There is an increasing focus on and awareness of the damage humans are causing the planet. As the damaging effects of climate change are becoming more obvious, the pressure to innovate and adapt to a circular economy is starting to become a significant priority business practice.
The notion of the circular economy can be described by the three R’s: reducing materials and waste, reusing products, and recycling materials. So, products and services are traded in closed loops or cycles. The Ellen MacArthur foundation illustrates that there is a continuous flow of materials through the value circle.
Today’s customers are demanding more product transparency from brands, and roughly 60% of them are inclined to buy products that have a clearly defined sustainability policy as shown by the success of fashion brands like Allbirds and Veja.
How companies handle the disposal or reuse of their products is important today. They must quickly adapt and innovate, using disruptive business models and technologies to support the movement.
Blockchain technology can be applied on multiple fronts to this problem, with wide-ranging benefits of the circular economy. As we know, blockchain technology originally spread through the emergence of bitcoin and cryptocurrency but is now widely used in applications like voting, health records, supply chain, ownership and identity management, energy supply, and protection of critical civil infrastructure.
Blockchain technology can reduce resource consumption by providing transparency and traceability, which efficiently facilitates the provenance of items. Blockchain technology can help to combat counterfeiting and its substantial negative environmental and social impacts in terms of materials used and human rights, as well as fair work practices. Moreover, consumers will be able to make more informed purchasing decisions, enabling them to consume truly sustainable circular products and services.
The circular economy is a complex area to navigate, mainly due to its vast extent of participants and the global nature of supply chains. Trying to fix the circular economy is a task for all participants in the ecosystem, not just one or two companies.
This is why blockchain technology is such a critical enabler: It helps provide an ecosystem with a trusted set of data and transactions on which the entire ecosystem can make collective decisions.
The future circular economy and blockchain use cases look positive as more and more brands turn toward adopting a circular economy.
Corporations should take advantage of emerging technologies to improve the tracking and tracing of products beyond the point of sale and enable authentication, resale and material recovery.
The future of our planet will be greatly improved if more companies adopt blockchain technology for the circular economy.