Everledger Looks Beyond Blood Diamonds With ESG Supply Chain Collaboration

Pioneering blockchain startup Everledger, famous for digitally recording the lifecycle of diamonds, is now tracking rare earth minerals including cobalt and lithium, the two essential raw materials used in batteries. 

To help push this work forward, Everledger plans to collaborate with Circulor, which has made its name using blockchain technology to monitor the sustainability of supply chains. 

Both companies inhabit the environmental, social and governance (ESG) space, fast becoming one of the hottest propositions within the enterprise blockchain sector, as evidenced by this year’s Hyperledger Global Forum in Phoenix, Ariz.

In an interview with CoinDesk, Everledger founder and CEO Leanne Kemp said a collaboration with Circulor was in progress.

“An early-stage collective collaboration is underway,” said Kemp. “So you will probably see something in April around that work.”

Circulor’s first trial involved tracking tantalum, a conflict mineral out of mines in Rwanda. Since then the startup has started working with Volvo to trace cobalt for electric batteries and Daimler for tracking CO2 in the supply chain. 

Circulor CEO Doug Johnson-Poensgen confirmed the talks with Everledger.

“The emerging market for traceability is large,” he said. “We expect that the cooperation that exists between large IT companies now will apply to the upstarts who have meaningful traction like Everledger and ourselves. It all comes down to effective ways of serving the needs of our customers.”

Exploring the ethical and sustainable use case together makes sense because Everledger and Circulor are both built using the same open-source technology called Hyperledger Fabric, an enterprise blockchain heavily backed by IBM. 

Double bottom line

Everledger was one of the first companies to show that blockchains can have uses outside of cryptocurrency, creating an immutable digital record of diamonds starting in early 2015. The firm has since built an impressive network of partnerships that cover some 40 percent of all diamonds in circulation.

As well as being first to market, Everledger combines what CEO Kemp calls “value and values,” using blockchain to verify not only that a diamond didn’t come from a factory but also that it didn’t come out of slave labor. 

“We saw that the next most potentially conflicted supply chain is going to be in rare earths and batteries,” said Kemp.

Underscoring the importance of the ESG component in this choice, Kemp added: “We’re not interested in tracking lettuce. That’s not where the world needs us to be.”

Johnson-Poensgen anticipates a broad range of use cases opening for Circulor. For instance, it’s not just cobalt mined in places like the Democratic Republic of Congo that is a problem in making batteries, he said: Lithium extraction threatens to cause an environmental catastrophe in South America’s Atacama desert by polluting water sources.

Other exciting areas include chemical recycling of plastics, or creating a circular economy for cotton, much of which is picked using forced labor in places like Kazakhstan and Uzbekistan before it even gets to the sweatshops in Bangladesh, said Johnson-Poensgen. 

“Every one of these raw materials comes with significant ESG concerns in different parts of the world. Complex industrial supply chains face significant challenges and that’s what we’re interested in,” he said.

Enter IBM

As well as having chats with Everledger, Johnson-Poensgen says Circulor has also been talking about interoperability with IBM.  

Unlike a small and nimble startup, IBM has taken a heavyweight consortium approach to sustainable supply chain tracking. Back in April 2019, IBM launched the Responsible Sourcing Blockchain Network (RSBN), which is currently focused on cobalt for batteries and includes the likes of Ford Motor Company, Volkswagen Group, LG Chem and Huayou Cobalt.

“The challenge with the consortium is it slows you down because doing things by committee is not the most efficient way to go,” said Johnson-Poensgen. “I want to provide customers with coalition benefits without consortium constraints. So Daimler pays for all the work around CO2, which will benefit Volvo, without formally having got into bed together.”

Sai Yadati, a partner at IBM Global Business Services, said Big Blue has refined its blockchain governance model to collaborate at speed and is on track for a production release in June of this year.

Yadat said IBM was open to explore interoperability with other Hyperledger projects.

“Industrywide collaboration is certainly our goal,” he said. “We’re collaborating with other networks that share common goals, and interoperability is an important part of our 2020 roadmap.”