The Circular Economy And Sustainability Powered By Blockchain
There is an increasing focus on and awareness of the damage humans are causing the planet. Whether you believe the extent of this or not, I am sure you agree that we should become better planet citizens and start to reduce, recycle and reuse more than we do today.
As the damaging effects of climate change are becoming more obvious, the pressure to innovate and adapt to a circular economy is starting to become a significant priority business practice.
Even though I work with blockchain, my background is in retail (being born into a retail family), and I am pleased to see that more and more brands are adopting a more sustainable, circular economy-driven practice.
The Circular Economy
The notion of the circular economy can be described by the three R’s: reducing materials and waste, reusing products, and recycling materials. So, products and services are traded in closed loops or cycles. The Ellen MacArthur foundation illustrates that there is a continuous flow of materials through the value circle.
Today’s customers are demanding more product transparency from brands, and roughly 60% of them are inclined to buy products that have a clearly defined sustainability policy as shown by the success of fashion brands like Allbirds and Veja.
How companies handle the disposal or reuse of their products is important today. They must quickly adapt and innovate, using disruptive business models and technologies to support the movement.
Blockchain technology can be applied on multiple fronts to this problem, with wide-ranging benefits of the circular economy. As we know, blockchain technology originally spread through the emergence of bitcoin and cryptocurrency but is now widely used in applications like voting, health records, supply chain, ownership and identity management, energy supply, and protection of critical civil infrastructure.
The Three R’s And Blockchain Technology
Blockchain technology can reduce resource consumption by providing transparency and traceability, which efficiently facilitates the provenance of items. Blockchain technology can help to combat counterfeiting and its substantial negative environmental and social impacts in terms of materials used and human rights, as well as fair work practices. Moreover, consumers will be able to make more informed purchasing decisions, enabling them to consume truly sustainable circular products and services.
The circular economy is a complex area to navigate, mainly due to its vast extent of participants and the global nature of supply chains. Trying to fix the circular economy is a task for all participants in the ecosystem, not just one or two companies.
This is why blockchain technology is such a critical enabler: It helps provide an ecosystem with a trusted set of data and transactions on which the entire ecosystem can make collective decisions.
How Companies Are Helping The Circular Economy With Blockchain Solutions
MonoChain is on a mission to utilize blockchain technology to keep around $460 billion worth of clothes out of landfills every year. (Full disclosure: MonoChain is a company the author advises and works with.) MonoChain’s blockchain solution connects the primary and "second sale" markets, which facilitates the reuse of products and helps to extend products' lives. For the end customers, they can see items’ provenance and their “worth” or “resale value” in real time and find out the best places to sell them. This creates a tangible way for customers to resell or reuse their items with simple solutions.
In the U.S., $100 billion in medication is destroyed annually, while approximately 32 million Americans cannot afford the medication they need. Remedichain is disrupting the game and providing a solution by redistributing unused, still-viable medicine to patients who need it. This, in turn, helps people in need and reduces pharmaceutical waste.
Bext360, a startup in the field of agriculture, is utilizing blockchain technology to better track and verify the authentication of the organic cotton supply chain. With a focus on transparency and greater insight into this market, Bext360 is partnered with the C&A Foundation, Fashion For Good and the Organic Cotton Accelerator.
And finally, a global fashion brand is investigating the use of hemp to produce "cotton" denim. Levi's, one of the world's biggest denim brands, has released the Wellthread x Outerknown collection, which uses hemp that has been processed to feel similar to cotton. The reason is sustainability: "We take out more than 2/3 of the total water impact to the garment. That's saving a lot." So not only do you get sustainable denim, but you also get to wear hemp clothing. It's like being transported back to the 1970s.
The future circular economy and blockchain use cases look positive as more and more brands turn toward adopting a circular economy.
Corporations should take advantage of emerging technologies to improve the tracking and tracing of products beyond the point of sale and enable authentication, resale and material recovery.
The future of our planet will be greatly improved if more companies adopt blockchain technology for the circular economy.