Volvo Mines Blockchain to Keep Ethical Sourcing Promise
Carmaker works closely with suppliers to monitor materials in the supply chain.
By Sasha Banks-Louie | February 2020
The Volvo brand has promised safety for some 93 years, and as it launches its first all-electric vehicle, it’s expanding that promise of safety—not only for drivers and the environment, but also for miners providing materials in the vehicles’ batteries.
The Swedish car company launched the 2020 XC40 Recharge in October, and Volvo has worked closely with its suppliers to monitor the materials that go into the SUV’s lithium-ion batteries.
“We’re doubling down on ethical sourcing,” says Martina Buchhauser, senior vice president of procurement at Volvo Cars. “By working with our suppliers to make sure that the raw materials in our batteries, including minerals like cobalt, come from ethical supply chains, we’re able to extend our promise of safety to drivers, miners, and the environment.”
Such a promise isn’t easy to keep. Cobalt is an essential mineral in lithium-ion batteries, and more than half of the world’s cobalt is extracted in the Democratic Republic of Congo. An estimated 15% to 20% of DRC cobalt is hand-dug by independent miners and then sold to traders and large-scale mining companies, making it extremely difficult to tell the difference between pirated and ethically sourced cobalt.
Blockchain helps us do more than recognize the challenge of illegally sourced cobalt. It also helps us take steps to stop it.”
To combat illicit practices, Volvo Cars inked 10-year deals with battery suppliers Contemporary Amperex Technology (CATL) in China and LG Chem in South Korea, with both agreeing to participate in a blockchain program that tracks cobalt-sourcing activities across their global supply chains.
In addition to using newly mined cobalt, Volvo Cars’ electric vehicle battery suppliers are also sourcing cobalt recycled from older lithium-ion batteries. To ensure that various cobalt recycling and refining companies that supply CATL and LG Chem do not use unsafe or unethical processes, Volvo Cars enlisted sourcing blockchain specialist Circulor to develop the carmaker’s traceability network and run these nodes on Oracle Blockchain Platform.
By authenticating each person, mining site, and truck, “blockchain helps us see exactly where the cobalt was extracted, who mined it, and how it was transported, giving us the confidence that the materials are mined under good working conditions, and without committing any human rights violations,” Buchhauser says.
Blockchain technology is drawing interest for supply chain uses across industries because it lets companies create a ledger that multiple parties can view and provide information to, but that also can be highly secure, providing a clear audit trail of all information that’s added to the blockchain.
Buchhauser says that data in the blockchain has given her a lot of confidence that every player in Volvo’s battery supply chain is meeting its expectations.
“We can see the cobalt’s entire chain of custody—from mining companies, parts makers, and logistics firms,” Buchhauser says. “Not only are these participants tracked and evaluated for compliance with the OECD’s ethical supply chain guidelines, but their activities, such as how long it takes to get a sample onto a truck and into a warehouse, are also tracked, so that any suspicious delays can be monitored and dealt with,” she says.
Blockchain doesn’t replace Volvo’s traditional process for tracking raw materials, but it has become a critical component in its ethical sourcing toolbox. “Blockchain helps us do more than recognize the challenge of illegally sourced cobalt,” Buchhauser says. “It also helps us take steps to stop it.”
This story originally appeared on Forbes Oracle BrandVoice.
An organic hay farmer and writer, Sasha Banks-Louie is a content strategist at Oracle, covering sales, marketing, and customer service issues, as well as startups and fast-growing companies.