sustainability

Review
The Effect of Blockchain Technology on Supply Chain
Sustainability Performances
Arim Park 1, * and Huan Li 2

1 Department of Marketing and Supply Chain Management, North Carolina Agricultural and Technical State
University, Greensboro, NC 27411, USA
2 Department of Economics, North Carolina Agricultural and Technical State University,
Greensboro, NC 27411, USA; [email protected]
* Correspondence: [email protected]

Abstract: Improving supply chain sustainability is an essential part of achieving the UN’s sustainable
goals. Digitalization, such as blockchain technology, shows the potential to reshape supply chain
management. Using distributed ledger technology, the blockchain platform provides a digital system
and database to record the transactions along the supply chain. This decentralized database of trans-
actions brings transparency, reliability, traceability, and efficiency to the supply chain management.
This paper focuses on such novel blockchain-based supply chain management and its sustainability
performances in the areas of environmental protection, social equity, and governance efficiency. Using
a systematic literature review and two case studies, we evaluate whether the three sustainability
indicators can be improved indirectly along supply chains based on blockchain technology. Our
study shows that blockchain technology has the potential to improve supply chain sustainability
performance, and we expect blockchain technology to rise in popularity in supply chain management.

Keywords: blockchain; supply chain; sustainability; IBM food trust; TradeLens







Citation: Park, A.; Li, H. The Effect

of Blockchain Technology on Supply 1. Introduction
Chain Sustainability Performances.
The COVID-19 pandemic has revealed a general lack of visibility and data exchange
Sustainability 2021, 13, 1726. https://
with global supply chains [1]. In an attempt to build resilient supply chain management,
doi.org/10.3390/su13041726
blockchain technology has become a prominent tool, which is a novel technology using
distributed and decentralized ledger to trace the real-time movement of goods and ser-
Academic Editor: Joseph K. Nwankpa
vices in a supply chain, thus bringing transparent and robust connectivity in the process.
Received: 25 December 2020
Accepted: 1 February 2021
Blockchain technology has seen an extensive application among businesses, such as fi-
Published: 5 February 2021
nancial services (e.g., Ripple and Libra), food and agricultural distributions (e.g., IBM
Food Trust and Bumble Bee Foods), and healthcare and pharmaceutical supply chains
Publisher’s Note: MDPI stays neutral
(e.g., ProCredEx and MediLedger). There is a general consensus about the value of the
with regard to jurisdictional claims in
blockchain to achieve a reliable supply chain system. Among many others, one major
published maps and institutional affil- contribution is its potential to promote sustainable development. Our project will focus on
iations. the blockchain-based supply chain and evaluate its unique contributions to the three pillars
of sustainability—environmental protection, social equity, and governance efficiency.
A central focus of the literature has been conceptualizing the impact of blockchain
technology on supply chain management. For example, Saberi et al. [2] introduced several
Copyright: © 2021 by the authors.
blockchain technology adoption barriers in supply chain and described how it could affect
Licensee MDPI, Basel, Switzerland.
local and global supply chain sustainability. We argue that there are two fundamental
This article is an open access article
reasons why focusing on sustainability is important: First, the role of supply chains for
distributed under the terms and a sustainable global economy has become increasingly prominent in recent years. Over
conditions of the Creative Commons 93 percent of the world’s 250 largest firms report on sustainability. Therefore, sustainability
Attribution (CC BY) license (https:// in the supply chain will be imperative. Second, as blockchain technology becomes increas-
creativecommons.org/licenses/by/ ingly popular, it is important to document its role in various aspects, such as promoting
4.0/). sustainability. Accordingly, this paper explores the effects of blockchain technology on

Sustainability 2021, 13, 1726. https://doi.org/10.3390/su13041726 https://www.mdpi.com/journal/sustainability

Sustainability 2021, 13, 1726 2 of 18

sustainability performance in supply chain management. It analyzes critical sustainabil-

ity measurements that can be considered to quantify corporate performance through an
extensive literature review. The purpose of this study is to document the association of
blockchain technology and the three pillars of sustainability, environmental (e.g., waste
management), social (e.g., public perception), and governance (e.g., corporate manage-
ment). To this end, we also provide two case studies showing the contribution of blockchain
technology to sustainability in the context of the food supply chain and logistics (the three
pillars of sustainability follow the United Nation’s Sustainable Development Goals (SDG)).
We propose a two-step framework. First, following a systematic literature analysis
approach, we conduct a broad review of the previous studies regarding the association
between the blockchain-based supply chain and sustainable development. We collect the
most relevant articles on our topic by searching for the proper keywords. Our proposed
analysis includes four research focuses: (i) blockchain technology in supply chains; (ii)
blockchain-based supply chains and environmental sustainability; (iii) blockchain-based
supply chains and social sustainability; and (iv) blockchain-based supply chains and
economic (governance) sustainability.
Having documented these associations, in the second step, we provide two case stud-
ies regarding the blockchain-based system and sustainability. The first case study is focused
on the collaboration between Wal-Mart and IBM Food Trust. The IBM Food Trust program
applies blockchain technology to food supply chains to enhance food safety and security.
It aims to reduce tracking time, shorten operation process, result in a reduction in truck
gas consumption, and ultimately make resource planning more efficient. The second case
study explores the Maersk blockchain-based system in logistics. Their blockchain system is
in its infancy. Therefore, we analyze the potential effect on their sustainability performance
based on the literature reviews and the company’s sustainable report, given they do not
have direct evidence of sustainability performances. Our paper aims to shed light on
two issues through case study analysis: First, what is the overall relationship between
blockchain technology in the supply chain and sustainability performance? Second, the
effectiveness of blockchain technology on supply chains’ sustainability performance. Our
study extends the literature by analyzing the effects of blockchain on the supply chain,
emphasizing the sustainability concept. This suggests directions for a future research
agenda that will further quantify sustainability performance.
Our paper proceeds as follows. Section 2 summarizes the background of blockchain
technology and the blockchain-based supply chain. In Section 3, we introduce the System-
atic Literature Analysis method and use it to select a list of articles for later analysis. Using
the method in Section 3, we present in Section 4 the concepts of sustainability and how the
blockchain-based supply chain contributes to its performance. In Section 5, we present
two case studies on Wal-Mart’s collaboration with the IBM Food Trust Program in the food
supply chain and Maersk with IBM in the shipping industry. We conclude our paper with
future directions in Section 6.

2. Blockchain-Based Supply Chain

Blockchain refers to a technology that stores and distributes data based on databases
among all users who are stakeholders participating in the network [3]. All participants
can access detailed transaction information in real-time. In the past, transaction data
were stored in a centralized hub system and shared information with direct transaction
participants. However, blockchain technology enables people to share all information
based on decentralization, security, and smart execution. In other words, all participants
can access to transaction details one after another through peer-to-peer networks (refers to
decentralization) [4,5]. Moreover, if transactions are performed by signatures, security is
enhanced, and ultimately, transparency is secured. Therefore, if any operational problems
occur, they can be cooperatively processed promptly (security) [4,6]. Additionally, once
a transaction is recorded in the system with a validated signature given to the users, it
remains unchanged. This feature is called “immutability” [7]. Given all these features,
Sustainability 2021, 13, 1726 3 of 18

this technology is expected to bring benefits to many industries. It greatly influences the
supply chains, where information sharing is a key aspect [8,9]. This study explores how
blockchain technology impacts supply chain management.
Supply chain management is a process that encompasses the entire process of trans-
porting, storing, and delivering products from the place of raw materials to production and
to the final consumers [10]. Blockchain technology is expected to bring various advantages
to supply chains, including increasing efficiency and lowering costs, which are the two
main objectives of the supply chains. Meantime, the literature on blockchain-based supply
chains is growing [11]. Below, we summarize the four characteristics of blockchain-based
supply chains: traceability (or visibility), reliability with security, synchronized transaction
process, and cost efficiency [7,8].

2.1. Traceability (or Visibility)

Within the blockchain-based supply chain environment, real-time location tracking of
goods becomes easy. Traceability is defined as the ability to trace all information in real-
time [9]. For instance, container freight management and document processing regarding
transactions can be stored and shared in the blockchain. All transaction information can
be confirmed by relevant participants along the movement path of cargo in real-time
through blockchain technology [12]. Therefore, a blockchain-based supply chain allows for
enhancing transparency [2].

2.2. Reliability and Security

It is known that the blockchain system helps to reduce the risk of counterfeit or unli-
censed products distributed in the region. This is because blockchain is a decentralized
record-keeping system [8,9]. Many industries, such as the food industry, employ this func-
tion to their supply chains based on blockchain technology [13,14]. Particularly, blockchain
technology can manage inventory appropriately while tracking cargo and recording and
managing cargo history. This makes it possible for consumers to trust the product, because
anyone who participates in the transaction can share and verify all the information. Based
on these primary functions, supply chain processes and objectives are impacted positively.
This study sheds light on two advantages of blockchain-based supply chains: synchronized
transaction process [15] and cost efficiency [4,16].

2.3. Synchronized Transaction Process

The contract process of supply chains is simplified on account of blockchain technology.
In the past, the contract between the seller and the buyer took a complicated procedure [17].
Blockchain eliminates unnecessary and complicated documents through a smart contract.
A smart contract refers to a transaction protocol supporting the automated execution
and control of documents [7]. This system makes a simplified process that all relevant
parties are necessary to check the agreement through digitally signed documents within
the blockchain system [12].

2.4. Cost Efficiency

Supply chains are associated with many relevant costs, such as inventory and trans-
portation, affecting the total cost [18]. Blockchain-based supply chains allow us to manage
inventory efficiently and help to reduce costs [4,16]. Logistics covers all processes from the
point of departure to the end destination, so unnecessary losses are profits. In particular,
inventory accounts for the most significant cost, and the supplier needs to periodically
forecast demand to produce and purchase inventory in a timely manner [19]. If the com-
pany has excess inventory than demand, the economic burden will increase with stock-out
costs. When operations manage fewer inventories, paying lost sales costs is required [14].
Therefore, the blockchain-based supply chain enhances cost efficiency through traceability
and security functions [9].
Sustainability 2021, 13, 1726 4 of 18

3. Methodology: Systematic Literature Analysis

This study explores the literature of the blockchain-based supply chain with the
sustainability concept by employing systematic literature analysis methods. This method
can reduce any potential biases by examining the detailed contents [20]. Simply put, we
performed two steps: collecting articles by searching for a list of specific keywords, and then
examining the trend in these articles. We only considered the literature after 2017, because
blockchain technology has only been adopted since 2017 in supply chain management.
We first collected the most relevant studies by conducting keyword searching in
Google Scholar database. The final list of primary keywords included “blockchain”,
“supply chain management”, “Blockchain-based supply chain”, “sustainable supply chain”,
“sustainability” and “blockchain sustainable supply chains”. We considered peer-reviewed
journal articles, academic books, and business-related news articles through Google Scholar
(www.scholar.google.com (accessed on 4 February 2021)) and the Web of Sciences from
2017 to 2021. As a result, we refined a total of 23 references.
Table 1 indicates a literature summary of these 23 references. As it shows, the most
common keywords are “blockchain technology” and “supply chain management”. The
most-cited two articles (number 8 and 11) share three keywords: “blockchain technol-
ogy”, “supply chain management” and “sustainability”. Previous studies examine how
the blockchain-based supply chain influences sustainability with discussion through the
case studies or literature reviews of the technology-based supply chain with sustain-
ability [5,21–26]. Saberi et al. [2] investigate the benefits of sustainability by adopting
blockchain technology in supply chains. Moreover, several papers have discussed the
three pillars of sustainability with the blockchain supply chain. First, environmental sus-
tainability enhancement was discussed [2,24,27–32]. Moreover, several papers explore
social sustainability issues [2,24,29,31–38] and economic (or governance) sustainability
issues [2,31,32,38–40]. Detailed descriptions of the potential indicators of the three pillars
of sustainability with blockchain-based supply chains in the literature review can be found
in the next section.

Table 1. Literature summary (accessed in August 2020).

Google Scholar
No Author Year Keywords Journal
Citations
1 Cartier et al. 2018 No Keywords Journal of Gemmology 15
Rutgers University,
2 Chang 2019 No Keywords 0
Doctoral Dissertation
Blockchain Technology; Research Agenda; Supply Chain
3 Cole et al. 2019 Operations and Supply Management: An 52
Chain Management International Journal
Supply Chain Traceability Systems;
Blockchain; Thematic Analysis; Production and
4 Hastig and Sodhi 2020 13
Stakeholders; Business Requirements; Operations Management
Critical Success Factors
Blockchain; Distributed Ledger; Computers and
5 Helo and Hao 2019 34
Operations; Supply Chain; Logistics Industrial Engineering
Barriers; Blockchain; Information Systems; International Journal
6 Hughes et al. 2019 Literature Review; Opportunities; of Information 103
Sustainable Development Goals (UNSDGs) Management
Production Capability Evaluation; Supply
International Journal of
7 Li et al. 2020 Chain Network; Blockchain; IoT; 3
Production Research
Machine Learning
Sustainability 2021, 13, 1726 5 of 18

Table 1. Cont.

Google Scholar
No Author Year Keywords Journal
Citations
Blockchain Technology; Supply Chain
International Journal of
8 Saberi et al. 2019 Management; Sustainability; Barriers; 304
Production Research
Research Agenda
Blockchain Technology; Operations
International Journal of
Di Vaio and Management; Supply Chain Management;
9 2020 Information 16
Varriale Sustainable Performance; Airport Industry;
Management
Non-Financial Reports
Harvard Business
10 Casey and Wong 2017 No Keywords 126
Review
International Journal of
Auditability; Blockchain; IoT; Network
11 Kshetir 2018 Information 428
Effects; Supply Chain; Sustainability
Management
Kouhizadeh and Blockchain; Supply Chain; Green Supply
12 2018 Sustainability 79
Sarkis Chain; Use Cases; Applications
Blockchain; Value Chain; Governance;
13 Nikolakis et al. 2018 Sustainability 24
Sustainability; Smart Contracts
Blockchain; Distributed Ledger
Technology; Physical Internet; Logistics;
Supply Chain Management; Research
14 Treiblmaier 2019 Logistics 16
Framework; Innovation; Information
Technology; Triple Bottom
Line; Sustainability
Supply Chain Management; Small and
Nayak and Medium Enterprises; Technology Cogent Economics
15 2019 1
Dhaigude Adoption; Multicriteria Decision and Finance
Making; Sustainability
Blockchain Economics
and Financial Market
16 Son-Turan 2019 No Keywords 0
Innovation
(Book chapter)
Blockchain; Social Sustainability; Multitier Robotics and
17 Venkatesh et al. 2020 Supply Chain; Supply Chain Computer Integrated 19
Sustainability; Traceability Manufacturing
Blockchain; Green Logistics; IoT;
18 Tan et al. 2020 Sustainability 2
Supply Chains
Blockchain Technology; Transparency;
International Journal of
19 Bai and Sarkis 2020 Sustainability; Hesitant Fuzzy Set; 17
Production Research
Regret Theory
Journal of Cleaner
20 Köhler and Pizzol 2020 No Keywords 1
Production
Blockchain; Artificial Intelligence; Security;
Privacy; Machine learning; Deep learning;
21 Nguyen et al. 2020 TechRxiv 6
Coronavirus (COVID-19);
SARS-CoV-2; Epidemic
Improving Maritime Transport
22 Jović et al. 2020 Sustainability Using Blockchain-Based Sustainability 0
Information Exchange
Supply Chain Management; Sustainability;
Blockchain; Barrier Analysis; DEMATEL; International Journal of
23 Kouhizadeh et al. 2021 0
Technology-Organization- Production Economics
Environment; Framework
 Based Information Exchange
Supply Chain Management;
Sustainability; Blockchain;
Kouhizadeh et International Journal of
23 2021 Barrier Analysis; DEMATEL; 0
Sustainability 2021, al.
13, 1726 Production Economics 6 of 18
Technology-Organization-
Environment; Framework

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Figure 1. Distribution of published research during the years 2017–2021 based on 23 literature
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4. Blockchain-Based Supply Chain and Its Three Pillars of Sustainability

4.1. Sustainability
The concept of sustainability was first addressed by the World Commission on Envi-
ronment and Development in 1987 [42]; since then, it has evolved to around 300 definitions
for several decades [43]. From the economic point of view, sustainability means that we
leave for the future generation “the capacity to be as well off as we are today”, quoted
from Robert Solow, the 1987 Nobel laureate in economics [44]. Consistent with this line of
thought, the most universal and widely adopted definition was provided by the United
Nations (UN) in 2005, which stylized the concept of sustainability into three core do-
mains: environmental, social, and economic sustainability, known as the three pillars
of sustainability.
The challenges of sustainable development require collective efforts not only from the
public sector but also the private sector (people and firms) of society. It becomes critical for
firms to ensure the alignment of their business practices with the UN Sustainable Develop-
ment Goals (SDGs). Specifically, the three pillars of sustainability are reflected by firms’ En-
vironmental, Social, and Governance (ESG) engagement and performance. Environmental
engagement primarily indicates the external impacts that a company may have on the envi-
ronment as a side effect of their business. The main criteria of environmental sustainability
include the utilization of resources, energy efficiency, the amount of waste, and level of emis-
sions from business activities [2,45]. Social equity is mainly concerned with several issues,
such as workplace health and safety, diversity and equal opportunity, gender or racial gaps
in wages, and child labor, all of which are part of human rights [38]. The governance perfor-
mance is related to the company’s long-term success and profit. It also covers the company’s
internal affairs, such as communication among stakeholders, according to the 2019 ESG
Sustainability 2021, 13, 1726 7 of 18

rating methodology report provided by Morgan Stanley Capital International (MSCI ESG
Research, 2019) (https://www.msci.com/documents/1296102/14524248/MSCI+ESG+
Ratings+Methodology+-+Exec+Summary+2019.pdf/2dfcaeee-2c70-d10b-69c8-3058b14109
e3?t=1571404887226 (accessed on 23 December 2020)). This ESG assessment framework
has been broadly discussed and adopted by firms to indicate their sustainable engagement
and performance [46,47].
Considering the three pillars of sustainability and the ESG framework, this paper
is particularly concerned with the supply chains that incorporate blockchain technology
and how this novel technology may contribute to ESG performance. As summarized in
Saberi et al. [2], there is increasing popularity in applying blockchain technology to supply
chains. In the rest of this section, we conceptualize each indicator in the context of supply
chain management and discuss how the blockchain technology’s unique characteristics
could improve its ESG performance through supply chains.

4.2. Blockchain-Based Supply Chain and Environmental Sustainability

Environmental sustainability is concerned with inter-generational equity of receiving
benefits from natural resources and environmental amenities. This issue has drawn significant
attention and discussion from academia, industry, and government entities [2,48]. In the
context of supply chains, environmental sustainability issues arise from both the early phase
where raw material resources flow from the natural environment into the process of produc-
tion and consumption (e.g., nature–economy interaction), and the later phase, where pollution
generated from economic activities flows to the natural environment (e.g., economy–nature
interaction). In the early nature–economy interaction, economic activities could lead to natural
resources diminishing and deteriorating, thus jeopardizing future generations. In the later
phase, the economy–nature interaction is often related to environmental degradation, such as
water scarcity, air pollution, and soil erosion, affecting humans’ well-being for generations.
According to the United States Environmental Protection Agency (EPA), supply chains sig-
nificantly contribute to a company’s environmental footprint, responsible for approximately
40–60% of a manufacturing company’s and 80% of a non-manufacturing company’s carbon
footprint (https://www.epa.gov/sites/production/files/2016-09/documents/improving_
sustainability_in_supply_chains_091516.pdf (accessed on 23 December 2020)).
Environmental sustainability within supply chains requires adopting optimal manage-
ment practices of natural resources and environmental protection policies [49]. Sarkis [45]
proposes a strategic decision framework for green supply chain management, highlighting
the dynamic nature of businesses and their relationship with the natural environment.
Such a dynamic nature requires a real-time monitoring system to update information for all
the participants in the supply chains synchronously. The nature of blockchain technology—
traceability, reliability, synchronized transaction process, as well as cost efficiency—makes
a better supply chain an appropriate alternative to traditional corporate policies and prac-
tices to promote environmental sustainability [2]. In particular, blockchain technology can
enhance the following two general indicators: (i) Environmental emission abatement: the
blockchain technology allows participants in the supply chain to track the location and
amount of emissions, especially carbon emissions, wastewater, or toxic pollutants from
each step and, therefore, take action to comply with environmental policies. In addition,
each participant can make sure their upstream partners do not violate any environmental
policy or law. Under this pressure, the supply chain as a whole will intentionally reduce
its environmental emissions. (ii) Resource management: blockchain technology enables
us to monitor the origins of raw materials, avoiding excessive extraction and utilization
of natural resources, and thus helping to prevent issues such as salinization or deforesta-
tion. Yet, we do not observe any empirical study showing whether and to what extent
blockchain technology could maintain a sustainable resource-use rate. (iii) Waste manage-
ment: blockchain technology allows businesses to track their waste [27], making it possible
to recycle, reuse, or properly take care of those wastes. For example, the IBM Food Trust
allows the food supply chain to track the amount of the food waste [26], which can not
Sustainability 2021, 13, 1726 8 of 18

only minimize costs to blockchain adopters but also protect the environment. It is worth
noting that energy efficiency is another area that can benefit from blockchain technology,
but that area is typically beyond supply chain management, so we leave it for future study.

4.3. Blockchain-Based Supply Chain and Social Sustainability

Social sustainability is concerned with business impacts on employees, workers,
customers, and even local communities in order to support a healthy society [50,51].
Despite the increased attention to social sustainability, this pillar is rarely studied in supply
chain management [38,48]. Social sustainability within the supply chains examines social–
economic conditions regarding involved employees (e.g., manufacturers and suppliers)
in the supply chain, such as safety and human rights (e.g., workplace protection) [52,53].
One of the critical social sustainability issues in the supply chain is how to be socially
responsible when buying resources [53]. For instance, Helo and Hao [36] suggest an
example of a socially sustainable supply chain based on “blood diamond”, which indicates
the exploitation of child labor and unethical process of the diamond supply chain [54].
The blockchain-based supply chain has an impact on social sustainability [2]. Specif-
ically, blockchain enables supply chains to maintain secure information, and the “im-
mutable” feature protects all involved parties in the supply chains from corruption—
individuals, governments, or organizations. This is because only authorized actors can
change the information in the blockchain-based supply chain. Moreover, supply chains
procure goods based on reliable suppliers. Blockchain keeps a transparent record of
transactions for the whole process, promoting assurance from ethical suppliers. In the
blockchain-based supply chain context, Cartier et al. [33] discuss the social issues in the
Gem industry. This industry supply chain is growing, especially in the sourcing aspect. The
unethical sourcing processes that potentially abuse human rights in the diamond industry
are widely discussed. They also point out that the blockchain-based supply chain allows
building a transparent procedure by verifying the supplier’s operations and preventing
any potential unethical sourcing issues (e.g., child labor and human trafficking).
Moreover, unethical sourcing in the fashion industry is discussed from a social point
of view [34]. There are many multitier suppliers in this industry, and some suppliers do
not have incentives to pursue social sustainability. As a result, unethical issues arising from
the suppliers would lead to damage to the reputations, sales, and stakeholder wealth of all
relevant supply chain participants [55]. Hence, the blockchain-based supply chain enables
us to increase visibility to prevent such unethical sourcing by having greater transparency.
Hastig and Sodhi [35] suggest that child labor, rural poverty trap, and standard of living
index can be used to evaluate the blockchain-based supply chain’s social sustainability. For
example, Helo and Hao [36] introduce the Walmart blockchain with the IBM food trust
system to explain one of the social sustainability indicators, safety. All players in the supply
chains gain data including farm origin, factory and processing data, expiration dates, and
delivery details recorded in the blockchain system. Li et al. [37] suggest evaluation criteria
from a social perspective based on the literature review by suggesting working efficiency,
work safety, and labor health.
In summary, blockchain secures stable and immutable information in supply chains,
and these features help to enhance social sustainability and other social dimensions. A
transparent information system prevents the corruption of all involved participants in the
supply chain (e.g., forgery and nefarious participants). Moreover, traceability supports eth-
ical sourcing by having clear information on product history. Thus, blockchain technology
protects human rights and safe and healthy business environments in supply chains [2,23].

4.4. Blockchain-Based Supply Chain and Economic (Governance) Sustainability

Economic sustainability refers to a status where an economy can achieve steady growth
without sacrificing social and environmental sustainability. In the context of corporate
and supply chain management, the economic sustainability pillar is often referred to as
governance. It requires the company to develop a robust management structure that
Sustainability 2021, 13, 1726 9 of 18

ensures overall transparency, traceability, and accountability, and ultimately can strengthen
relations with external stakeholders and attract potential investors [40,48]. Successful
sustainable governance offers long term successes to the supply chains, because it can
strengthen firms’ competitiveness, realize healthy and transparent corporate management,
increase profit [28], and help the development of the other two pillars [48]. However,
it faces a range of challenges in practice. First, information asymmetry among partners
along the supply chains could temper with the transparency management structure. This
is particularly true for global supply chains, partly due to increased outsourcing [39].
Second, the lack of reliability is another significant concern for the supply chain governance
performance, which can lead to error or corruption issues due to the centralized transaction
system [38]. Lastly, it is often the case that traditional supply chain management hardly
achieves traceability and reliability at the least possible cost, because it requires a substantial
investment and management effort to monitor and trace the whole supply chain. Although
most supply chains voluntarily self-regulate, such as the global management system (ISO
14000), it is not a panacea for these challenges.
The factors that drive sustainable governance typically cover two themes: corporate gov-
ernance and corporate behavior. According to MSCI ESG Research (2019), the former theme
can be indicated by board activities, ownership, and accountability (https://www.msci.com/
documents/1296102/14524248/MSCI+ESG+Ratings+Methodology+-+Exec+Summary+2019
.pdf/2dfcaeee-2c70-d10b-69c8-3058b14109e3?t=1571404887226 (accessed on 23 December
2020)). The latter can be indicated by leadership ethics, corruption and instability, anti-
competitive practices, financial system instability, and tax transparency. These indicators
are consistent with Hastig and Sodhi [35], who emphasize that capabilities, collaborations,
technological readiness, supply chain practices, leadership, and governance of traceability
effort could bring supply chain management success. Based on these factors, we believe that
blockchain technology could improve supply chain governance performance. We illustrate
this from three aspects. First, it allows supply chain participants to instantly access accurate
and reliable information, making the whole transaction process transparent and fast. Second,
it provides a powerful solution to the asymmetry information issue using the smart contract,
by which a transaction is made only when every participant agrees to it, bringing symmetry
information among upstream and downstream partners and, therefore, avoiding possible
corruption or errors [38]. Last, the historical performance of a supply chain participant, such
as on-time deliveries or payments, can be stored on blockchain, which can be further used to
establish trust and collaboration among stakeholders [28].

4.5. ESG Ratings

Beyond the conceptual assessment of the three pillars of sustainability, ESG ratings are
a widely used tool to show sustainability performance to business leadership, investors,
and stakeholders [46,56]. Hence, ESG ratings are indicated in sustainability reports, such
as carbon emissions and percentage of the international market. There have been a number
of ESG rating agencies providing ESG ratings and scores. Each company has its own
criterion and methodology to evaluate its sustainable engagement and performance. This
methodology often involves comprehensive data collection and assessment models. The
most historical ESG ratings are provided by MSCI, which reports the MSCI ESG ratings
of approximately 8500 companies worldwide by assessing 37 ESG key issues within the
three pillars. Another popular ESG rating is provided by Sustainalytics. This assesses the
extent to which a company’s enterprise business value is at risk due to environmental,
social, and governance concerns. The rating considers an assessment of a company’s
exposure to industry-specific material ESG issues in addition to an assessment of how
well the company is managing those risks. Yet, these ESG performance criteria are often
complicated and vary according to industries and social norms. Hence, those criteria are
unlikely to fully represent the company’s sustainability assessment process [57]. A more
detailed explanation of several other ESG ratings is discussed by Huber et al. [58].
Sustainability 2021, 13, 1726 10 of 18

5. Case Study
Below, using two case studies, we evaluate whether the three sustainability indicators
can be improved indirectly along supply chains based on blockchain technology. Our
evaluation is based on the characteristics of blockchain technology and their relationships
to the three pillars of sustainability, as summarized in Sections 4.2–4.4

5.1. Wal-Mart and IBM Food Trust

5.1.1. Background
Motivation of Wal-Mart Blockchain-Based Supply Chain
Traditional supply chains rely on manual processes, requiring a long time to discover
the sources and routes of food with safety issues. Many diseases (e.g., Escherichia coli) have
appeared due to hazardous food for many years. Wal-Mart had massive food scandals
related to milk and infant formula across China. Over 300,000 people were negatively
affected [59]. Supply chains need to be verified by tracking the source (e.g., origin) to
examine food contamination. In this process, it should be quick and accurate to identify
food sources. However, companies involve many suppliers and customers, which leads
to overloading information regarding products, prices, workforces, documentation, etc.
Wal-Mart found that it takes several days to find the origin of products, and this situation
shows that their supply chains require improving traceability. In October 2016, Wal-Mart
announced a project to track the food distribution process using blockchain technology in
partnership with the IBM Food Trust program to resolve the traditional burden of processes.

Pilot Project in Wal-Mart Food Supply Chain

Specifically, Wal-Mart launched two pilot projects aiming to improve food safety in
the supply chains of pork products and mangoes. They use blockchain technology to
track pork products in China from origins (e.g., farms) to destinations (e.g., Wal-Mart in
China) and increase food safety. Moreover, they started monitoring mangoes from Latin
America to the United States, which is indicated in the 2017 Wal-Mart Global Responsibility
Report [24]. At each step in delivering food from a supplier to a consumer, relevant
information, such as the origin information of the food, batch number, factory, processing
data, and transportation details, is recorded on the blockchain in real-time. As a result, Wal-
Mart achieved a significant improvement through a blockchain-based supply chain system
related to a package of sliced mangoes. They reduced the tracking time to obtain origin
records in Mexico in 2.2 s. In the past, it took six days based on a paper record-keeping
system [24].

Impacts of Blockchain-Based Supply Chains

After a successful pilot for two products (e.g., pork, mangoes) on food safety through
blockchain-based supply chains, Wal-Mart requested all their suppliers of fresh leafy greens
to use the blockchain system. Moreover, Wal-Mart expanded the blockchain technology to
trace the origin of foods such as strawberries, chicken, yogurt, and baby foods. with Hy-
perledger Fabric in 2018 [60]. This result illustrates that the blockchain-based supply chain
system helps to track products, which can improve trust among involved stakeholders
(e.g., suppliers and customers) by obtaining accurate and transparent information about
their origins and processes. This technology allows supply chains to collaborate more
efficiently than before for information sharing. Suppliers need to upload data through the
blockchain system [61]. Ultimately, enhanced traceability contributes to the impact on the
environmental, social, and governance pillars in their supply chains.

5.1.2. The Effects on Food Trust on Wal-Mart Food Supply Chain Sustainability
Following the above discussion, our primary goal is to evaluate whether and to
what extent the IBM Food Trust program, based on blockchain technology, contributes to
sustainability within Wal-Mart’s food supply chain. To this end, we concentrate on the three
most important performance indicators: food waste management, food safety, and product
Sustainability 2021, 13, 1726 11 of 18

health and nutrition. These three indicators are recognized as the most critical concerns
of any food supply chain, as they are highly associated with environmental sustainability
through managing waste, social sustainability through protecting consumer welfare, and
governance sustainability through minimizing cost.

Food Waste Management by Blockchain

Wal-Mart set a waste reduction goal named Zero Waste in 2005, aiming to reduce 25%
of store waste by 2008, including all types of waste, such as cardboard, plastics, metals,
food waste, glass, wood, tenant waste, and residual waste (according to the Wal-Mart
Sustainability Report, achieving the 5% goal would be the equivalent of taking 213,000
trucks off the road per year, and saving 323,800 tons of coal and 66.7 million gallons of
diesel fuel from being burned). Wal-Mart has made progress in reducing waste over time,
according to its annual sustainability report. However, this achievement has mainly been
attributed to reducing cardboard, not other types of waste, especially food waste. In 2014,
Wal-Mart launched a campaign focusing on reducing food waste, but the target was not
met in 2015. This was mainly because the food waste management tracking system was
insufficient to measure and manage accurately.
In response to this challenge, Wal-Mart moved to another target in 2016, Zero Waste Fu-
ture, considering the whole food supply chain from farming to manufacturing to consumers.
At the same time, this food waste tracking system has been improved by introducing the
IBM Food Trust to its food supply chain. The IBM Food Trust creates an intelligent system
to trace waste from each stage within the food chain, allowing Wal-Mart to accurately
judge the remaining shelf life and make appropriate plans to ensure the freshness of prod-
ucts. It enhances the efficiency and effectiveness of managing waste generated along the
food chain. It also reinforces environmental sustainability by tracking and recycling the
food packages, which are a major source of waste [27]. As of the end of 2016, Wal-Mart
successfully reduced food waste by 15.3% (Wal-Mart Global Responsibility Report, 2016)
(Wal-Mart measures reductions in food waste by the following: measurement metric = total
weight of non-diverted food in pounds/total weight of all food sold in pounds). Since then,
Wal-Mart diverted more than 1.6 billion dollars in 2018 (more than 1.4 billion in 2019) of
food waste from landfill globally, receiving the highest score among supermarkets assessed
nationwide by the Center for Biological Diversity’s food waste study according to the
2019 and 2020 Wal-Mart Global Responsibility Report. In addition, all waste was reduced
significantly after 2016. For example, according to Wal-Mart’s Global Sustainability Report
in 2016, Wal-Mart in the US achieved 82% diversion of materials from landfills and diverted
an average of 71% in international markets.

Food Safety, Health, and Nutrition by Blockchain

The IBM Food Trust helps to secure food safety using blockchain technology. Supply
chain partners and consumers can access reliable and transparent information on where
the ingredients grew, and trace origins and spread if there were any cross-contamination
and foodborne illness on the food chains [26]. The availability of this information im-
proves consumer welfare and prevents additional costs for supply chain participants and
society. In practice, Wal-Mart attempts to collaborate with upstream partners to ensure
accountability, which relies on efficient communication among supply chain partners. In
2017, Wal-Mart collaborated with IBM and Tsinghua University to promote food safety
by a blockchain-powered traceability system in China, following a similar application
of blockchain technology to the leafy product Wal-Mart US in 2018. Based on the Wal-
Mart Global Sustainability Report, food safety issues improved significantly after these
two initiatives.
Blockchain technology also brings transparency and visibility to food supply chains,
making life-cycle information of a product from farm to table transparent. Consumers
can learn any information about the ingredients and origins of any product in seconds,
providing a great opportunity for consumers to acquire health and nutrition knowledge.
Sustainability 2021, 13, 1726 12 of 18

The Effects on Wal-Mart Overall Sustainability

We further investigate whether the IBM Food Trust program promotes Wal-Mart’s overall
sustainable performance. Wal-Mart has reported its approaches and assessments on environ-
mental, social, and governance performance since 2005. The report covers a series of topics,
including its ESG goals, commitments, initiatives, approaches, and progresses. Overall, the
ESG performance has improved over time, especially after 2016, when the IBM Food Trust
program was first introduced to its food supply chain. To eliminate any biases, we also collected
the ESG scores between 2014 and 2020 from the CSRHub Ratings (www.csrhub.com (accessed
on 4 February 2021)). CSRHub collects data from ESG analysis firms, NGOs, government
databases, publications, and research reports, which are further transformed into a 1 to 100 scale,
with 100 as the best rating. The time trend of four indicators for Wal-Mart Stores, Inc. is shown
in Figure 2a–e. In general, it is consistent with Wal-Mart’s self-evaluations reported in the
annual responsibility report. The overall ESG ratings jumped after the second quarter of 2016,
and then gradually increased until 2019 when there was another slight increase.
As a piece of additional evidence for Wal-Mart’s environmental performance specif-
ically, we applied the product impact measurement framework of the Impact-Weighted
Accounts Initiative (IWAI) provided by Harvard Business school [62]. As shown in Figure 3,
we plotted Wal-Mart’s monetary environmental intensity from 2010 to 2018 using two mea-
surements: “Total Environmental Intensity (Revenue)”, which represents the company’s
environmental damage of water and air emission per unit of sales; “Total Environmental
Intensity (Operating Income)”, which represents the company’s environmental damage
to water and air emissions per unit of operating income. This allows us to observe the
time trends in their monetary valuation of environmental impacts, including before and
after they adopted the IBM Food Trust program in 2016. As shown in Figure 3, the envi-
ronmental damage per unit of sales gradually decreased over time, especially after 2016,
while the environmental damage per operating income increased immediately after 2016
but then gradually declined after 2017. This suggests that the environmental intensity in
terms of operating income had a lag to show the effects. Still, in general, the environmental
performance showed a significant improvement after 2016, which is consistent with what
we found using the ESG score and Wal-Mart Sustainable report, as discussed above.

5.2. Maersk with IBM (TradeLens)

5.2.1. TradeLens: Blockchain-Based Supply Chain of Maersk with IBM
Maersk, an integrated shipping company, launched pilot blockchain technology to
enhance global supply chain flow transparency. Partnered with IBM, they established a
blockchain-based platform called “TradeLens” in logistics in December 2018. The shipping
industry is composed of multiple brokers that cause a long value chain through man-
ual processes in their supply chains [63]. Maersk expected to enhance the transparency
of its global supply chain by facilitating global trade using the “TradeLens” platform,
which uses blockchain technology to enable users trading in a “simple, secure and real-
time environment” [64]. After 2019, this platform solution was used by more than 60
in-network members, including ocean carriers and inland carriers, worldwide ports, and
terminals and custom authorities. According to the 2019 Maersk sustainability report (
https://www.maersk.com/about/sustainability/our-sustainability-strategy (accessed on
4 February 2021)), they analyzed the trade trends of their terminal in India, and this showed
that the simplified transaction processes by the blockchain-based system reduced their total
operating costs. In particular, exporters and importers in Mumbai reduced their costs by
approximately 15% of total costs than before adopting blockchain technology. Westergaard-
Kabelmann (2019) points out that documentation’s related average time was significantly
reduced thanks to the simplified exchange system with “secure, immutable digital work-
flow” among all partners via the blockchain-based supply chain system (Mumbai transport
study highlights TradeLens value).
 Sustainability2021,
Sustainability 13,x1726
2021,13, FOR PEER REVIEW 1313ofof1918

(a)

(b)

(c)

(d)

(e)
Figure
Figure2.2.(a)(a)
Wal-Mart overall
Wal-Mart ESG
overall rating
ESG between
rating 20142014
between andand
2020.2020.
(b) Wal-Mart environmental
(b) Wal-Mart environmental
sustainability rating between 2014 and 2020. (c) Wal-Mart social sustainability rating (employee)
sustainability rating between 2014 and 2020. (c) Wal-Mart social sustainability rating (employee)
between 2014 and 2020. (d) Wal-Mart social sustainability rating (community) between 2014 and
between 2014 and 2020. (d) Wal-Mart social sustainability rating (community) between 2014 and
2020. (e) Wal-Mart governance sustainability rating between 2014 and 2020. Data source for (a–
2020. (e) Wal-Mart governance sustainability rating between 2014 and 2020. Data source for (a–e):
e): CSRHub Ratings (www.csrhub.com).
CSRHub Ratings (www.csrhub.com (accessed on 4 February 2021)).

As a piece of additional evidence for Wal-Mart’s environmental performance specif-

ically, we applied the product impact measurement framework of the Impact-Weighted
Accounts Initiative (IWAI) provided by Harvard Business school [62]. As shown in Figure
3, we plotted Wal-Mart’s monetary environmental intensity from 2010 to 2018 using two
measurements: “Total Environmental Intensity (Revenue)”, which represents the com-
pany’s environmental damage of water and air emission per unit of sales; “Total Environ-
mental Intensity (Operating Income)”, which represents the company’s environmental
damage to water and air emissions per unit of operating income. This allows us to observe
the time trends in their monetary valuation of environmental impacts, including before
 environmental damage per unit of sales gradually decreased over time, especially after
2016, while the environmental damage per operating income increased immediately after
2016 but then gradually declined after 2017. This suggests that the environmental intensity
in terms of operating income had a lag to show the effects. Still, in general, the environ-
Sustainability 2021, 13, 1726 mental performance showed a significant improvement after 2016, which is consistent 14 of 18
with what we found using the ESG score and Wal-Mart Sustainable report, as discussed
above.

Total Environmental Intensity Scaled by Revenue

-1.02%
-1.12%
-1.22%
-1.32%
-1.42%
-1.52%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Total Environmental Intensity Scaled by Operating Income

-22.00%
-24.00%
-26.00%
-28.00%
-30.00%
-32.00%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Figure 3. Wal-Mart monetized environmental intensity (data source: IWAI).

Figure 3. Wal-Mart monetized environmental intensity (data source: IWAI).

5.2. As
Maersk with IBMin
documented (TradeLens)
the literature, blockchain technology can contribute to the sustain-
ability performance of the shippingSupply
5.2.1. TradeLens: Blockchain-Based industry. Forof
Chain instance,
Maersk Jović et al. [32] perform an
with IBM
extensive review of how blockchain-based systems improve maritime
Maersk, an integrated shipping company, launched pilot blockchain transportation
technologysus-
to
tainability. The blockchain-based system adopts electronic paperwork, which
enhance global supply chain flow transparency. Partnered with IBM, they established a significantly
contributes to environmental
blockchain-based protection
platform called by reducing
“TradeLens” carboninemissions.
in logistics DecemberFurthermore,
2018. The ship-a
sustainable supply chain contributes to supply chain performances in the logistics
ping industry is composed of multiple brokers that cause a long value chain through man- domain,
ultimately reducing emissions and bringing benefits to public health and the country’s
ual processes in their supply chains [63]. Maersk expected to enhance the transparency of
reputation [65]. Another potential sustainability benefit is to promote economic growth
its global supply chain by facilitating global trade using the “TradeLens” platform, which
by reducing shipping costs with high visibility [66,67]. They performed manual processes
uses blockchain technology to enable users trading in a “simple, secure and real-time en-
with multiple brokers in the shipping industry [63]; however, a blockchain-based system
vironment” [64]. After 2019, this platform solution was used by more than 60 in-network
will remove those brokers. This direct transaction improves cost-effectiveness (e.g., com-
members, including ocean carriers and inland carriers, worldwide ports, and terminals
mission). In terms of social sustainability performance, the blockchain-based system can
and custom authorities. According to the 2019 Maersk sustainability report
achieve a better social aspect, enhancing human rights and fair working environments. The
(https://www.maersk.com/about/sustainability/our-sustainability-strategy (accessed on 4
blockchain system can monitor the system based on an immutable record system [2,32].
February 2021)), they analyzed the trade trends of their terminal in India, and this showed
To our acknowledge, there are many potential positive sustainability enhancements by
that the simplified transaction processes by the blockchain-based system reduced their
the blockchain-based system in the logistics domain. Below, we discuss how sustainable
total operating costs. In particular, exporters and importers in Mumbai reduced their costs
performance could be improved in Maersk after they adopt TradeLens.
by approximately 15% of total costs than before adopting blockchain technology.
Westergaard-Kabelmann
5.2.2. (2019)
The Effects of TradeLens onpoints
Maersk out that documentation’s
Supply related average time was
Chain Sustainability
significantly
Maersk initiated a pilot program using TradeLens in 2018, so there is“secure,
reduced thanks to the simplified exchange system with no directimmutable
evidence
for improvement of sustainability performance in their annual reports. Unfortunately, we
do not have access to either CSRHub or IWAI to perform a third-party evaluation of
Maersk’s sustainable performance as we did for Wal-Mart. However, Maersk’s annual
report showed indirect evidence that the blockchain-based system influenced their overall
sustainable performance. In the 2018 Sustainability Report, Ms. Skou, the CEO of Maersk,
mentioned: “We continue to develop our blockchain documentation solution, TradeLens,
to improve our customer experience and create access to trade, as digitising information
can drive down the cost of trade, reduce the occurrence of corruption and support job
creation.”. In this message, Maersk expected to improve its economic aspect (e.g., cost
Sustainability 2021, 13, 1726 15 of 18

of trade) and social sustainability (e.g., reducing corruption and supporting job creation)
by adopting TradeLens. According to the 2019 Sustainability Report, Maersk introduced
its blockchain-based system TradeLens and discussed how the simplified transactions
by TradeLens could help to reduce costs. The report covers ESG issues, objectives, and
sustainability performance. Despite the fact that they do not show the direct impact of
blockchain technology on sustainability, it is evident that there are potential improvements
in the future.

6. Conclusions and Future Directions

Improving supply chain sustainability is an essential part of achieving the UN’s sus-
tainable goals. The blockchain-based supply chain is gradually growing. Using distributed
ledger technology, the blockchain platform provides a digital system and database to
record the transactions along the supply chain. All the information is agreed upon and
then shared among supply chain actors. This decentralized database of transactions brings
transparency, reliability, traceability, and efficiency to supply chain management.
This paper focuses on supply chain management and its sustainability performance
in the areas of environmental protection, social equity, and governance efficiency. We
assessed the extent to which the three sustainability indicators can be improved along
supply chains based on blockchain technology. In light of three bodies of literature, i.e.,
sustainability, supply chain management, and blockchain-based supply chain, we assem-
bled the studies using systematic literature analysis. We found that studies focusing on the
impact of blockchain technology on sustainability are continuously increasing in recent
years, claiming the positive effect of blockchain platforms on sustainability.
In addition, we provided a case study on how supply chains can take advantage of
blockchain technology by focusing on the collaboration between the Wal-Mart food supply
chain and IBM Food Trust. We investigated Wal-Mart’s annual sustainable performance
report and external ESG ratings before and after adopting the IBM Food Trust. We showed
that blockchain technology improves waste management and provides food safety, health,
and nutrition along the Wal-Mart food supply chain. This evidence suggests that we
could use the potential quantifiable sustainability indicators (ESG ratings) for future study.
Additionally, we added another case study related to Maersk in the logistics area. Even
though there is no direct evidence suggesting that TradeLens, a blockchain-based system,
improved Maersk’s sustainability performance, the literature and Maersk’s Sustainability
Report imply that TradeLens is associated with possible positive performances.
Recently, many companies have been adopting blockchain technology in their supply
chains (e.g., Ford, Unilever) not only in the food and logistic industry but also in many
other industries, such as healthcare (e.g., Pfizer and Change Healthcare) [41], energy (e.g.,
Shell and Siemens), bank and finance (e.g., Visa and HSBC), travel (e.g., Delta airline and
British airways), insurance (e.g., MetLife and Prudential), and even government (e.g., Seoul
Metropolitan Government and Monetary Authority of Singapore). This growing popularity
of blockchain technology provides us with opportunities to extend the literature on the
effects of blockchain technology on corporate management that are beyond our study. One
direction for future investigation could be through the lens of stakeholders (e.g., suppliers,
distributors, and end-customers), with implications that could improve the design of
blockchain-based sustainable supply chains more efficiently by taking other stakeholders’
effectiveness into consideration [25]. In addition, within the scope of sustainability, though
this study and the majority of the literature focus on the three pillars of sustainability
separately, the three pillars are very likely to reinforce each other. Future work might
consider the interacting effects of the three pillars of performance.
Finally, although the literature and the two case studies suggested that supply chain
sustainability performances can benefit from blockchain technology, it is worth noting that
this article neither estimates correlation nor identifies causal inference between adopting
a blockchain-based supply chain and sustainability performance. Even a previous study
examined the relationship between the blockchain-based supply chains and sustainability
Sustainability 2021, 13, 1726 16 of 18

based on the literature [2]. However, given that a growing number of companies have been
adopting blockchain technology, an empirical analysis estimating the effects of blockchain
technology on sustainability performance could be a promising research question for future
investigation with theory development.

Author Contributions: Conceptualization, A.P. and H.L.; Methodology, A.P. and H.L.; Formal
Analysis, A.P. and H.L.; Resources, A.P. and H.L.; Visualization, A.P. and H.L.; Writing—Original
Draft Preparation, A.P. and H.L.; Writing—Review and Editing, A.P. and H.L.; Funding Acquisition,
A.P. and H.L. All authors have read and agreed to the published version of the manuscript.
Funding: This paper was funded by a research awarded from the Center for the Study of Blockchain
and Financial Technology at Morgan State University.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Publicly available datasets were analyzed in this study. This data can
be found here: https://www.hbs.edu/impact-weighted-accounts/Pages/default.aspx (accessed on
4 February 2021).
Acknowledgments: We would like to thank participants in the HBCU Blockchain Research and
Innovation Conference 2020 for helpful comments.
Conflicts of Interest: The authors declare no conflict of interest.

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