Leveraging Blockchain Technology to Combat Child Labor in Global Supply Chains

How would you react if you discovered that the phone in your hand or the chocolate you just savored was produced using child labor? The idea is unsettling, yet child labor is a hidden reality behind many everyday products, including electronics and food.

Child labor is notably prevalent in sectors such as cobalt mining and cocoa production. A recent BBC investigation even uncovered its presence in the supply chains of prominent cosmetics brands. Despite the efforts of major corporations to enforce zero-tolerance policies, they often remain unaware of the child labor embedded in their intricate manufacturing processes. Research indicates that child labor is widespread in international supply chains, with UN figures from 2021 estimating around 160 million child laborers worldwide.

Addressing this issue has proven challenging, with various initiatives such as audits, due diligence policies, and responsible sourcing efforts yielding mixed results. However, blockchain technology presents a promising solution.

Blockchains, commonly associated with cryptocurrency transactions, are digital databases that store and share information across global supply chains. This technology functions as a virtual ledger, ensuring data security and transparency. It could be utilized to verify that products are ethically produced without child labor by tracking transactions throughout the supply chain.

Here’s how it could work: when a product is harvested or mined, it receives a digital ID, and its details are recorded, creating a “digital birth certificate.” Each subsequent transaction or process adds a new “block” of information to the product’s ID, forming a blockchain. This creates a transparent record of the product’s journey.

If large companies had access to this comprehensive information, supply chain transparency would significantly improve. The technology’s ability to document a product’s journey from start to finish would make it difficult to conceal unethical practices like child labor. Additionally, smart contracts—contracts written in programming code—could verify compliance with labor standards, triggering audits or recording ethical practices.

In cases of supply chain disputes between buyers and sellers, the blockchain serves as a digital logbook to resolve conflicts. Workers could use secure digital IDs to ensure that only those legally allowed to work are employed, thereby preventing child labor. Furthermore, the secure recording of all payments would ensure workers receive fair compensation, holding companies accountable for unfair practices.

While blockchain technology offers substantial benefits, its implementation is not without challenges. Large companies might adopt it in ways that favor their operations and reputation, setting the rules and determining data access. This could disadvantage smaller suppliers, giving more power to big firms rather than improving working conditions.

In developing economies, many small-scale farmers and suppliers lack the technological infrastructure—such as smartphones or reliable internet connections—needed for blockchain implementation. One potential solution is recording transactions via text messages. This would enable farmers and buyers to document transactions using basic mobile phones. Information about the farmer’s ID and the amount of product being sold could be securely recorded in a blockchain, ensuring transparency.

Such a system would allow farmers with limited technology access to participate in secure and trustworthy transactions, fostering fairer and more accountable supply chains and reducing child labor worldwide.

Stay updated with supply chain logistics news on The Supply Chain Report. Free international trade tools are available at ADAMftd.com.

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