Traceability and Transparency are Key to Sustainability

Author: Sönke Mißfeld

We all know that the once superior capitalistic organization of production and consumption has reached its peak in many areas simultaneously. We’ve seen our worldwide identically structured credit-based fiat money systems result in historic levels of indebtedness. This unsustainable “live at the expense of the future” can only be maintained with massive ongoing market interventions of central banks and governments. If they stop or fail, the economy falls. Now, that’s already a very unpleasant truth, but it is not our biggest problem. On top of this ever louder ticking financial doomsday clock comes a far more threatening consequence of globalization: Earth overconsumption.

The globalized competitive persuasion of personal profit maximization has led to a completely unsustainable world economy. Earth overshoot day 2018 will probably be on the first of August this year. This means, that 5 out of 12 months we will consume, waste and destroy resources that our nature will not be able to regenerate. Global Warming, Overfishing, Deforestation, Microplastic, Pollution — this list goes on and is an unbearable disgrace for a species in the information age that considers itself to be intelligent. Long-term irreparable damage and critical resource depletion wherever you dare to take a closer look.

Politicians manage our problems — Technology solves them

Even though there couldn’t be a more urgent matter than sabotaging our and our children’s very own future, global politics are not doing nearly enough to reverse this destructive path. Distracted in the repeating left vs. right wing traps, they seemingly avoid this mother of all problems the best they can –partly because they can’t and partly because they don’t want to change it (because they’d have to take some donors privileges). In most countries, it is quite obvious that short-sighted lobby interests and corruption overrule the peoples’ will and human right for the common good. Any responsible government would naturally have to set this topic on the very top of the agenda.

So again, it is up to the one thing that’s really helped people in their day to day life. The only thing that has persistently raised humanities life quality throughout the last decades and centuries — despite money and power not being in the favor of the masses most of the time: Technology! It has lifted us from the self-supplying berry-gathering stone age men to a highly specialized, machine controlling online-society and hell yeah, thanks to the digitalization and the blockchain we are very hopeful it will finally free us from the inherent insufficiencies of centralized human power.

Unlike politicians, technology doesn’t think in four-year terms or know the fear of personal repressions. It can’t be bribed or change its mind against its own campaigning promises. It’s a tool — once invented and widely spread, you can’t just tell people to stop using it. If it solves a problem, it will be used. For many decades politicians did not dare to challenge the true game-changers like the monetary system or the monopoly-like property concentration on the very top of the pyramid. But blockchain technology already did.

Blockchain means trust in decentralization

The blockchain enables us to define one undeniable truth for any decentralized digital ledger. Whatever we document this way is immutable and can be trusted without a central entity having oversight or control. It basically eliminates the need for a trusted third party in value transactions, contract closings or consensus findings. Functional decentralization challenges the middle man’s business — that’s the big deal with Blockchain.

This is why we don’t have to wait anymore for some distant vote or revolution to bring us the next savior. Thanks to the blockchains distributed consensus mechanism, we finally have it in our own hands to upgrade or bypass the old inefficient centralized power structures. The Blockchain-Genie is out of the bottle and it’s here to stay. Whatever we wish (and pursue with a critical mass) that lies in the power of decentralized digital documentation shall become reality.

Even if we were only the purely egoistic, self-interest pursuing individuals some scientific models reduce us to, we still should easily be able to find a common wish for the unbottled ghost of decentralization — for the sole sake of survival:

“Please give us a fast and effective tool to turn away from our self-destructive path of earth overconsumption! A tool anybody could easily learn to use — without the help of insufficient governments and even against the will of some greedy individuals.”

And the Blockchain-Genie laughs and says:

“Your wish is my command: I give to you the immutable supply chain visibility tool. Utilize it to stop the waste of resources in production and to give the people all the information they need to make sustainable production and consumption decisions.”

Enhanced product visibility for efficient supply chain management

As fantastic as that may seem, this utopian development is far more realistic then you might think. First will be the traceability: There already are numerous blockchain startups popping up all around the world that offer different distributed ledger solutions for product tracing and every other aspect of supply (and value) chain management. Even the old big players like IBM have recognized the many promising use cases from food tracing to medicine safety and efficient logistics.

It is not a matter of if, but only a matter of when and how, that the lion’s share of global production will be digitally documented and blockchain secured. There’s simply too much cost reduction potential in this technological advancement for most industries to not apply it. In the competitive globalized world, this will be one of those “adapt or die” evolutionary steps like the internet has already forced a few upon many traditional businesses. To confidently know when a certain part or product is where and what is done with it gives supply chain managers optimal decision bases and helps them realize critical competitive advantages — if correctly integrated.

Connecting resources, production and consumption

So, if we assume cost reduction and efficiency gains automatically lead to waste reduction, this development is itself very good news for our overstretched resources. But it certainly will not stop there. Blockchain will extend our current understanding of a products supply chain to both ends — down to the required resources and up to the consumption and its disposal. Both extensions will be crucial elements for the evolution towards a sustainable economy.

On the one side, thanks to the unstoppable tokenization of resources and the blockchain based tracing of products, we now have the technical ability to reliably document the existing reserves and monitor their depletion by product, sector and region. This way more and more products will be embedded in the greater picture of what we have and can afford in this world. Engineers and managers will have a way better idea about the true costs of their solution to satisfy a certain consumer need. The current practice of always going for the cheapest buying price can be very misleading regarding sustainability. Without additional pressure from the outside, it might still be their choice to go for the biggest profit regardless of the environmental costs, but at least it will be a knowing and conscious decision.

Empowering conscious consumerism via transparency

This brings me to the other side of the above-mentioned supply chain extension which is the far more crucial point of the utopian Genie-tool: The consumers decision-base. Managers and engineers will always do what is best for their companies but consumers have the power to dictate what that would be. Conscious consumption can exert the only pressure for change neither governments nor lobbies can directly influence. If we consumers make the joint decision to not buy a certain product or from a certain company anymore, the producer is forced to change or destined to decline.

Until now, the majority of consumer decisions were almost completely disconnected from the way of production and the related work conditions or environmental costs. Transparent blockchain-based product-tracing will rapidly improve the customers’ knowledge base prior to a purchase and therefore close this gaping information hole. Boiled down to the core, we are talking about nothing less than the information equilibrium between consumers and producers. Again, like the producer, the consumer might still decide against the sustainable product, but at least it will be conscious.

Sustainability is not only a duty — it is the market of the future

The rapid growth of organic food and fair-trade products in the last decades undoubtedly proves many consumers growing desire for safer, more sustainable and high-quality products and the willingness to pay more for it. We strongly believe that these trends will accelerate with more and more product-information being reliably documented and available. OURZ hope is that this will result in a self-nurturing up-spiral. Growing knowledge will lead to more conscious consumerism. This creates pressure for more sustainable production and consumption and more demand and reward for transparency.

For someone with the old-economies thinking, transparency will ring certain bells calling “competitive disadvantage”. This is undeniably true for many of the old but still successful business models. Many rely strongly on under- or misinforming business partners and consumers to maintain their profits. But if you think about it: It is this information asymmetry and anonymity that makes most of the bad behavior like eco-sins or slave work possible in the first place. The more transparent our economic decisions get, the less likely social misbehavior becomes.

In the emerging more decentralized economy, transparency might become the biggest competitive advantage. It enables supply chain managers to optimize efficiency better than ever before, satisfies the conscious consumers demand for reliable product information and opens up undreamt-of cooperative potentials (I’ll deepen this in one of the next articles). Traceability and transparency in production are key to sustainability. The blockchain tool is our biggest hope to reach this very urgent next evolutionary step on time because, for the first time, we the people have it in OUR own hands.