The last U.S. administration pulled out of the Paris climate agreement. The current administration recommitted. While governments can certainly effect change in businesses’ behaviors, administrative action can create uncertainty and legislative change takes time to enact and longer to take effect. The customer is more powerful and more global than any government. Brands can tap this power through blockchain technology to drive socially conscious brand loyalty through increased transparency and access to information. If we want to turn climate change around, we must turn to the power of the purse—or, put in more relevant terms, the crypto wallet.
How Blockchain Enables Purpose-Driven Customers to Shop Green
April 01, 2021
Industry must account for its contribution to flooding, drought, deforestation, stripmining, and other unsustainable practices. Though governments must create regulations and laws to reshape economies long-term, we need a more immediate and invariable solution capable of change at a global scale. Socially conscious businesses must turn to the capabilities of blockchain, which is uniquely capable of upsetting “trust intermediaries” and delivering transparency for the full lifecycle of a transaction or product.
The ramifications of increased transparency, particularly to the supply chain, will empower sustainable brands, regardless of their size and risk appetite, to set themselves apart from less sustainable brands and products. In addition, blockchain technology provides customers with access to disintermediated truth about transactions and product development. Increased knowledge, of course, helps customers make educated decisions, but more critically it reduces the disparity between customer attitudes and purchase behaviors as relates to a global effort to combat climate change.
While much has been said about blockchain and climate change since Elon Musk, founder of one of the world’s most prominent purpose-driven brands, publicly embraced Bitcoin some weeks back, these conversations distract from the point. We possess a tool capable of being leveraged to track a product from origination to purchase, endowing us with the power to galvanize a global population to demand sustainable practices.
Purpose-Driven Brands Can Create Socially Conscious Customers
A 2019 Accenture study observes, “an era of radical visibility, technology, and media have given individuals the power to stand up for their opinions...,” stating 66% of customers say they picked a brand because of its commitment to transparency. Another study by IBM shows that eight in ten customers care about sustainability with nearly as many saying they would pay a premium for environmentally responsible products. These trends have given rise to purpose-driven marketing, epitomized by companies like Patagonia, the founder of which famously stated, “Patagonia is in business to save our home planet.”
There’s still a gap: though customers say they prefer ethical, sustainable, environmentally-conscious products, brand loyalty often dictates their choices. If we want to make inroads with climate change, we need sustainable brands to integrate transparency into their supply chains so that customers don't need to just take the brand's word for it; they can verify sustainable practices by viewing the entire product journey, from raw materials through manufacturing and distribution, recording on an immutable ledger. Increasing customer knowledge through transparency will help correct incongruence between customer attitude and behavior, justifying eco-friendly premiums, and entrenching sustainable practices in the market.
The Radical Possibility of Transparency from Blockchain
The Accenture study mentions an era of “radical visibility” brought about, largely, by consumer access to information across the internet. That said, increased access to information does not necessarily translate to the accumulation of knowledge. The internet has also ushered forth an uncontrollable amount of misinformation, making facts increasingly scarce. For the most part, brands continue to rely on marketing to convey data about their products with few to no methods for customers to verify these brands are telling the truth.
The advent of blockchain technology propels us into a new, truly radical era of demonstrable transparency. Blockchain allows brands to integrate supply chain transparency and even corrective action, such as carbon credits, directly into their buyer experience. Businesses can go beyond green marketing to offer proof of sustainability to an increasingly conscious consumer base. More importantly, purpose-driven brands can create more socially responsible customers.
Blockchain technology makes it possible to track and trace a product's entire journey from raw materials through to distribution, giving brands and retailers proof of a product’s impact and sustainability. Environmentally conscious businesses can use this immutable record of supply chain activity to create more socially conscious customers who will put their money where their mouths are because knowledge has empowered them. It’s the difference between show and tell.
A restaurant can offer diners access to a steak’s entire story from the birth of the calf to its ultimate arrival in the kitchen, which will encapsulate everything from animal rearing practices, to meat packing conditions—even how a vendor dealt with COVID-19, to transportation choices made by the distributor. A clothing brand can narrate how a shirt came into being from the cultivation of natural fibers to factory conditions during fabrication. Any company can use blockchain to chronicle previously hidden aspects of their product's supply chain, affording new advantages to truly sustainable businesses willing to share more than the competition with customers who will start to ask of those who are not transparent, “what are they hiding?”
Blockchain transparency will enable businesses to incentivize customers in new ways. For example, brands may also choose to embed carbon credit purchases into their products, immediately offsetting potential environmental impacts and enabling customers the benefit of personally owning and controlling that commodity through integration with crypto wallets. The bottomline is that, in the future, companies pursuing the traditional methods of transparency will ultimately fail to live up to the new standards driven by socially conscious customers and met by companies practicing transparency.
A Truly Global Solution to Climate Change