Corporate sustainability is a top priority among companies large and small, yet many organizations still struggle to translate their green goals into reality. One particularly tough area for companies to tackle: Ensuring sustainability and visibility across all aspects of the supply chain. When you're trying to drive sustainability, you can't manage what you don’t measure,” says Douglas Johnson-Poensgen, founder and CEO of Circulor, a global tech-company that specializes in using blockchain technology and traditional databases to track and trace materials and commodities in industrial supply chains.
Over the last decade, the environmental, societal, and corporate governance (ESG) movement, along with pressures from customers, investors and regulators, has reshaped the conversation around enterprise sustainability and the way organizations manage greenhouse gas emissions and energy usage. Businesses today are also eager to inspect the impact their organization and supply chains are having on the environment and social setting and establish active governance to oversee both.
Circulor—a 2021 Oracle Sustainability Awards winner—helps companies gain visibility into their supply chains to improve ESG performance by proving responsible sourcing, reducing greenhouse gas emissions, and managing supply chain risks.
According to a 2021 analysis by the World Economic Forum, more than 50% of global CO2 emissions are concentrated in the supply chains of just eight industries, including automotive, construction, and consumer electronics. The decarbonization of these supply chains is seen as a key factor to combating climate change and meeting Paris Agreement goals to limit global warming.
Circulor is working with automakers including Volvo Cars and Polestar, as well as mining and energy companies including BHP and LG Energy Solutions, to trace their supply chains, prove responsible sourcing, and analyze supply chain emissions as they pursue ESG targets. Circulor’s solution assigns a digital identity to commodities at the source and tracks materials as they change state through the supply chain, encoding the data onto Oracle Blockchain. This enables companies to then track the embedded carbon at each stage of production, recycling, and end-of-life, providing visibility into what have been largely opaque, complex supply chains.
“We are one of a number of companies that have seen an opportunity to apply technology to bring greater visibility into supply chains,” Johnson-Poensgen says. “My view, post-pandemic, is that all of us now understand that supply chain visibility is mission critical.”
Circulor uses Oracle Blockchain, a distributed permissioned ledger based on Linux Foundation’s Hyperledger Fabric architecture, where smart contracts verify the chain of custody, chain of ownership, and chain of provenance of materials before any records are committed to the ledger. All participants have access to the shared data they are authorized to see via controls in the permissioned Oracle Blockchain, while extensive REST APIs and integration adapters also let manufacturers integrate with other systems and applications used within their organizations.
Circulor continues to have successful adoption in the electric vehicle industry, to assist automotive manufacturers and suppliers in tracking battery materials such as cobalt, mica, and lithium. In 2019, Volvo Cars implemented Circulor’s traceability system for tracking cobalt—one of the essential ingredients in creating a lithium-ion battery—in its electric vehicles and has since started tracing lithium and nickel as well.
“Our work with Volvo started with a question that they posed to us, which was, ‘How do we prove we have no child labor in our cobalt supply chain?’ Between 60% and 70% of the world's cobalt is mined in the Democratic Republic of Congo, which has raised concerns around child labor and unsafe working practices,” Johnson-Poensgen says.
To help Volvo Cars adhere to ethical sourcing standards, Circulor’s technology traces the automaker’s vehicle components back to the raw materials, assigns an identity to those materials, and follows them through the supply chain.
“When you have a reliable chain of custody, you can start to attach other information to that flow of materials, because you not only know who the actors are, but you also know the identity of the material as it changes from rock to battery,” says Johnson-Poensgen. “Then we start to attach ESG metrics to that flow of material. And of course, with that information, you can start to develop intelligence about sourcing from different suppliers.”
In the mining industry, Johnson-Poensgen says upstream producers are engaging with Circulor directly as part of a desire to differentiate their products and transportation and storage services from other suppliers, particularly those in regions with questionable sourcing practices and ethics.
“If you collect data from your supply chains, you’re shining a light on something that will encourage suppliers to do things more sustainably, or else you’ll stop doing business with them,” Johnson-Poensgen says.
To acknowledge the company’s achievements to advance supply chain sustainability, Oracle named Circulor to its list of 2021 Oracle Sustainability Award winners earlier this year. The awards are presented to select customers who use Oracle technology to drive environmental initiatives as part of their business strategy. For Circulor, Johnson-Poensgen says the recognition could help more potential customers see the value of its platform, and ultimately, drive environmental improvements in global supply chains.
“We've moved beyond the true pioneers like Volvo Cars who were prepared to experiment, and we're in the zone of the fast followers,” he says. “But the real impact comes with scale, as you encourage everybody else to start to recognize that supply chain traceability and the emissions that they inherit from their supply chain are fundamentally important to their future success.”
Douglas will be one of the key speakers presenting at Oracle CloudWorld in Las Vegas. See Douglas in action live at CloudWorld 2023 by registering today!
Natalie Gagliordi is a senior writer at Oracle. She spent a decade as a technology journalist and was previously a senior writer on ZDNet.