Supply Chain

Introduction to Supply Chain Optimization Climate Solutions Enabled by Blockchain

The accurate tracking and measurement of a vast array of components across the global economy is no small task. Supply chains can encompass everything from the sourcing and distribution of raw materials through manufacturing, transportation, the eventual delivery to the end user, the use of the product and even the disposal of both the product itself and the packaging that it came in.

Every one of these elements involves greenhouse gas (GHG) emissions that are currently tracked in a non-standardized hodge-podge of custom software and databases along with literal excel spreadsheets. An effective strategy for dealing with supply chain GHG emissions requires a detailed understanding of where the emissions are coming from and the full life cycle of products.

Blockchain applications running on shared protocols may be able to help provide a new layer of transparent and accessible details to assist with monitoring, reporting and verification of material flows throughout the supply chain. This has the potential to be integral in the restructuring or retrofitting of entire sectors of global supply chains for the sake of efficiency and monitoring of sustainability practices. As a single source of truth for relevant supply chain stakeholders, data transparency and predictability may enable big wins for supply chain management at scale. And, what is remarkable about supply chains is how even the smallest improvements in logistical efficiency can have huge impacts on energy use at scale.

So why is blockchain usage in supply chains not happening at scale today? Many companies simply do not know where to begin – engaging a fragmented supplier base, with limited data visibility and seemingly conflicting procurement priorities can seem like a mammoth task.

However, the SEC may soon require carbon disclosures from companies as investor concerns about the material impact of climate change on financial performance continue to escalate but they are still considering excluding scope 3 emissions in those disclosures. This is a strong indication as to how hard those emissions are to accurately track and yet, scope 3emissions are in many cases up to 85% of the emissions associated with a given product's
Lifecycle.

Scope 3, being where so many Corporate emissions reside, also presents the greatest opportunity for carbon reduction. However if Scope 3 tracking and disclosure does not improve there will be no way for legacy industries to be accountable for their emissions.