German luxury carmaker, Mercedes-Benz will partner start-up Circulor for a pilot project for transparency on CO2 emissions in the cobalt supply chain. The project partners will use blockchain technology to track the emissions of climate-relevant gases as well as the amount of secondary material along the complex supply chains of battery cell manufacturers.
Increasingly focusing on sustainability, this pilot is under Startup Autobahn and starts right at the source from procuring raw materials. Circulor, is a British start-up specialising in tracking raw materials by means of blockchain technology and artificial intelligence. Using these technical solutions, Circulor helps companies map transparent supply chains.
As part of 'Ambition2039', Mercedes-Benz Cars aims for a carbon neutral new passenger car fleet in less than 20 years. This transformation requires detailed knowledge of all climate relevant processes associated with the entire vehicle value chain. As part of its first step, Mercedes-Benz is creating transparency of carbon dioxide emissions and the use of secondary material in the supply chain. In relation to this as part of Startup Autobahn, the company has started a pilot project with a key battery cell manufacturer and Circulor, a start-up specialising in blockchain technology.
On the Cobalt track
The partners will first focus on cobalt, which enters the supply chain from recycling facilities. A blockchain-based system maps the production flow of the materials as well as the associated carbon dioxide emissions. In the long-term, Mercedes-Benz is pursuing the goal of a circular economy and is working to close material cycles. For this, mapping of the material flow also records the amount of recycled material in the supply chain.
Furthermore, the network also displays whether Daimler’s sustainability requirements in terms of working conditions, human rights, environmental protection, safety, business ethics and compliance are passed on to all companies involved. The German carmaker calls on its direct suppliers to comply with these standards and requirements and also carry the provisions into upstream value chains and to monitor their compliance. With the pilot project, Mercedes-Benz is driving transparency in the supply chain beyond the direct contractual partners.
Markus Schafer, Member of the Board of Management of Daimler and Mercedes-Benz, responsible for Group Research and Mercedes-Benz Cars Development, Procurement and Supplier Quality: "With Ambition2039, Mercedes-Benz Cars has set itself high goals. We can only get there in close cooperation with our suppliers. The key is transparency: It is our aspiration to make all processes transparent and traceable. We are the first manufacturer to use blockchain technology to map CO2 emissions in the global battery cell supply chain. In doing so, we are laying the cornerstone for effective improvements – for the environment and for our businesses".
Mercedes-Benz says suppliers and partners play a key role in the implementation of sustainability business strategy as they significantly contribute to value creation. The aim is to take into stronger consideration of carbon dioxide savings and the environmentally sustainable handling of resources as it pertains to procurement. The focus of the commitment is initially on materials whose production is particularly carbon dioxide intensive. In addition to battery cells, this also includes steel and aluminium. As a first milestone, Mercedes-Benz will source battery cells from carbon-neutral production for the first time as part of a sustainability partnership with a battery cell supplier.
The blockchain advantage
Mercedes-Benz says blockchain technology offers numerous advantages for the documentation of product and contract data. It links digital data through encodings (cryptography) and cannot be altered unnoticed. All participants in the supply chain are able to trace the integration, transmission and confirmation of information at any time. At the same time, confidential information remains protected. This is of particular relevance for complex and highly dynamic global supply chains, such as in battery cell production.
Mercedes-Benz says this builds on its experiences from previous initiatives. Last year, the company commissioned the development of a blockchain prototype for the supply chain. The aim was the consistent and transparent documentation of contracts across all tiers. The insights gained are being incorporated into the new pilot project.