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How blockchain technology could help prevent child labor in global supply chains
How would you feel if the phone in your pocket or the chocolate candy you just enjoyed were made using child labor? The idea might scare you, but the truth is that child labor hides behind the production of everyday products, including electronic devices and food.
It is particularly widespread in sectors such as cobalt extraction AND cocoa productionAnd like a recent one BBC investigation revealed, it can also be found in the supply chains of well-known cosmetic brands.
Although large companies seek to implement zero tolerance policies, they may not be aware that child labor is a feature of their complex manufacturing processes. But research suggests that it is extended in international supply chains. United Nations data from 2021 suggests that the number of child laborers in the world is around 160 million.
So what can be done? Various attempts Audits, due diligence policies and efforts to ensure responsible sourcing have been undertaken to address the issue, albeit with varying degrees of success.
A potential solution could be found in blockchain technology.
Blockchains are a kind of digital database often used in cryptocurrency transactions. The technology is essentially a way to store and share information along a global supply chain, like a virtual ledger that ensures data is secure and transparent.
But it could also be used to ensure products are made ethically and without child labor by tracking transactions.
It could work like this: whenever a product is harvested or mined, it is immediately assigned a digital ID and its details are recorded, like a digital birth certificate. This is the first part of the chain.
Then, every time the product is transported or processed, a new “block” of information is added to its ID. Each additional block gradually forms the blockchain: a clear record of where the product has been and what has been done to it.
If large companies had access to all this information, supply chain transparency would be greater would have improved significantly. And because the technology records a product’s journey from start to finish, it would be difficult to hide any unethical practices, such as child labor.
It would also include contracts written in programming codes (known as “smart contracts”) which help verify whether labor standards have been respected or not, activating audits or recording ethical practices.
Cocoa farmers could benefit from greater transparency on wages.
Narong Khueankaew/Shutterstock
If there is a dispute along the supply chain between buyers and sellers, blockchain provides a digital ledger that resolves disputes. Workers can also use secure digital IDs to ensure that only those legally authorized to work are employed, preventing child labor.
Another benefit would be the secure recording of all payments, meaning workers receive the promised pay and companies that don’t pay fairly can be held accountable.
Technical support
But my research suggests that implementing blockchain technology would not be an easy solution. While it can help improve monitoring and accountability, large companies may be able to adopt it in a way that benefits their operations and reputation. They can set rules and standards and decide who has access to the data generated.
Closed blockchain systems would make it difficult for smaller suppliers to benefit from the technology, potentially resulting in giving more power to large companies instead of improving working conditions.
To know more:
“We miners die often.” Appalling conditions and miserable wages: the life of cobalt miners in the DRC
Additionally, in developing economies, many small farmers and suppliers lack the technological infrastructure – such as smartphones or reliable internet connections – needed to implement blockchain technology. Recent research suggests so possible solution this would allow transactions to be recorded via text messages.
In this way, transactions between farmers and buyers could be documented using simple mobile phones. Information about the farmer’s identity and the quantity of cocoa sold, for example, would then be securely recorded in a blockchain (perhaps via an app or web page), ensuring transparency.
Such a system would enable farmers with limited access to technology to participate in safe and reliable transactions and engage in fairer and more responsible supply chains that reduce the amount of child labor around the world.