Volvo becomes latest company to join Responsible Sourcing Blockchain Network

Built on the IBM Blockchain Platform, the Responsible Sourcing Blockchain Network (RSBN) and its pioneering participants are working to build an open, industry-wide blockchain platform that provides for the traceability and verification of responsible sourcing practices from mine to market, including the end-to-end supply chains. The solution is designed in such a way that it allows companies of any size in the mining industry to contribute data in a secure and permissioned way.

Traditionally, miners, smelters, and consumer brands have relied on third-party audits and laborious manual and paper-based processes to establish compliance with industry standards. The blockchain network allows the secure and permissioned sharing of information to enable visibility into the end-to-end supply chain in real time. RCS Global consistently assesses each participating company against responsible sourcing requirements set by the Organization for Economic Cooperation and Development (OECD) and relevant industry bodies, like the Responsible Minerals Initiative (RMI) Blockchain Guidelines.

Focus industries include, but are not limited to automotive and consumer electronics, including their supply chains and the mining sector. A governance board representing members across these industries is being formed to help further ensure the platform’s growth, functionality and adherence to good practice principles.

“We are setting in motion a process of mainstreaming responsible sourcing practices across major industries,” said RCS Global Group CEO Nicholas Garrett. “We’ve reached significant new milestones as we’ve moved beyond testing, proving the merits of this coupled technology and assurance model can extend to a wide range of participants across every tier of the supply chain and to other minerals.”

Founding RSBN members include Ford Motor Company, Volkswagen, LG Chem, and Huayou Cobalt. Effective Nov. 6, Volvo Cars announced that it, too, will be joining this cross-industry network as its newest member. More partners from the auto, tech, and mining sectors are expected to join this year.

“The early addition of Volkswagen Group, and now Volvo Cars, to this collaboration confirms that blockchain technology coupled with responsible sourcing assurance can help address critical sustainability issues impacting the entire industry,” Garrett added.

Volvo will be the first company in the consortium to fully apply the RSBN solution in its LG Chem supply chain from spring 2020. The automaker said it also plans in the future to apply RSBN to other key minerals found in its batteries, including nickel and lithium.

“We have always been committed to an ethical supply chain for our raw materials,” said Martina Buchhauser, head of procurement at Volvo Cars. “With blockchain technology we can take the next step in ensuring full traceability of our supply chain and minimizing any related risks, in close collaboration with our suppliers.”

Volkswagen, too, has been working with relevant battery suppliers to address the need for supply chain due diligence and is now aiming to significantly increase its supply chain mapping and auditing activities for key battery mineral supply chains. Through the RSBN, and other initiatives, Volkswagen is utilizing technology toward securing better supply chain traceability and transparency and to connect this information with the sustainability performance of supply chain partners.

“We have always been committed to an ethical supply chain for our raw materials. With blockchain technology we can take the next step in ensuring full traceability of our supply chain and minimizing any related risks, in close collaboration with our suppliers.”

Martina Buchhauser, Head of Procurement, Volvo Cars

As Ford prepares to launch its global all-electric Mustang-inspired SUV next year, the RSBN becomes an important tool to strengthen transparency and visibility into its global mineral supply chain. Expanding this network beyond cobalt to other battery minerals will compound the RBSN’s positive impact on human rights protection and labor practices.

“As a founding member of the network, we are pleased that the project is moving to an operational phase,” said Lisa Drake, vice president of global purchasing and powertrain operations at Ford. “This will further strengthen the human rights protection and responsible sourcing efforts in mineral supply chains. This becomes even more important as we start to launch our next generation of all-electric vehicles starting next year.”

Making progress

In initial testing, the RSBN blockchain demonstrated how cobalt produced at Huayou’s industrial mine site in the Democratic Republic of Congo (DRC) could be traced through the supply chain to LG Chem’s cathode and battery plant in South Korea, and then to its destination, a Ford plant in the United States. An immutable audit trail captured on the platform delivered corresponding data providing documentation for the initial ethical cobalt production, its maintenance, and its ethical provenance from mine to end-manufacturer.

This progress comes at a crucial time for the industry. According to a recent supply chain risk report by DHL Resilience360, there will be a shortage in critical raw materials, including cobalt, presenting a high risk to supply chains that source this raw material. “Battery minerals like cobalt are foundational to a number of industries, from automakers to consumer electronics and smartphone manufacturers,” said Manish Chawla, global managing director of chemicals and petroleum/industrial products industries at IBM.

Moreover, 58 percent of worldwide production of cobalt in 2017 came from the DRC, according to the 2018 U.S. Geological Survey. The fact that so few mines produce this natural resource and that DRC has been linked to human rights abuses.

“The Volkswagen Group has set itself a goal of full transparency in the critical supply chains of our parts and products, which includes cobalt,” said Ulrich Gereke, head of strategy for Volkswagen Group procurement. “Due to the particular complexity of many critical supply chains, such transparency goals represent a difficult challenge.”

“Thus, with the help of new technologies and digital solutions, the Volkswagen Group is continually working toward securing better supply chain traceability and transparency and to connect this information with the sustainability performance of supply chain partners,” Gereke said. “In this manner, we will be able to identify sustainability risks at an early stage and improve our ability to react to them in a timely manner. The Volkswagen Group encourages other business partners to join the network.”

Moving forward, the RSBN said its plan is to extend into other battery metals, including lithium and nickel. The platform is also actively working to progress the solution to support tracing other common metals, including 3TG metals—tungsten, tantalum, tin, and gold.