Crowd-based reporting mechanisms replace costly and corruptible auditors to ensure qualitative and quantitative Sustainable Fair Trade without delays.
Fair Trade has been around for 70 years, linking consumers with an awareness for fair wages to producers willing to respond to their demands. Today the concept of Fair Trade is increasingly linked to a broader social and environmental responsibility: Sustainable Fair Trade.
The common pitfalls for Fair Trade are the cost of uncorrupted verification of standards and their chain of custody. With the rise of decentralized digital network technology, first implemented in 2009 as a core component of the crypto-currency Bitcoin, the barriers to Fair Trade have changed.
Commonly known as “blockchain” or “hashgraph”, a distributed ledger is a chain of time-stamped, cryptographically secured, immutable blocks of consensus-validated digital data, existing in multiple synchronized, geographically distributed copies. Together, these properties make the data practically impossible to tamper with.
The technology has grown to a level of sophistication and ease of use, so a small group of people can use it to implement a simple idea and put it to a test. The Distributed Ledger Technology offers so-called “smart contracts”: self-executing digital contracts verified for authenticity.
A Significantly Cheaper Marketplace
Consumers can agree on any requirement to their supply chain, be it a fair wage policy climate-forcing emissions or any other consumer concern. By placing their time-limited willingness to pay a prime for their demand on the digital marketplace, their search for a verified supplier responding to their concern begins. As a matter of facts, the consumer demands do not even need to be linked to a certain product. The requirement may be seen as separately purchased service. That way consumers choose their demands once and for all, be it food products, leather goods or services. Their particular concerns are met across the board of their purchases.
For verification, Distributed Ledger Technology replaces costly and corruptible auditors by a crowd-based reporting mechanism, as already implemented in prediction market schemes (see e.g., www.augur.net), where verification is converted into a digital asset. Any attempt to influence the verification outcomes can furthermore be revealed and intercepted by an economically incentivized whistleblower function. This decentralized verification is significantly cheaper than the physical audit scheme, which is currently in play to verify the integrity of Fair Trade standards.
Consumers are in Power
In order to meet the standard of the emerging prediction markets, the Fair Trade verification model described above still needs to develop from a coarse global reporting mechanism into a more granular community-controlled approach. But first moving schemes for authentication of supply chains have already been launched, e.g. by Everledger for diamonds, or more generally by www.provenance.org.
Decentralized network technology opens up an abundant field for enterprises that are willing to assist consumers in changing the world through sustainable Fair Trade.
In conclusion, consumers are not powerless and they don’t have to wait for governments to agree on emission targets for CO₂ or fair wages. Furthermore consumers do not need the authorities to enforce these agreements. New decentralized network technology can place the consumers in control of the supply chain, forcing businesses to act responsibly and sustainably.
This blog post is based on the in-depth work of Bo P. Weidema, who addresses an LCA audience here.
Contributing authors:
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Bo P. Weidema is full professor at Aalborg University within the field of quantitative sustainability assessment and senior consultant in 2.-0 LCA consultants.
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Manuel Klarmann is co-founder and CEO of Eaternity, a company developing climate-friendly, health-conscious and low-cost management solutions for the restaurant industry. He has a Masters degree from the ETH in mathematics and neural systems and computations.
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Jürg Federer is a copywriter with 25 years of experience in helping brands tell their story. He’s currently supporting Eaternity in the role of Head of Marketing and Sales, promoting the Eaternity Database; currently the largest and most comprehensive database for carrying out CO₂-calculations in the food supply chain.