Volvo Applies Blockchain To Fight Against Child Labor

Volvo Cars integrates blockchain technology to avoid using unethical cobalt in its var batteries. Thus, the company goes up against child labor exploitation and illegal manufacturing.

Blockchain technology is a great solution for the supply chain sector because it allows companies to keep all data on their products and their transportation secure, sharing only necessary information with the transferee. However, it also allows companies to guarantee the quality of materials used for item production.

One of the key ingredients used to create lithium-ion battery is manufactured in Congo — the region that is a world’s leader in cobalt manufacturing with more than two-thirds of world market production. At least 17% of cobalt are manually extracted in mines in South-East of Katanga region, being sold to intermediaries that cooperate with a series of manufacturers.

Being a long-term cobalt supplier, Volvo took a decision to pay more attention not only to the quality of purchased materials but to the circumstances of their production. In particular, Martina Buchhauser, head of procurement at Volvo, stated that the company has always paid attention to the ethical aspect of the production of raw materials they purchase. With the integration of blockchain technology, it became possible for the company to take full control over the traceability and origin of the materials, minimizing risks connected with the cobalt consumption.

This issue has become even more important within the last years, as the growing demand for electric cars motivated Volvo to produce its first fully electric car — XC40 Recharge. Moreover, they are now actively working on the new model of the electric battery, planning to present its new version on a yearly basis until 2025. For sure, such an amount of produced electric batteries will require more raw materials and therefore the ethical issue becomes as important as never before.

For now, Volvo cooperates with electric batteries producers: China’s CATL and LG Chem of South Korea. They have already signed an agreement that covers battery supply issues for at least the decade, covering both Volvo car models and those of their co-owned Polestar brand. The integrated blockchain technology will be operated by Circulor and Oracle Corp across CATL’s supply chain.