Greening inventories: Blockchain to improve the GHG Protocol Program in scope 2

Abstract

The complexity of the supply chain, with a multiplicity of suppliers and organizations imposes challenges to its traceability, affecting the possibility of making it more sustainable. The declaration of Greenhouse Gas (GHG) by companies has been a response to pressures from stakeholders and regulations towards a sustainable supply chain management (SSCM). However, there are still some setbacks. The verification process of the inventories is a time-consuming task and the utilization of traditional renewable energy certificates can cause distortions in the perception of those who are consuming renewable energy but are not buying certificates. A blockchain-based application could address those problems by tracking transparent records of product history. Therefore, we propose a blockchain-based artifact in the form of a level 1 architecture diagram to improve the Brazil GHG Protocol Program inventory process on scope 2, which includes indirect carbon emissions from consumption of purchased electricity, heat or steam; main supply chain components. Using the Design Science Research (DSR) approach, we combine knowledge from business participants and environmental experts to understand the Program problems, propose and evaluate the artifact, and analyze its contributions. We find out that not all actors may want greater transparency in the supply chain and that traditional certificate issuers are expected to resist, while a new generation of blockchain-based certificates challenges the more traditional competitors. Additionally, the economic benefits observed in implementing blockchain points out that the organization and resistance of the actors, therefore, could be as important as costs in the implementation of new technologies in supply chains. There are two main contributions from this study. First, it introduces the discussion on blockchain adoption in the GHG Protocol Program. Second, it uses DSR as an instrument to both articulate a solution around a theoretical artifact and make its potential contribution understandable for actors not familiar with blockchain technologies. We propose that future studies could: (i) produce a proof-of-concept or a pilot implementation of this artifact; (ii) include other actors from the energy and trading certificates chain on the artifact, such as energy producers, regulators and the Brazilian Electricity Trading Chamber (CCEE); (iii) reproduce the same proposition focusing on GHG Protocol’s scope 3.