DLT Traceable Sustainable Commodities

Since 2001, over 70 million ha of commodity-driven deforestation has increased CO2e emissions from tropical tree cover loss (2.4 Gt/yr to 4.2 Gt/yr). Low incomes for smallholders limit their incentive and ability to adopt sustainable practices.

Carbon trading ($50 USD/t CO2e EU ETS) creates opportunities to finance adoption of sustainable methods. Used to meet net-zero commitments by tire and car companies, it creates opportunities in Sri Lanka as largest tire exporter for use case involving natural rubber that absorb 8tCO2e/hectare/yr on deforested land equivalent to $400/yr in carbon credit revenue; a 25% increase in smallholder income.

Our traceability solution provides incentives directly to smallholders  (responsible for 85% of production) to follow sustainable practices by linking them to downstream companies meeting net-zero commitments using carbon markets with provable claims. This can scale to 12 million ha and six-million smallholders globally, and also work for other commodities.

Over 70 million ha commodity-driven deforestation since 2001 increasing CO2e emissions from tropical tree cover loss from 2.4 Gt/yr. to 4.2 Gt/yr. This is also linked to low incomes for small farmers. Aligning public and private sector efforts to address environmental sustainability, as captured in the New York Declaration on Forests, Sustainable Development Goals and Paris Agreement is a requisite step to increasing agriculture and forestry production, improving livelihoods in developing countries while at the same time reducing the environmental impacts of production, reducing greenhouse gas emissions and strengthening integrated sustainable development decision-making and implementation. 

Natural rubber is a good example to consider in the context of sustainable development as a high value commodity with increasing demand but with the corresponding need to address environmental impacts and chronic low incomes for smallholders responsible for the vast majority of production. Natural rubber plantations emerged as a significant source of deforestation and forest degradation due to land conversion from primary tropical forest to monoculture resulting in CO2e emissions and biodiversity loss in the early decades of the 21st century. Despite this rapid expansion and high demand, smallholders responsible for the vast majority of production continue to suffer from chronic low incomes. 

Our solution is a supply chain traceability platform designed to incent smallholders to adopt low carbon, climate resilient and sustainable commodity production practices.  We will pilot and validate the prototype with natural rubber in Sri Lanka and then grow and scale the platform across other natural rubber producing regions along with other commodities linked to deforestation and forest degradation globally.

The solution will work in supporting traceability along the value chain for sustainably produced natural rubber products with provable claims that incent growers to follow sustainable practices, while creating differentiated and traceable products which can command new markets and better prices. It is also aimed at improving livelihoods for plantation workers and smallholders with a particular focus on women. 

The solution entails the development of a web-based traceability tool using a DLT platform to enhance traceability in the natural rubber value chain. The digital solution will also include the use of a digital wallet starting with smallholders where they can retain verifiable digital certifications and incentive payments (carbon offsets/insets/impact credits), which can also help promote their products and make certification authentication easy.

Globally, smallholders are responsible for many commodities that are linked to deforestation and forest degradation including 85% of rubber production and for up to half of the world’s palm oil production. Often, poor, small farmers face low productivity issues and practice extensive agriculture, clearing forests and other valuable ecosystems in constant search of new land to cultivate.

While supply chain companies have been working to halt deforestation and boost responsible commodities’ production through certification, traceability, and supplier monitoring of their large, direct suppliers, they have not been able to effectively reach and engage independent smaller actors on conversion frontiers. This ultimately undermines companies’ need to demonstrate their sustainable supply chain when sourcing from smallholders.

Our solution aims to help small farmers including women to proactively address deforestation and ecosystem conversion.  By engaging smallholders on conversion frontiers to change their practices, this will help small farmers to be accepted by supply chains requiring them to work sustainably, and to limit the clearing of valuable ecosystems.

The solution initially targets the world’s six million small-scale rubber growers that account for over 85% of production with an initial focus on the more than 75 thousand small-scale growers (Less than 20 ha.) in Sri Lanka.  Sri Lanka, with the presence of major tire companies like Continental, is the leading solid tire exporter in the world currently recording 22 % of the world demand creating opportunities to link our solution to carbon reduction commitments being made by tire and car companies who will use carbon markets to help meet their commitments. Sri Lanka’s total production of natural rubber was 83,100 MTs in 2018. In 2018, the rubber finished products industry earned $875 million in export income.  Sri Lanka is also well-known for latex based gloves in the global market for which demand also recently grew as a result of the Covid-19 pandemic.

Based on scientific evidence, natural rubber was also chosen because it has a key role to play for climate change mitigation as an important land user that can absorb up to 8 tonnes per hectare annually on deforested land, a producer of renewable materials, and as a major economic activity.  Adoption of sustainable practices in the natural rubber supply chain with efficient traceability checks from land origin can best contribute to low-carbon, climate resilient, inclusive and fair growth. However, the complexity of tracking raw materials along the supply chain requires a solution that directly links product claims and associated incentive payments by downstream users of natural rubber to the upstream small holders to create incentives for them to adopt sustainable forest management and agro-forestry practices.  

In addition to the project objectives of improving sustainability of natural rubber production, it also is aimed at improved livelihoods for these smallholder farmers, tappers and wage labourers with a particular focus on women. Women make essential contributions to the agricultural and rural economies and comprise over 40 percent of the agricultural labour force. Women tend to be more strongly represented in the low productivity and low-income plantation sectors such as rubber where pay and benefits are low with limited opportunities for enhancing income.

The solution will enable downstream users to efficiently and directly support smallholders to adopt sustainable practices. It aims to improve the sustainability (carbon absorption, forest & water conservation, biodiversity, natural rubber productivity & quality) and livelihoods of smallholders including women (improved incomes, human & labour rights) with a focus on SDG 2, 5, 12, 13 and 17. Many companies in the transportation and mobility sector are initiating actions targeted towards meeting their emission reduction targets including adopting sustainable practices on deforestation, procurement and consumption. This is also driven by importing countries such as the EU and, to a lesser extent, the U.S. and China who are adopting measures to address deforestation, forest degradation and human rights thereby forcing companies to respond. In that regard, carbon offsetting/insetting can help finance and create incentives for plantations and smallholders to adopt sustainable practices, support corporate claims, secure access to these important markets while improving livelihoods for the over 6 million plantation workers and smallholders with a particular focus on women.

We have identified partnerships and engaged with Sri Lankan rubber companies and research institutes who have consulted both their female and male employees and smallholders on their employment programs and purchasing practices. The project preparation phase has taken the opportunity to review the socio-economic conditions of men and women in Sri Lanka and on plantations in the project area, the relationships between men and women, access to resources, their activities, and the constraints they face relative to each other as well as developmental opportunities of women and men.

As the specific sites for the field interventions are finalized, the project team will further engage with smallholder farmers, tappers and wage labourers to ensure that the detailed design ensures that they are effectively engaged in the final project design.  This will include using both formal channels, such as community-wide meetings, and informal methods to provide appropriate channels to achieve this participation. This will ensure that our design for a web-based sustainable natural rubber traceability tool to support traceability along the value chain for natural rubber with the initial focus on improving the sustainability and livelihoods of smallholders and tappers/wage earners. 

We will specifically engage women including dedicated meetings as part of the final design phase to ensuring that both men and women receive greater benefit from sustainable natural rubber value chain gains.  This will also help address other challenges women face in terms of more restricted access to capital, agricultural inputs, technical and market information and training programs compared with male counterparts. For example, these can be incorporated into the design for the solution to support certain agro-forestry practices such as garden plots that women manage to produce food for their families and that they can sell to generate additional income while also improving carbon absorption and biodiversity. 

It will help address long standing problems of low incomes and poor employment terms while providing them with strong incentives to sustainably manage their natural rubber plantations to improve carbon stocks and biodiversity.  

On all our projects, we take a design thinking approach to creating user-centric and simple to use solutions, applicable to users with varying technology access and digital literacy levels. We've worked in challenging environments, working creating solutions in varied places as varied as Afghanistan, rural Mongolia in herding communities, and urban environments in Canada and Singapore. Good technology enables change and is simple to use, and our pilot-first approach to our projects allows us to tweak and refine our solutions based on real world usage to ensure they have continued impact.

As part of this project, we have already started discussions with local plantations, industry bodies, and factories willing to use and trial our solution to help refine it before scale-up. UX/UI design consultation is planned to go along with the rollout and trial of the technology to ensure we can create something that is field-ready and practical.

Our solution will link smallholders, responsible for many commodities like natural rubber associated with deforestation and forest degradation, with financing from tire and car companies to meet their commitments towards the 2 degree target. In this way, it is aligned with the Resilient Ecosystems Challenge of managing ecosystems to provide greater benefits including carbon mitigation. 

It will be scalable across natural rubber and other commodities globally while providing verifiable monitoring and data collection to track ecosystem conditions by linking plantations and smallholders to carbon standards that address climate change, support local communities and smallholders, ensure gender engagement, and conserve biodiversity.   

We have completed the preliminary design and developed an initial prototype for a traceability platform for low carbon, climate resilient and sustainable commodities including natural rubber.  We now have defined a two-phase development timeframe for the project.

Phase 1 – Pilot Test and Validate Platform(Year 1): with pilot factories and downstream buyers of natural rubber in Sri Lanka which is as a valuable testing ground.  The goal is to have the platform recognized by global commodity industries, government agencies and credible certification standards as a key instrument for traceability to support sustainable production.

Phase 2 – Grow and Scale(Year 2-5): We will work with the International Rubber Study Group (IRSG) and other strategically chosen commodity producers with supply chain footprints in additional conservation priority areas in other countries to grow and scale the platform. Appealing to tire, car, and goods manufacturers aiming to achieve net-zero commitments.

Our solution is innovative in how it pushes the beginning of the supply chain towards greater digitization and can help them tap into incentives, which in turn can help with both the sustainability and efficiency of natural rubber smallholders, plantation and factory operations as well as building a brand around their certified products they can market to commercial buyers and end consumers. 

Due to the current cost and complexity of tracking natural rubber along a very fragmented physical supply chain, there are opportunities to focus initially on carbon offsetting/insetting or impact credits as the main tool for companies to signal their expectations and support best practices at the start of their supply chains. Smallholders account for 85% of natural latex production.  At the same time, many supply chains are long, complex and opaque: companies that want to connect with and support better sources of natural latex find it too expensive or time-consuming to identify their  sources. At the same time, there may not be enough sources of preferred materials available to justify companies investing in tracing their supply chains back to the start. Smallholders are being asked to change their practices but are not getting sufficient financial support to adopt those good practices.  

Our solution captures sustainability information in digital transaction certificates that are attached to the data passports for registered latex.  This will also help create a carbon offsetting/insetting program that can drive additional value back to the smallholders at the beginning steps of the value chain. 

In terms of how many people our current solution serves, a pilot of our platform using similar Ethereum-based blockchain technology to that being used in our proposed solution involved over 70 different goat herders and 8 cooperatives. 

Over the next year, our proposed pilot will involve 40-80 smallholders, tappers and wage labourers, with 50% of the beneficiaries expected to be women, as well as processors in the initial pilot sites.  We have identified partnerships and engaged with Sri Lankan rubber companies and research institutes who have consulted both their female and male employees and smallholders on their employment programs and purchasing practices. 

Over the next five-years, we will look to deploy the solution more broadly  across the natural rubber producing areas in Sri Lanka. In Sri Lanka, most of the land under rubber farming is belongs to small holders (holdings below 20 acres) who number about 130 thousand families. Out of a total of about 124 thousand hectares, 72 thousand hectares belong to small holders and 52 thousand hectares under the estate sector. 

We will also looking at deploying our solutions in other significant rubber producing regions including Southeast Asia and West Africa. The global land area devoted to rubber, reached around 14 million hectares in 2020. 85% percent of natural rubber production is accounted for by the world’s six million small-scale rubber growers by smallholders. We plan to extend this to other deforestation-linked commodities having completed preliminary design and testing for other commodities like cattle, argan oil, cashmere, etc. 

We will measure progress using indicators associated with the SDG's 2, 5, 12, 13 and 17 that align with our solution:

Target 2.3 incomes of small-scale producers including women through productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment. 2.3.1 Volume of production per labour unit and forestry enterprise size 2.3.2 Average income of small-scale food producers, by sex  

Target 2.4 ensure sustainable and resilient production systems that increase productivity and production, help maintain ecosystems, strengthen capacity for adaptation to climate change and improve land and soil.  2.4.1 Proportion of area under sustainable management

Target 5.a Undertake reforms to give women equal rights to economic resources, as well as access to financial services 

Target 5.b Enhance the use of enabling information and communications technology to promote the empowerment of women.  5.b.1 Proportion of individuals who own a mobile telephone, by sex

Target 12.6 Encourage companies to adopt sustainable practices 12.6.1 Number of companies publishing sustainability reports

Target 13.a Implement commitment by developed-countries to UNFCCC goal of mobilizing $100 billion annually to address developing country needs for  meaningful mitigation actions and transparency on implementation and  operationalizing the Green Climate Fund as soon as possible 13.a.1 Mobilized amount of United States dollars per year starting in 2020 accountable towards the $100 billion commitment

Target 17.3 Mobilize additional financial resources for developing countries from multiple sources 17.3.1 Foreign direct investments (FDI), official development assistance and South-South Cooperation as a proportion of total domestic budget. 

There will be 10 people working on our solution team.  They include 4 full-time staff, 2 part-time staff and 4 contractors. Other engineering staff can be included as additional contract workers as the project scales over-time. 

We differentiate ourselves in terms of our approach which considers both the digital and the broader transformation facets of digital transformation programmes and projects.

Our expertise and understanding of both drivers of digital transformation along with economic, social, agricultural and environmental perspectives allow us to help stakeholders understand why and how to undertake it.

Strength of our partners some of whom we have listed here along with the breadth of experience of our staff, and global network helps consider problems and solutions from all angles

Possessing extensive consultancy experience, we have advised, developed, and implemented related components of the proposed technology solution in regions such as Ecuador, Sri Lanka, India, Mongolia, and Afghanistan

Taking a discovery-first approach, user-centered technology design and design thinking for our processes and implementation help to create creative solutions that are easy to use, tailored to work in all kinds of remote environments. 

In addition to the proven experience of our team in integrating digital technologies, we also bring complimentary skills for carrying out project with direct experience in program design and implementation, stakeholder engagement, agricultural production and innovative financial instruments including project structuring and finance. 

Our name Convergence speaks to a coming together of Tech, People and Culture which align with our core values that embody diversity and inclusion.  

We continue to build a Leadership Team that reflects our values of diversity and inclusion while more importantly putting this into action tackling deep rooted social and environmental as well as business problems to target impact on the ground. Diversity and inclusion values are also very much reflected by the makeup of our Advisory Board & Special Advisors along with the way that they support and guide our work.

These beliefs also influence the way our company selects and interacts with clients and partners.  We put our head, heart and guts to work for our clients working with purpose as we take on even the hardest, most deep rooted social and environmental problems. With our partners - including The UNDP, UNICEF and OECD - we are helping to build aware, engaged and active communities tackling these issues.

Lastly, these values of diversity and inclusion are reflected in our purpose projects.  We’re committed to the United Nations 2030 Sustainable Development Goals. We invest our time and energy into the big questions of our age, with a focus on engaging students; over 1,000 of whom, from 58 countries, participated in our most recent 2021 climate event. See Events for upcoming and past events including digital inclusion and child mental health. Read about our commitment to Education here.

We are applying to Solve to access funding for further development costs and to find relevant partners including from the corporate sector to test and validate the impacts of our platform. We are also hoping to tap into MIT’s innovation ecosystem to refine our proposed business model to ensure longer term financial sustainability and transformational impact. 

Although corporate commitments continue to grow, deforestation is on the rise globally. Many companies have a limited view of the network of business partners within their value chain. Most can identify and track their immediate (tier 1) suppliers, but information is often lost about the suppliers of their suppliers. Improving traceability has become a priority for commodity value chain to increase their ability to manage their supply chain more efficiently, manage reputational risks, identify and mitigate sustainability impacts.

The implementation of traceability in supply chains is an expensive and complex issue because it requires the collaboration of all stakeholders and the deployment of shared, reliable technical solutions that require upfront investment. The global fragmentation of production is a key feature of the rubber industry which is further complicated by the prevalence of many smallholders who are responsible for much of the production. As a result, it will be difficult to provide consumers with information about product provenance without funding and collaboration across the value chain including midstream and downstream companies.

Corporate partners can help test and validate the use of distributed ledgers such as blockchains and IoT to enable the rubber sector to improve supply chain transparency across a variety of ecosystems making available all information about product origin in a transparent and trustworthy manner by notably assigning a digital identity to the product.

It is also very difficult for a start-up to both fund and design a traceability solution due to the current cost and complexity of tracking natural rubber along the physical supply chain.  Many supply chains are long, complex and opaque: companies that want to connect with and support better sources of raw materials find it too expensive or time-consuming to identify their raw material sources. At the same time, there may not be enough sources of preferred materials available to justify companies investing in tracing their supply chains back to the start. Smallholders are being asked to change their practices but are not getting sufficient financial support to adopt those good practices.

Grant funding can help with the initial design and development costs for an effective traceability platform and then there are opportunities to make the platform financially self-sustaining through carbon and impact credits as a tool for companies to signal their expectations and support best practices at the start of their supply chains. Carbon offsetting/insetting and impact credits offer advantages due to speed and efficiency while supporting claims in support of their commitments to net-zero and carbon neutrality particularly for their scope 3 emissions. 

We would like to partner with organizations to help test and validate our platform in the mobility and transport sector who use more than half the world’s natural rubber including tire and car companies. Tire and car companies have started committing towards net-zero (Continental) and carbon neutrality (GM) in their operations. Major tire companies like Continental and Goodyear are also taking part in an initiative to set up a broader sustainability platform for natural rubber under a framework called the Tire Industry Project (TIP) of the World Business Council for Sustainable Development (WBCSD) that transitioned to a Global Platform for Sustainable Natural Rubber (GPSNR). Continental and the German Federal Ministry for Economic Cooperation and Development (BMZ) are looking to expand their recent pilot digital traceability system for natural rubber. At the same time, leading car companies are part of Drive Sustainability which aims to lead the transition towards a circular and sustainable automotive value chain.  

We have also been meeting with and are actively pursuing partnerships with a number of voluntary carbon standards organizations including Forest Stewardship Council(FSC)certification, Rainforest Alliance (RA), WWF & Gold Standard and Verra's Voluntary Carbon Standard(VCS) Standards to identify certifications that will help projects that simultaneously address climate change, support local communities and smallholders, ensure gender engagement, and conserve biodiversity tap into voluntary carbon markets.  We would like to incorporate their standards and certifications into our platform while exploring various social enterprise partnership models to scale and broaden adoption of the platform for maximum impact. 

The General Motors (GM) Prize is open to solutions from the Resilient Ecosystems Challenge that help create sustainable communities around the world.  Its grant funding would be important in helping us further develop our traceability platform.  It would also be a valuable partnership in testing and validating the platforms impacts given that GM is targeting carbon neutrality across its operations and products globally by 2040, while also committing to set science-based targets that would deliver net-zero emissions ten years later.

We hope to qualify for the GM prize and its support for solutions that create sustainable communities by transforming the global rubber and tire supply chain to create lasting, environmentally sound sustainable rubber production through a collaborative approach. Through an industry-first commitment to sourcing sustainable natural rubber in its tires, General Motors is helping drive the industry toward net-zero deforestation and uphold human and labor rights.

Steve Kiefer, GM senior vice president of Global Purchasing and Supply Chain has stated that “Our supplier partners are an extension of our company,” and “We want to encourage affordable, safer and cleaner options for our customers that drive value to both our organization and the communities in which we work.”

GM believes that sourcing tires produced using sustainable natural rubber has a number of community, business and environmental benefits, including:

• Preserving and restoring primary forests and high conservation value and high carbon stock areas that are critical to addressing climate change and protecting wildlife
• Improving yield and quality for natural rubber farmers, further supporting the small businesses that contribute 85 percent of this material
• Mitigating business risk related to supply chain sourcing and performance and helping  assure long-term availability of a key commodity

As tire manufacturers develop sustainable natural rubber policies, automaker demand will help fuel results. GM will be working with tire suppliers, governments, rubber industry associations and environmental NGOs to drive alignment and reduce supply chain complexity.

GM is also working with tire suppliers such as Bridgestone, Continental, Goodyear and Michelin to develop appropriate transparency into natural rubber and ensure its traceability throughout the supply chain. The company encourages other automakers and suppliers to join in the effort to accelerate progress.

Consistent with the intent of this prize, our solution uses innovative technology to improve quality of life for women and girls and the funding provided would help us ensure that the design addresses women's needs as users and they receive the necessary technology and capacity building support.  

Women make essential contributions to the agricultural and rural economies and comprise over 40 percent of the agricultural labour force. Women tend to be more strongly represented in the low productivity and low-income plantation sectors such as rubber where pay and benefits are low with limited opportunities for enhancing income. In addition to the project objectives of improving sustainability of natural rubber production, it also is aimed at improved livelihoods for smallholder farmers, tappers and wage labourers including women. In ensuring that both men and women receive greater benefit from sustainable natural rubber value chain gains, it will also help address other challenges women face in terms of more restricted access to capital, agricultural inputs, technical and market information and training programmes compared with male counterparts.

Our solution of a traceable sustainable natural rubber platform would qualify for the ServiceNow Prize because it would connect communities to develop, share, and replicate best practices for carbon absorption and decarbonization. The platform would link to global efforts to scale voluntary carbon markets create opportunities to finance and incent adoption of sustainable natural rubber production methods that absorb 8 additional tonnes of carbon per hectare per year on degraded or deforested land. 

Natural rubber can play an important role both globally and locally in Sri Lanka in climate change mitigation through carbon sequestration as an important land user (≈12 Million ha globally and ≈120 Thousand ha Sri Lanka) and producer of renewable materials. It can also provide significant economic opportunities as a major economic activity generating more than $300 B annually and sustaining around 40 million people globally with smallholders including women being responsible for much of the production. 

Solutions for these interrelated problems require the development of alternative land-use systems and safeguarding important ecosystem functions and services on the one hand as well as providing economic viability on the other.  Sustainable production methods include the adoption of specific tree species and the integration of agro-forestry into the smallholder plantations that can also provide supplementary food and income.  

We would use the up to $100,000 prize for our Solver team under the Resilient Ecosystems Challenge for further development and testing of our platform in Sri Lanka and then in other regions including Southeast Asia and West Africa.

We qualify for the GSR prize based on our traceability solution using an innovative and sustainable approach to alleviate poverty amongst smallholders responsible for more than 85% of natural rubber production and promoting the adoption of sustainable practices to promote carbon sequestration, protect biodiversity, water retention and soil health. 

Our solution is also consistent with their emphasis on blockchain or innovative technology-powered solutions. It will support traceability along the value chain for sustainably produced natural rubber products with provable claims that incentivize growers to follow sustainable practices, while creating differentiated and traceable products which can command new markets and better prices. It is also aimed at improving livelihoods for plantation workers and smallholders with a particular focus on women. 

The solution entails the development of a web-based traceability tool using a blockchain platform to enhance traceability in the natural rubber value chain. The digital solution will also include the use of a digital wallet starting with smallholders where they can retain digital certifications and incentive payments (impact credits/carbon offsets/insets.  The digital wallet can be extended to other actors along the value chain as needed such as support related to digital certifications.

The up to $150,000 prize from the Resilient Ecosystems Challenges will support completing the pilot (alpha) phase testing, further specification and solution refinements and field (beta) testing representing the final round of testing involving a larger group of smallholder farmers, tappers and wage labourers including 50% women as well as collection centres before a traceability platform is fully deployed.