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Banks to test blockchain for sustainable supply chains

LONDON: December 13, 2017. The University of Cambridge Institute for Sustainability Leadership (CISL), supported by Barclays, BNP Paribas, Sainsbury's, Sappi, Standard Chartered and Unilever, has launched a pilot project to test blockchain technology to reward supply chain management sustainability.

The year-long project, which has secured private and public funding of more than £600,000, will trial the concept by using a shared data system for tea farmers in Malawi that supply Unilever and UK-based supermarket Sainsbury's.

The technology works by gathering and recording standardized information from farmers about their produce, including production quality and price, using virtual identifiers that are encoded on a blockchain, making the supply – and its sustainability information – traceable and transparent.

tea-pickingThe partners believe the blockchain application has the potential to ultimately benefit not only 10,000 farmers in Malawi but also 1.5 billion families who depend on small-scale agriculture worldwide.

The technology has been developed by blockchain-based supply chain services firm Provenance and Halotrade, which uses smart contracts and algorithms to convert supply chain data into preferential pricing terms in banks' systems.

Supported by Britain's Department for International Development (DFID), key to the success of the pilot will be whether it can provide companies and banks with Sustainability data in order to offer preferential terms or access to credit for growers.

"This technology has the real potential to help banks access more detailed and more reliable information about social and environmental impacts in a secure way, throughout the entire supply chain," said Marguerite Burghardt, head of the BNP Paribas Trade Finance Competence Center.

"This will enable financial institutions to broaden the scope of their financing offers and to propose financial incentives to their customer clients, based on their environmental and social standards," she added.

For banks the technology could mean better oversight of transactions as well as enabling compliance with regulations such as the Modern Slavery Act and Bribery Act. This in turn would attract investors and clients concerned with Sustainability impacts according to CISL.

"This innovative new technology will help us to increase sustainable sourcing, enhance the livelihoods of the smallholder farmers we work with around the world, and help to make sustainable agriculture mainstream," commented Unilever CMO and head of Sustainable Business Keith Weed. "We have an important role to play in providing healthy food from a healthy planet, and we're proud to be working with industry leaders on new technologies to bring us closer to this goal."

The project was originally developed by a fintech taskforce and launched at a summit hosted by CISL patron HRH The Prince of Wales.

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