Blockchain serving sustainability in the agri-food and textile sectors.

Introduction.

On August 5th, 2021, in Trieste, the Ministers of Digital from the G20 adopted the Ministerial Declaration on Digitalization[1]. This agreement identified several points on which signatory countries have decided to cooperate internationally to contribute to the United Nations Sustainable Development Goals (SDGs), in line with the priorities of the Italian G20 Presidency, People, Planet and Prosperity, identifying “Digital Economy” and “Digital Government” as priority themes.

Digital transformation for sustainable growth.

Among the highlighted points in the approved document is the commitment to harness the potential of digitalization for a strong, inclusive, resilient, and sustainable economic recovery. It was recognized that companies need to be prepared for further technological changes to address future challenges towards a sustainable economy, and the need to increase efforts to develop a human-centric approach to the digital economy.

But that’s not all. In fact, the document also includes a commitment to raise awareness, educate and support consumers, including through digital literacy programs, with the aim of ensuring protection for quality and safety of products, privacy, personal data protection, and unfair commercial practices, with particular attention to vulnerable consumers. Technologies based on shared registers, including blockchain technology, were presented for tracking products along the value chains.

Transparency and environmental impact.

In general, consensus based on blockchain and smart contracts have the potential to reduce transaction costs and paper documentation in many sectors, providing solutions that help reduce waste, while providing valid assistance in assessing environmental impact thanks to complete transparency of information on collective sustainability behaviors, without geographic limitations, leading to faster results and feedback cycles and the establishment of global green standards.

To better understand how to create value through blockchain while contributing to achieving the goals set by the UN Agenda 2030, it is possible to observe the application of this technology in high-impact environmental sectors such as agri-food and textiles, where the relationship with the consumer is a fundamental factor.

Authentication of the composition of a textile product for recycling.

The textile sector is one of the most polluting in terms of greenhouse gas emissions due to the use of non-sustainable production technologies and materials[2]. In fact, only about a third of the fibers produced annually are of natural origin (a biodegradable material), while the remaining two-thirds are synthetic. However, one of the most significant problems in the sector is the process of product recycling, due to the difficulty of tracing the origin of the material used in the production phase. The use of new technologies can be a solution, and among these is blockchain, also to allow consumers to make more informed and sustainable choices[3].

By applying a barcode or QR code to a textile product, for example, it is possible to provide consumers with an easy link that allows them to verify the composition of the garment and the textile supply chain at the time of purchase, directly at the point of sale. The same information could be used to facilitate the disposal of textile products and their reuse, enabling certified recycling of discarded products both in the production phase (e.g., due to imperfections) and in the phase after purchase.[4]

Supply chain certification in the agri-food sector.

There is an increasing demand from consumers to know the origin of the products they purchase in-depth. Therefore, it is necessary to implement production processes taking into account new frontiers of traceability, such as those outlined by blockchain, through proactive involvement of those who will purchase a particular product.

Innovation in the agri-food sector is precisely linked to the concept of supply chain certification, in order to strengthen the relationship between consumer and producer. This solution involves companies linked together contractually, forming a kind of extended company (supply chain), led by a “coordinator” or “head of the supply chain,” with the task of managing the agreed output and taking responsibility for checking the conformity of the product at the end of the production process. Supply chain management allows for the integration of the agricultural sector into agri-food supply chain quality systems, where producers and transformers are involved in the same way.

Traceability is a risk management tool that offers the possibility to react to potential risks that may arise in production. Furthermore, it also provides operators in the sector with the ability to isolate the problem by withdrawing or rejecting contaminated or unsafe products, thus preventing them from reaching consumers. The uniqueness of the data stored within a blockchain network, and the consequent impossibility of tampering and manipulation of the data, guarantees the end consumer a high level of transparency.

ICE tender to support Made in Italy.

Last October, the Italian Agency for Foreign Promotion and the Internationalization of Italian Companies (ICE) launched a European tender, worth over 2.6 million euros, for the establishment of a framework agreement with several economic operators for the assignment of blockchain traceability services to promote Made in Italy in the agri-food, textile, and clothing sectors. The goal of the tender, which aimed to involve ten different economic operators, was to allow entrepreneurs to securely and immutably trace all events that occur in various stages of the production chain.

Through the application of blockchain, it would be possible to certify the origin of products and therefore enhance the authenticity of Made in Italy products, limiting the phenomenon of Italian sounding and counterfeiting.

In practice, the tender aimed to select some specialized technology partners who can contribute to the realization of a service, for Italian companies in the agri-food and textile sector, capable of recording – through blockchain technology – traceability information on their goods. The tender was awarded at the end of last March to eight companies, which will have to develop the above service in the next four years.

Opportunities: the Fund for the Development of 4.0 Technologies of the MISE.

Italy’s commitment to promoting the development and adoption of innovative next-generation technologies has also been demonstrated elsewhere. Indeed, at the beginning of December, the Minister of Economic Development, Giancarlo Giorgetti, signed the implementing decree of the Fund for the Development of technologies and applications of artificial intelligence, blockchain, and the internet of things.

In particular, the Fund established at the MISE, with a total endowment of 45 million euros, aims to promote the competitiveness and productivity of the entrepreneurial system, stimulating the birth and diffusion of research and technological innovation projects related to the 4.0 transition program.

For the implementation of the interventions, Infratel Italia, an in-house company of the same MISE, has been entrusted with carrying out the operational and administrative support activities necessary to pursue the objectives of the Fund. A subsequent decree will have to be adopted to identify the methods and terms of presentation of applications for subsidized financing, which can be presented by public or private entities.

^[1] Declaration of the G20 Digital Ministers (link)

^[2] “The impact of textile production and waste on the environment (infographic),” European Parliament, 16/02/2021 (link)

^[3] [3] “How blockchain can change the fashion industry in an ethical and sustainable way,” Blockchain4innovation, 19/05/2020 (link)

^[4] “Innovative recycling systems and blockchain technology for a more sustainable textile industry,” AWARE Think tank, 24/03/21 (link)

^[5] “DTP 035 Controlled supply chain,” CSQA, date n.d. (link)

^[6] “Framework agreement with multiple economic operators for the provision of blockchain services for the promotion of Made in Italy ‘Blockchain project for internationalization’,” ICE, 18/10/2021 (link). See also the notice published in the Official Gazette (link)

^[7] “45 million for blockchain and artificial intelligence,” MISE, 09/12/2021 (link)