Data Verification Consortium to Test Blockchain-based Digital System for Chemicals Sustainability
Circularise and ISCC have announced a joint project under which numerous companies will test a pilot blockchain-based digital system with certification procedures to validate sustainability claims in the chemicals sector.
Espoo/Finland - Today, Circularise announced a pioneering joint project with the certification scheme ISCC, material suppliers Neste, Asahi Kasei, Borealis, Trinseo and Shell, original equipment manufacturers (OEMs), brands Arcelik, Philips Domestic Appliances and Evbox, as well as trading companies Marubeni and Itochu, in which partners tested a blockchain system to complement the ISCC Plus certification. These parties were brought together by Circularise and Marubeni. This is the first time that 10 chemical industry players and appliance companies got together to test a blockchain-based digital system as a complement to a sustainability certification process of complex value chains.
Circularise’s blockchain-based digital system was tested with the ISCC Plus certification to make auditing of certified parties more efficient, and to strengthen integrity of certified data. Participants utilized a public blockchain enabling authentication, decentralization and encryption of data verifying material flows and related sustainability attributes. This innovative approach differs from other blockchain projects where companies use a private blockchain operated by pre-selected participants, such as members of a consortium. Instead, Circularise and project partners used a public blockchain, making it virtually impossible for companies to appear more sustainable than they really are by reusing the proof of a sustainability claim across assets. This principle forms the foundation of trust in data integrity.
“Blockchain technology is revolutionizing how data is stored and shared. Now companies don’t need to individually keep a balance of goods and transactions in excel. Instead, they can use blockchain and smart contracts to store balances, record transactions, and apply mass balance rules. Every transaction is fully traceable. Auditors can therefore rely on the blockchain for parts of the audit,” said Mesbah Sabur, Circularise’s Founder. “We are excited to bring our knowledge in supply chain traceability and data management to project partners to test a public decentralized blockchain with the ISCC Plus certification.”
“At Neste, our purpose is to create a healthier planet for our children. We aim to drive a positive impact on biodiversity, while achieving a nature-positive value chain. To make sustainability a shared benefit to society, transparency along complex value chains is required. This is currently not easily available. Our goal in this project led by ISCC, Circularise and forerunner companies is to enable complex value chains to learn and take full advantage of innovative digital solutions, aiming to efficiently share data and validate sustainability characteristics of their products. Transparent product sustainability attributes will benefit industry, consumers and society,” says Isabella Tonaco, Vice President Strategy Execution & Marketing from Neste’s Renewable Polymers and Chemicals business unit.
Material traceability and verification of data at individual sites and across the value chain were guaranteed by ISCC Plus certification of each site of the operators, requiring site-specific audits, certification and mass balance calculations to provide reassurance about the sustainable content. The data was uploaded to the Circularise software system to improve mass balance bookkeeping and reporting.
“Certification will become more digital in the future. It will allow certification schemes to simplify the auditing process of supply chain actors and reduce the risk of mistakes. Companies will have an easier way to show compliance and adhere to auditing rules,” said Jan Henke from ISCC. “We are excited to have tested Circularise’s traceability software on ISCC procedures.”
Mass balance approach for the sustainable chemicals transition
Currently, the chemical sector is engaged in significant sustainability transformation efforts, including rethinking of the use of raw materials, circularity, and climate impact of operations and entire value chains. This transformation is largely built upon sourcing new, more sustainable feedstocks, while maintaining efficient processes, a viable economy and high credibility.
Certification schemes providing an option to use the mass balance system can facilitate a gradual switch towards increasing the replacement of fossil feedstock and materials with renewable and recycled raw materials, while enabling the use of existing infrastructure and equipment instead of constructing parallel plants and value chains. In the mass balance system, data storage and data integrity are key elements in verifying sustainability and compliance to the certification requirements.
One of the greatest challenges the mass balance approach faces in the plastics and chemicals industries is awareness and understanding. Through this project, the collaborating partners managed to deepen their knowledge on the topic, align internal processes with ISCC Plus requirements, and test a new futureproof way for bookkeeping of mass balance credits, while easily sharing them across organizations.
Overall, this allowed value chain actors to better substantiate sustainability claims and improve collaboration. Beyond this project, blockchain technology will play a critical role in complementing supply chain certification to enable certification schemes to simplify the auditing process of supply chain actors, reduce the risk of mistakes and accelerate the sustainable transition.