Blockchain is a digital record of transactions consisting of documentation labeled “blocks”, which are then linked together into a network in the form of something apparently a chain. Blockchain (so named because of its structure) is commonly used to record cryptocurrency transactions, the most popular example of which is the Bitcoin platform. Corporations and Blockchain are another connection that could prove to be a new target area for a decentralized network.
In addition to the financial domain, Blockchain is a flexible tool that has many non-cryptocurrency uses. Recently, this network has been described as a powerful tool in the corporate world. Mainly because it increases business efficiency while reducing costs.
Despite being a much sought after tool in the business world, blockchain is known to notoriously consume large amounts of energy, which has a huge impact on the environment. Nevertheless, the network appeared on the market as a unique tool for companies to implement corporate social responsibility (CSR). CSR is a management concept under which companies integrate social and environmental issues in their business models and in interactions with stakeholders.
Corporations, blockchain and CSR
The social responsibility movement is gaining ground all over the world. Blockchain can be used to implement many sustainable measures in business, which fall within the scope of CSR. For example, it can serve as a platform for building a circular economy, i.e. an economic plan aimed at eliminating waste and the endless use of resources.
Corporate Social Responsibility and Blockchain can be used to optimize corporate supply chains. The use of the web when incorporating CSR into the entire business model is a great opportunity for corporations to follow the (increasing) trend of corporate social responsibility.
Consumers are demanding real, tangible efforts by corporations. Some say they would prefer to purchase services from companies that show any commitment to environmental protection. Companies that sacrifice themselves in the fight to protect it.
Corporations have long come under fire from activists. Large business entities often carry out apparent CSR activities, which creates the so-called “Greenwashing”. In short, companies often hide under the veil of environmental and social sustainability while actively participating in harmful practices.
The benefits of blockchain for consumers and businesses (and its usefulness in corporate social responsibility) are intertwined. The basic principles (which are trust and transparency) give us the opportunity to neutralize the negative effects and at the same time take a big step towards a more sustainable future.
What benefits can consumers and companies count on by choosing Blockchain?
Blockchain can ensure socially responsible supply chain management through easy access to information in connection with:
– Transport of goods from warehouses to points of sale
– The condition, quality and price of the products concerned
– Fulfillment of orders and transactions
Blockchain, corporations, logistics
The wide availability of information creates an ideal data integrity environment. The decentralized structure of the blockchain ensures that each party has access to them and maintains control in connection with each process taking place. Throughout the logistics process, the details of each transaction are recorded and made available via persistent history (data cannot be deleted or changed). It therefore makes it impossible to tamper with the actual register.
Thanks to this detailed tracking and verification process, connecting and sharing can be done synchronously. Benefits include the elimination of human error, cost reduction, and minimized transaction delays. Supply chains will be exponentially more efficient.
By eliminating overhead costs (i.e. capital replacement) and third party involvement, Blockchain provides the ability to significantly reduce transaction costs and time. For example, the cost of factoring can be reduced by up to 25% as Blockchain automatically reduces the risk of selling multiple invoices.
In addition, the network can help identify and correct broken or redundant contracts and stagnation in the flow of goods, which will have a positive impact on corporate social responsibility. In turn, by recording the history of each transaction and production, blockchain can help prove the sourcing of raw materials (by companies) in a humane manner. The network can be part of any company’s CSR activities.
Continuing the advantages of the web, blockchain gives consumers the ability to obtain accurate information on the business practices of various corporations. It enables them to make informed decisions about where to spend the money.
Increased consumer awareness would encourage companies to sustainably source materials and ensure social responsibility at all stages of the supply chain.
Blockchain benefits not only consumers and companies, but also society as a whole. Thanks to this network, we are moving towards more ethical business models.
Blockchain and the circular economy
The concept of a circular economy is about reducing materials and waste, and reusing products to ensure “circularity” to conserve resources.
By leveraging benefits such as transparency and traceability, blockchain can encourage a circular economy in enterprises. Proposing to track used resources (from the point of extraction, through distribution, to purchase by consumers), while confirming the implementation of the mission of social responsibility.
Another unique application that this network can offer is its ability to create a distinctive digital identity (which can be traded). By emphasizing the inherent value of natural resources, Blockchain can encourage consumers and businesses to embrace this type of economy.
Speaking of examples, it is worth taking a look at the recycling industry. Plastic Bank (a recycling company that specializes in plastics) has created a system where consumers receive digital tokens in return for recycling plastic. People with such tokens can later use them in stores that cooperate with the company. This method is a good way to generate income and solve environmental problems that have plagued society for some time.
Not as easy as it sounds
Despite all the benefits of this promising new technology, there are barriers to its widespread implementation. Encouraging the use of Blockchain is similar to encouraging society to change culture. In both cases it is difficult and time consuming.
It is not easy to integrate new technology into existing supply chains. This is certainly one of the most daunting buts.
According to Logistics Bureau (a supply chain consulting company), implementing Blockchain technology involves six key steps:
1. Identification of the expected benefits
2. Choosing an ideal method for the subsequent Blockchain network consumer selection
3. Choosing the right platform
4. Configuring the selected platform
5. Preparation of a smart contract
6. Designing a suitable interface for the user
Smart contracts are digital contracts stored in the Blockchain. They run automatically after certain conditions are met. The key aspect is that once implemented in blockchain, they cannot be changed.
Ultimately, any investment in blockchain should be properly assessed prior to its implementation. Despite the fact that the web has a lot of potential – it is only a fledgling technology. Therefore, it is difficult to predict the actual performance improvement of any type of enterprise. When implementing blockchain, you should take into account all the opportunities and threats it brings.
Blockchain and corporations as an opportunity for sustainable development
The implementation of the blockchain network is crucial towards sustainable economic and social development. Optimizing supply chain management offers real opportunities as it ensures transparency and traceability. Undoubtedly, this can lead to an improvement in business practices, not only in terms of efficiency but also from an ethical point of view.
Using Blockchain and promoting a circular economy would reduce the negative impact on the environment and increase consumer confidence. Blockchain and corporations is a combination with extremely high potential in the future.