Raw materials sourcing is becoming a sensitive issue for big business amid numerous reports of human rights and environmental failures. Attempts to establish auditing of the source of minerals and nature of their extraction have been dogged by criticism they would be too easy to manipulate.
Volvo will be among the first corporates to use the blockchain-based Responsible Sourcing Blockchain Network (RSBN). From early next year, Volvo will test the supply chain of its batteries via a blockchain system belonging to computing firm IBM. The development marks digital cobalt supply chain monitoring graduating from its pilot phase into the real world, according to a statement released by IBM and auditing service provider RCS Global Group.
“We have always been committed to an ethical supply chain for our raw materials,” said Martina Buchhauser, head of procurement at Volvo Cars. “With blockchain technology, we can take the next step in ensuring full traceability of our supply chain and minimizing any related risks in close collaboration with our suppliers.”
RCS Global will be tasked with assessing each entity in the supply chain against responsibility requirements set by the Organization for Economic Cooperation and Development. Members of the RSBN supply chain monitoring system reportedly include Ford, Volkswagen, LG Chem and Chinese mineral supplier Huayou Cobalt.
“We are setting in motion a process of mainstreaming responsible sourcing practices across major industries,” said Nicholas Garrett, chief executive of RCS Global. “We’ve reached significant new milestones as we’ve moved beyond testing, proving the merits of this coupled technology-and-assurance model can extend to a wide range of participants across every tier of the supply chain and other minerals. The early addition of Volkswagen Group, and now Volvo Cars to this collaboration confirms that blockchain technology, together with responsible sourcing assurance, can help address critical sustainability issues impacting the entire industry.”
The blockchain, powered by Linux’ Hyperledger Fabric, hosts an audit trail for traceability and verification from mine to market which cannot be edited, said the project partners. There are admission requirements concerning human rights and environmental practices which will apply to new companies wishing to enter the supply chain and which will be audited. A trial phase of the system traced back cobalt used in a Ford plant in the U.S. to an LG Chem battery factory in South Korea and a Huayou mining operation in the Democratic Republic of Congo, with each of those stakeholders having signed up to the audit.
Volvo said it would apply blockchain tracing to other materials found in its batteries that could have a high social conflict rate, such as nickel and lithium. Volkswagen AG has reportedly worked with battery suppliers to address supply chain due diligence and is said to be working on mapping and auditing activities for key battery minerals.
It is intended the auditing solution will be able to trace the ‘3TG’ metals – tin, tantalum, tungsten and gold – in future.