Blockchain technology – a new era of ecolabelling schemes?

Abstract

Purpose

This paper aims to investigate the potential of blockchain technology (BCT) for enhancing the effectiveness of ecolabelling schemes (ecolabels). The paper examines ecolabels’ effectiveness across three criteria – reducing adverse environmental and social impacts, enhancing quality and safety standards during production and service delivery and increasing producer’s trading power via decreased information asymmetry. These three categories are compared with technology’s status quo, linking use cases relevant to the enhancement of contemporary ecolabels’ effectiveness. Conclusions are drawn over BCT’s potential for enhancing the effectiveness of ecolabels. The paper also offers directions for future research related to BCT and purpose-driven ecolabels.

Design/methodology/approach

This study adopted a qualitative interpretivist approach to investigate the potential BCT represents for enhancement of the effectiveness of ecolabelling schemes (ecolabels). The paper identifies three criteria against which ecolabels can be assessed in respect to their effectiveness. Additionally, it looks for linkages between the design of ecolabels and a creation and utilisation of improved practices in a given industry. This conceptual literature review resulted in a framework for ecolabels’ effectiveness and a lens to review BCT-related literature with potential to enhance ecolabels’ design and trading practices.

Findings

There is an undeniable shift in attitude towards the adoption of BCT, stepping away from the naïve notion that BCT can fix all the problems encountered in a supply chain. On the one hand, BCT offers to better inform consumers of the green benefits ecolabelled products provide. On the other hand, a broader application of BCT currently faces a trilemma of challenges related to issues of decentralisation, security and scalability. BCT’s presence is likely to force ecolabelling organisations to review their position on the market and their intended purpose in the marketplace.

Research limitations/implications

This paper is based on a conceptual literature review and derives with three key themes grouping ecolabels against their efficiencies. These themes provide scope for a search of relevant blockchain-embedded use cases that may or may not contribute to the enhancement of ecolabels’ impact. This is a conceptual, theoretical review of possible approaches that can be adopted by commerce with predictions relevant to ecolabels. This paper does not claim any empirical findings.

Practical implications

Despite interest BCT gained to date, the technology still deals with unresolved issues related to decentralisation, scalability and security. Many studies advise caution, and some do not view the technology as disruptive but foundational. The paper provides references to studies that assist organisations with a decision, whether it is the right time to invest in BCT or not.

Social implications

This paper adds to the ambition most ecolabels strive for, and that is to mitigate adverse environmental and social impacts production of conventional products may have. Use cases embedded in BCT offer insights into the impacts of enhanced transparency within supply chains. For example, BCT is likely to work well for improving the lives of those producing the foods we eat while informing on issues such as child labour or planting of new trees as part of an offset program.

Originality/value

This paper’s contribution is manifold. First, it delivers a qualitative conceptual analysis of principal ecolabels against their stated purpose. Second, it reviews the BCT literature and identifies cases that are able to provide perspective on the technology’s relevance to ecolabels’ effectiveness. Third, by exploring the overlap of the two concepts, this paper discusses the likelihood of future BCT’s utilisation in ecolabelling programs.

Citation

Balzarova, M.A. (2021), "Blockchain technology – a new era of ecolabelling schemes?", Corporate Governance, Vol. 21 No. 1, pp. 159-174. https://doi.org/10.1108/CG-08-2020-0328