Sainsbury’s and Unilever look at bitcoin technology for sustainability
Sainsbury’s and Unilever have joined a new international initiative that will test whether blockchain – the critical part of the bitcoin peer-to-peer payment system - can help reward sustainability in the supply chain.
The new collaboration is made up of six international companies and banks – including Barclays and BNP Paribas – plus four FinTech startups.
The project, which has secured private and public funding of more than £600,000, will trial the concept by using a shared data system for tea farmers in Malawi that supply Sainsbury’s and Unilever. The same system will also track the materials produced for the tea’s packaging, provided by sustainable wood fibre products company Sappi.
The technology has been developed by the collective of FinTech startups, including blockchain-based supply chain services firms Provenance and Halotrade, and uses smart contracts and algorithms to convert supply chain data into preferential pricing terms in the banks’ systems. Landmapp will provide land rights documentation via mobile technology, and the FOCAFET Foundation will ensure open-source data standards are developed and used throughout.
The technology works by recording standardised information from farmers about their produce, including production quality and price, using virtual identifiers that are encoded on a blockchain. This makes second and third tier supplier information available to all the parties that can access that blockchain, making the supply – and its sustainability information – traceable and transparent.
Financial institutions can then offer preferential terms or access to credit based on the evidence of sustainability supported by the blockchain. Through access to cheaper levels of working capital, smallholders will be able to increase investments in their farms to become more productive without needing to convert more land.
The pilot aims to test not only whether the technologies work together but also whether this application is commercially viable. Key to the success of the pilot will be whether the system can provide companies and banks with sustainability data that is material to their assessments of risk that they are not able to access through existing systems.
Keith Weed, chief marketing officer and head of sustainable business at Unilever, said: “Unilever has committed to sourcing 100 per cent of its raw agricultural materials sustainably. This innovative new technology will help us to increase sustainable sourcing, enhance the livelihoods of the smallholder farmers we work with around the world, and help to make sustainable agriculture mainstream. We have an important role to play in providing healthy food from a healthy planet, and we’re proud to be working with industry leaders on new technologies to bring us closer to this goal.”