Can blockchain serve sustainability-focused brands?

Could DLT be the key to unlocking a market of conscious consumerism?
23 December 2019 | 24 Shares

Nike topped Morgan Stanley’s list in 2015 of most sustainable clothing and footwear brands. Source: Shutterstock

Shopping is emerging as an experience, and for some, it could even serve as a statement contributing to a larger social movement. This trend rises as consumers are increasingly concerned about their product source, and are conscious of the ecological footprint it leaves behind. 

As an example, grabbing a coffee from outlets using organic, ethically-sourced beans directly links a company with support for sustainable coffee farms. Many new clothing brands, meanwhile, are seeking to establish loyalty among environmentally-conscious customers in an industry with an ill reputation for ethical manufacturing. 

Based on a survey by Unilever, one in three consumers keeps sustainability in mind when choosing products, while a further 21 percent aim to go down the same sustainable route. This trend reflects a migration of consumers, especially millennials, gravitating towards brands that champion ethicality and sustainability in their mission statements and business values.

Now more than ever, an organization’s brand is graded against purpose, sustainability, and the impact it brings to consumers and the wider community. Even though that’s the reality, many companies find the lack of trusted verification can be a contributing factor for backed-up stock. Proving that sustainability has been central in the manufacturing and transit of goods can be a crucial selling point. 

In this regard, blockchain specialists are increasingly keen on developing solutions that allow retailers to integrate blockchain into supply chains to managing consumers’ expectations for transparency and traceability. 

Linking businesses with customers through blockchain 

Yonathan Lapchik, Chief Executive Officer of SUKU, explained that tech-savvy consumers carry high expectations for companies to provide transparent and clear labeling of product origins. An opaque view is insufficient to satisfy consumers in this era of information. 

“The key to customer loyalty has traditionally involved maintaining a high degree of trust between a brand and its consumers. Blockchain technology flips this paradigm on its head, moving from a world of ‘trust’ to one of ‘proof’. With blockchain technology, retailers can provide corroborated verification on products attribute, as validation is arrived at with a larger network of participants,” says Lapchik.

This form of transparency not only satisfies consumer habits but also provide new avenues for retailers to grow and retain customer loyalty. 

As an example, retailers can illustrate product information in a step-by-step audit and guide consumers in understanding the brand values with sustainable proof; overall, retailers are initiating the conversation on transparency and sustainability, perpetuating a positive image even before the purchase journey begins. 

This is evident in Cencosud, a leading retailer in Latin America, which embraces blockchain in the emerging “trust economy”. The household name allows consumers and suppliers to scan and check the provenance of meat products sold and this service has been implemented across 20 different stores. 

On one end, consumers are empowered with product information through blockchain; on the other end, food companies can streamline the flow of the supply chain and reduce overall cost in the tracking of goods and logistics. 

Challenges in delivering transparency 

Ideally, retailers are eager to showcase the stages of a product being delivered from steer to shelf to embrace full transparency on product provenance; however, in reality, the implementation comes with some bumps on the road. 

Lapchik explained, “the process typically involves the onboarding and coordination of several parties to have a healthy pool of partners that can provide the required variance in technical sophistication and automation, meaning that the supply chain process is no longer simply linear with many variables.”

The decentralization of supply chain and elaborated collaboration between organizations bring unique challenges, yet early adopters will find the impact to be rewarding in many ways. 

“Besides the well-spoken about benefits of transparency and traceability, blockchain is often overlooked in its providence of a real-time, network-wide consensus that ensures information is continually in check. Tangibly, this helps reduce errors, lower recalls, and eliminate existing inefficiencies throughout the supply chain. 

Translating into the ability for companies to react in a much more intuitive and instant manner as issues crop up along the way, blockchain should be recognized as much for its work in future-proofing the industry for the next turn of the 21st century,” Lapchik concluded.