How can companies measure the product carbon footprint of their supply chain using Blockchain technologyFatima Khalilova

23 August 2021

To maintain a long-term competitive advantage, manage climate-related risks and be prepared for emerging policies and regulations, the companies need to understand and manage their product- and supply chain-related greenhouse gas emissions risks. Thus, corporates shift towards accounting for a more granular level carbon footprint which requires a deeper analysis of purchased materials, processes, and services. The challenges in supply chain emissions exist due to highly complex, fragmented, specialised, and outsourced global value chains caused by multi-stage production and complex networks. These factors complicate environmental data and information exchange among the partners where technology, in this case, blockchain can bring several advantages.

Blockchain is a distributed ledger system for recording transactions among multiple parties in a verifiable and tamper-proof way. It includes a chronological string of blocks where each block is encrypted and distributed to all participants who keep their copies of the transactions. They are immutable meaning the past data cannot be overwritten; it is a highly secure network. Therefore, it can help to efficiently connect value chain actors enhancing traceability over the product’s life cycle in a trustless environment. This plays as an encouraging mechanism for manufacturers, tiers, OEMs to improve their environmental footprint; supports consumers to better understand the product’s environmental impact.

Since the technology's application in supply chain PCFs is in its infancy, there is a gap in exploring practical models. Thus, the research paper presents a conceptual framework based on CarbonBlock pilot project to investigate how blockchain technology can help companies to measure the PCF of their supply chain. The pilot project's focus was to measure and manage the upstream carbon footprints of materials, parts or components using smart contracts based on private blockchain technology. The research paper differentiates itself by investigating the practical use case of blockchain technology as a solution bringing together the large automotive industry representatives.