How blockchain technology can advance circularity in Global Material Flows

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Events of the past 18 months have brought climate change and sustainable development to the forefront of the global conversation. Unprecedented extreme weather conditions, such as wildfires, flash floods, record-breaking temperatures and melting ice caps, have had a devastating effect. And what we are seeing is just the beginning. Wasteful economic practices have led to an ever-increasing quantity of plastic pollution in our seas, on our land, and the insidious discovery of micro-plastics in human organs.

The fashion industry continues its pursuit of fast fashion. And the subsequent demand saw garment production double between 2000 and 2015, an alarmingly high rate. The textiles industry was estimated to produce a total of 1.2 billion tonnes of CO2 equivalent in 2015. This was more than the emissions of all international flights and maritime shipping combined. 

The traditional linear economy is clearly no longer a sustainable model for growth. The idea of a take/make/dispose economic plan cannot continue in a world racked with climate change issues. The idea of a circular economy is reaching the top of government and business agendas worldwide. An increasing number of case studies prove the business viability; material loops are closed to minimise value leakage, while value capture is optimised and materials are kept in circulation to create resilient businesses and stable prices.

A discussion paper published at the end of 2020 by the UN Environment Program (UNEP) and International Resource Panel (IRP), entitled ‘Sustainable Trade in Resources – Global Material Flows, Circularity and Trade’ reveals shocking numbers on the use of global materials: 

  • The annual global extraction of materials tripled between 1970 and 2017. 
  • In 2017, natural resource extraction and processing accounted for 90% global biodiversity loss, 90% of water stress and 50% of global GHG emissions.
  • With the current trend, annual waste generation is forecast to increase 70% by 2050.  

The paper also explains how international the trade in material resources has led to an imbalance of net global import and export, creating a volatile market space. We only have to look back to the start of the Covid-19 pandemic for recent proof of this, with disruptions to material supplies due to the complex supply chains we now have in place for most industries.  

Analysis of the traded products lifecycle has shown that one-third of the total volume of materials extracted (to produce traded goods) is three times the volume of goods traded across nations. The paper also discusses how adopting circular economic methods allows for the decoupling of material use and environmental impacts from economic activity and human wellbeing and enables sustainable development. Conclusions recommend policy revisions to trade agreements to mitigate any adverse effects of the transition to a circular economy.

So what role can technology play in this transition towards circular economy? How can we ensure that materials remain in use at their highest value and reduce extraction? Although some still regard blockchain as a relatively immature technology. The security, traceability, and transparency of Distributed Ledger Technology (DLT) mean that material usage is already traced by existing implementations. It provides a map of material flows and associated carbon and GHG emissions. This map supports the business by mitigating risk andensuring regulatory compliance. Investors require this transparency in supply chain operations because of the increased focus on Environmental, Social and Corporate Governance (ESG) criteria increases for new investments. 

Blockchain has its challenges and will not resolve the problem of designing products for reuse, repurposing and recycling alone. But as the technology matures, it offers excellent potential for scaling up material flow tracking and the much-needed transition to circularity. 

Sources:

  1.  Ellen MacArthur Foundation, A new textiles economy: Redesigning fashion’s future (2017, http://www.ellenmacarthurfoundation.org/publications) 
  2. Sustainable Trade in Resources: Global Material Flows, Circularity and Trade | UNEP – UN Environment Programme 

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