Food Crime Unit.

Many NGO-led initiatives are working to increase supply chain transparency for commodities linked with environmental damage and biodiversity loss, such as overfishing, or the tropical deforestation associated with the production of palm oil, timber and soy (e.g. take a look at SPOTT, Trase, and ThisFish). The enormous complexity and international nature of the supply chains involved make transparency particularly difficult to achieve. It’s essential for conservation to keep thinking of additional ways to improve transparency, and to consider emerging technologies and the role they might play.

Introducing Blockchains

One potential technology for increasing supply chain transparency has been getting a lot more attention recently: blockchains. Blockchains (best known for their application in trading Bitcoins) are essentially online, decentralised, public ledgers, which permanently record and timestamp transactions of data. Each record (or ‘block’) within the system is linked to a previous one (creating the ‘chain’), and cannot then be altered. The decentralised nature of a blockchain and the complex cryptographic methods used to ‘authenticate’ all records in the system make it extremely secure. There are many more detailed explanations of blockchains (e.g. see here and here), but the main message here is this: blockchains can allow for data to be passed all the way through a supply chain without being altered by any actor in it, and can therefore provide secure information on each stage of a product’s journey, from production to consumption.

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Fishing for Opportunities

This is potentially a pretty big deal. One of the main groups working in this area is Provenance, which earlier this year ran a successful pilot of blockchain technology to improve transparency in the supply chains of yellowfin and skipjack tuna from Indonesia. Local fishermen registered their catches on the blockchain through texts sent from a regular mobile phone. Additional data on various environmental and social aspects relating to the catch were verified and added to the blockchain record by local NGOs – this would confirm, for example, that a pole-and-line capture method was used, or a particular fair trade standard was applied. By digitising the catch data at the point of capture, this information can be made accessible throughout the product’s journey. The idea is then that this information is passed along, and added to, on the blockchain with the catch as it moves through each stage of the supply chain. By the time the fish has been transformed into a final product, all the data accumulated from each stage of its journey can be made available through a smart label, QR code or Radio Frequency Identification (RFID) tag. The customer can scan the product with their smartphone, and voilà – they know exactly what their tuna’s been up to.

It’s easy to see how this system might be applied to many other commodity supply chains with major social and environmental impacts. Blockchains could provide assurance, for example, that a shipment of timber has been legally harvested or that a CITES-listed species has been bred in captivity rather than illegally removed from the wild. Perhaps this system could even be seen as a more sensitive and flexible alternative to (or additional component of) traditional certification schemes. Instead of simply labelling a product as ‘good’, a smart label could provide a wealth of relevant information – maybe even incorporating data from third-party sustainability platforms – which the consumer could take into account in order to make their own decision. By grounding this data in a blockchain, it is secure and can be added to without removing or changing previous information.

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So what’s the catch?

There are, of course, some stumbling blocks to using blockchains for supply chain transparency in this way. An obvious one is that this system does not allow us to verify the validity of data reported – the social and environmental information being so securely locked into the blockchain is only valuable if it is, in fact, true. This ‘junk in-junk out’ issue is a recurring theme in the monitoring of many commodity supply chains, and although a blockchain framework can certainly help – for instance, by making data more accessible and therefore bringing it under greater scrutiny – it is not a silver bullet and should not be mistaken for one.

We should also carefully consider the ultimate goal of producing all this data. The extent to which product transparency matters to consumers is debatable, with some studies finding a high consumer demand for information, whilst other research suggests sustainability labelling has a low influence on consumer choices. Even where there is high demand for product information, however, there may not be the capacity to make meaningful choices based on the huge volume of data made available. Let’s imagine, for example, that blockchain technologies made it possible to know the exact origin and supply chain journey of the palm oil derivatives in a lipstick – what is the consumer expected to do with this information? If we continue to place the focus on providing more and more details to the consumer at the point of purchase, when do we hit an information overload? We should be very clear as to why we are asking for producers, traders and manufacturers to provide this additional information before we ask them to do it.

Despite the potential problems, it seems that blockchains provide huge potential to improve supply chain transparency and so address the environmental impacts of certain commodities. Some retailers (including Co-op and Walmart) are already exploring the potential of blockchains, and it seems likely others will follow suit. As the need for complex supply chain data continues to grow, conservationists should consider blockchains as an important, shiny new tool in their kit.

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Twitter: @Ellie_Spencer_

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