Consumer Disclosure Contracts for Sustainable Supply Chains

Prompt NM2: The products we consume on a daily basis can be linked to severe climate impacts due to unsustainable supply chains. Consumers are mostly not aware of the side-effects in the consumption of these products due to weak disclosure laws. The palm oil industry is a good example of how unsustainable supply chains feed into this asymmetry of information in regards to goods. Research, propose and develop a model that can use transparent supply chain tracking (eg. using blockchain) to inform consumers of the products environmental footprint (eg. in the label and in qr code) and leverages the use of consumer law with smart contracts.

Prompt Host: Maren Woebbeking (Yale ISP)

Discord channel: https://discord.gg/yyFJ4gQ

Whilst this prompt mentions blockchain and smart contracts, contribution opportunities do not require specific code. Participants can choose the degree of difficulty they want to bring into their contributions

Tasks

Some contribution opportunities include:

  • Research: What are consumer disclosure laws around palm oil and pre-contractual information duties regarding the characteristics of sold goods in general; can existing laws be reinterpreted in light of climate change

  • Research: Which projects already exist in this area (e.g. Code Check) and which products are not covered; where is reliable data missing?

  • Research: How to define sustainable products, how to calculate the ecological footprint, carbon emissions

  • Design (graphic design): Design a label for palm oil disclosure and tracking (and any other product relevant)

  • Design (art): A visual campaign (similar to the tabacco disclosure system) that could be included in all gas stations to inform consumers that gasoline contributes climate change

  • Research & Develop (software): How to integrate the Hyperledger Grid framework for supply chain tracking (and any first pilots being developed), recording carbon records or any meaningful records into the Open Climate Ledger using Hyperledger Sawtooth.

  • Propose: a mechanism to calculate the durability of products, gather existing information on the durability, detecting unsustainable products from planned obsolescence

    • this information would also help to boost consumer rights under the new EU directive 2019/771 that declares the durability of products to be an objective requirement for conformity with the sales contract

Background and Suggested Reading

Product durability

When buying goods, consumers often wonder how durable the products they want to purchase are. Such data is not available for most products and if it is, it often takes consumers considerable effort to find this information, e.g. online. Knowledge of the durability of a product, especially regarding technical devices, would nevertheless have a decisive influence on the consumer's purchasing decision.

With the knowledge of the durability of the product, it is likely that more long-lasting products would be purchased. This in turn would create an incentive for producers to produce more durable products. It would also counteract planned obsolescence. All in all, it would promote sustainability enormously. In view of these possibilities, the EU just adopted a directive at the beginning of the year which even provides consumers with remedies if a product they bought does not have the durability it should generally have had. The effect of producing sustainable products is to be further enhanced by this provision. Unfortunately, however, even the directive does not provide for direct measures to inform the consumer about the average durability of goods in the first place. Although the European member states could impose corresponding information obligations on producers when implementing the directive, it is uncertain whether this will actually happen. Moreover, this would only apply to products sold in the EU or in the Member State concerned. Therefore, not only against the background of the new European Directive, but also in order to influence consumer and producer behavior globally, a database is needed which gathers information on the durability of goods, especially of electronic goods.

This database would then have to be easily accessible to consumers, for example by enabling them to use an app to scan the barcode of a product and then receive information on its durability. Such information could be gathered from different sources. For some products there are product tests by public and private entities. Consumers who have already bought the product could also submit information or corresponding consumer surveys could be initiated. For some goods, in particular cars, there are also court rulings that deal with their durability. In addition, some producers are voluntarily providing information.

Such voluntary declarations could be further promoted by giving producers the possibility of obtaining a certificate of sustainability. To promote sustainability, it would be crucial to gather this existing data, collect more data and develop an appropriate data collection mechanism if necessary, while ensuring the quality of the data, to then make it available to consumers as seen.

Palm Oil problem background:

https://www.worldwildlife.org/pages/palm-oil-the-hidden-truth-lurking-in-your-home

Supply chain role: https://engagethechain.org/palm-oil

Consumer disclosure

General: https://www.investopedia.com/ask/answers/110614/whats-difference-between-consumer-disclosure-and-credit-report.asp

Climate Change Business Disclosure: https://www.ey.com/en_us/assurance/climate-change-disclosures-revealing-risks-opportunities

On Palm Oil Disclosure needs:

Sustainable supply chain Technology

Hyperledger Grid

Blockchain - Palm Oil Paper

Successful product disclosure labelling campaign

Tabacco case study and regulation