Fiat Chrystler Automobiles (FCA) (FCAU.NYSE) announced that it has joined the Responsible Sourcing Blockchain Network (RSBN), an industry collaboration using blockchain technology to support sustainable, responsible sourcing and production practices from mine to market.
Rich western companies have basically picked up where rich colonialist powers left off in terms of exploiting the local indigenous populations of economically disadvantaged geographical locations like the Democratic Republic of Congo (DRC), where a high percentage of the world’s cobalt is mined. This initiative provides both transparency and accountability to the companies involved, which can translate into ethical decision making on part of the consumer.
“Our commitment to the responsible procurement of raw materials is vital to the integrity and sustainability of our supply chain, especially as our electrification strategy ramps up. Embarking on this journey together with technology and industry leaders will propel our ability to have visibility into artisanal and small-scale mines, allowing us to better manage the social and environmental impacts of our business,” said Carl Smiley, chief purchasing and supply chain officer for FCA.
We originally wrote about the responsible sourcing blockchain network last month when their pilot test for cobalt went live. The RSBN is a blockchain network committed to human rights and environmental protection in mineral supply chains. It’s built on the IBM Blockchain Platform and assured by RCS Global Group, with inputs from the Ford Motor Company (F.NYSE), Volkswagen Group (FWB.VOW), LG Chem (003550 KRX), Huayou Cobalt (603799 SHA), Volvo Cars, and now FCA.
Traceability and raw materials mapping is essential to the efficient mitigation of unethical practices that threaten the future for the communities where the raw materials are sourced. FCA intends to launch more than 30 electrified nameplates by 2022, and the consortium will help enable a responsible supply chain of cobalt, which is used in lithium-ion batteries to power electric vehicles.
By putting a data point at each aspect of the supply chain, and ensuring somehow that it’s actually filled in, the RSBN could theoretically do some good in the world. But the problem here like we laid out in the original article is that there’s no guarantees that every company, from mine to manufacturer, will be honest about their role in the process.
Let’s consider for a second the benefits of blockchain technology:
Blockchains are defined by the following properties:
transparency: all participants can view all data recorded;
sharing and decentralisation: several copies of the blockchain coexist on different computers;
irreversibility: once data is recorded, it cannot be altered or removed; and
disintermediation: all decisions are made by consensus between the participants, without a central arbitrator.
Like every other technology out there, a blockchain is only as reliable as the people who use it, and if someone wanted to hide some illicit details of their supply chain, it would be as simple as supplementing one negative datapoint for another. Basically, if mine A is known for human rights violations, then indicate that your cobalt came from mine B, which doesn’t. It’s not like anyone is going to check these things—after all, blockchain is supposed to be “trustless.”
FCA also recently contributed to the Responsible Business Alliance (RBA) Foundation Upstream Due Diligence Smelter Fund to help smelters and refiners offset the costs of their due-diligence activities as they strive to become compliant with the guidelines for due diligence put forth by the Organization for Economic Co-operation and Development (OECD). The foundation is the chief support behind the charitable, scientific and educational purposes of the Responsible Miners Initiative (RMI), of which FCA is a member.
Still, it’s a positive development that companies like FCA, Ford and Volkswagen are onboard with using blockchain technology to help make their production processes more transparent.
FCA corporate citizenship efforts are aligned with the United Nations Sustainable Development Goals, which aim to address global challenges, including those related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice.