Observing the last few decades, and particularly since the year 2000, one notices that reality encounters innovation sooner or later, and more often than not, the former tends to adapt to the latter, improving itself. The economic, social, and financial reality surrounding us tends, fortunately, to smooth out the right angles towards ever more shared, flexible, open, and accessible solutions, recapturing (or rather pursuing) the model of the circular economy defined by the European Union as a “production and consumption model that involves sharing, lending, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible.”
The topic of the premise refers more deeply to the so-called “premature obsolescence of products” that we all use today as simple accessories and for which, by now, we have adapted (without too much effort) to the logic (which is instead proper to the linear economy) of “Take-make-dispose,” neglecting its real and effective “innovative” component or the one that could simply be there by taking advantage of new technologies to accelerate the realization of a circular economy.
Such a transition towards a progressively more circular economy will be even more urgent and evident today since looking back seven years ago, the same European Parliament warned of a strong “increase in the demand for raw materials and at the same time… a scarcity of resources: many of the essential raw materials and resources for the economy are limited, but the world population continues to grow, and consequently, the demand for these finite resources also increases” (European Parliament, 2015).
The point on which we need to focus our attention and theoretical analysis is a renewed conception of “sustainable thinking” that necessarily opens the doors to an indispensable combination with technological innovation represented by the main technologies used today, based on a key concept such as “sharing of information.”
This elected thought, that of “sharing of information,” identifies its technological panacea in blockchain, a decentralized and distributed (i.e., shared) database where the information added to it is, due to the particular genetics of this technology, validated by the same participants in the distributed network, each of whom possesses a copy of the entire information database of the registry, effectively rewriting the exchange of information in the modern era.
Due to the nature invested in it, in fact, blockchain, even together with other technologies such as Artificial Intelligence and IoT, just to name a few, can certainly contribute to achieving the circularity of an economic model by automatically monitoring the production processes and the final part of a product’s life, realizing transparency of data and information accessible to all parts of the value chain of a given product.
The above thought, indeed, is not isolated if we consider other sustainability parameters from which to draw positive considerations and support the intrinsic value of blockchain technology in contributing to the realization of circular and, therefore, sustainable economic models.
In this perspective, the ways in which blockchain technology can be used in a sustainable key are diverse and multiple, but it is on the supply chain and, therefore, ultimately, on the transparency of the information generated by the plurality of actors involved in the production process, that blockchain shows the best nuances of a natural interdependence on the theme of the circular economy.
Furthermore, the interference (sometimes positively, other times less so) of “globalization” in the management of raw material supplies, which naturally opens the Pandora’s box of (perhaps often desired) “incomplete and poorly transparent coordination” between all actors in the supply chain, is a fact.
Taking a moment to revisit the concept of “premature product obsolescence,” it is entirely evident how technologies such as blockchain, which are physiologically designed for traceability (and immutability) of data, contribute effectively as essential prerequisites to circularity, towards achieving circular economy models through constant “certification” of the entire life cycle of a given product, highlighting potential (very present to date) negative externalities and informational asymmetries due to the ever-growing network of business relationships involved in a value creation and supply process guided by cost optimization.
The challenging issues highlighted by the Covid-19 pandemic have helped to shift the spotlight precisely, but not only, on the unmistakable fragility and vulnerability of international supply chains.
Therefore, given what has been presented so far, and turning our attention to the 17 Sustainable Development Goals (SDGs) outlined by the United Nations, it will be possible, without any theoretical effort, to argue that blockchain, in its main intrinsic and architectural characteristics such as “security” and “transparency,” can realistically be positioned, as it already is, as one of the main technologies enabling the pursuit (and desirable achievement) of circular and sustainable economy models.
Thus, the transition from a linear economic model to a circular economic model is no longer just necessary but indispensable, aiming for a significant limitation of input material and energy expenditure, minimizing waste and losses, and paying adequate attention to preventing negative environmental externalities for the concrete realization of new social, environmental, and consumer value.
In conclusion, taking stock of the ideas presented and returning to a premise drawn from the Ellen MacArthur Foundation, it should be clear how the transition to a circular economy does not consist only of regulating and canceling the negative effects of the linear economy, but also (and perhaps primarily) represents a systemic change that develops long-term resilience, improves business and economic opportunities, and provides environmental and social benefits.
To be more explicit, the combination of theory and technology is only partially potentially suitable for achieving an innovative and shared economic and social vision.
Without a renewed cultural vision that goes beyond current logics and embraces sustainable environmental, economic, and social scenarios, we will be forced to observe innovation without understanding the real and effective benefits that technology can actually “give us,” finding ourselves dealing, metaphorically and in a modern key, with Zeno’s paradox: technology has an advantage that we are able to reach, but never surpass.
Dr. Alessandro Toschi
Market and Data
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