Today we look at how the concerned consumer can be sure that a particular product has come from ethical sources, with David Coleman from IOV42. In this Wednesday Interview we're talking timber.
Ethical Sources
Anthony:
Well today, my guest is David Coleman who is chief product officer at iov42. David, welcome to the Sustainable Futures Report.
David:
Thanks. Thanks for having me, Anthony.
Anthony:
It's a pleasure. Now concerned consumers want to know where what they buy has come from. They really want to know that every link in the supply chain can stand up to scrutiny, that materials come from responsible sources, and that all workers in the production process are properly rewarded. In a recent episode of the Sustainable Futures Report I spoke to Shameek Ghosh of TrusTrace about how he can do this for the fashion industry. He can provide a tag with a QR code on it and scanning the QR code tells you exactly where that garment has come from right back to the original materials. Now, your company, iov42, has linked up with Preferred by Nature to create TimberChain, providing real time supply chain data for timber. Before we get into that in detail, please tell us a little bit more about iov42 and who is Preferred by Nature?
David:
Yeah, that's a good question. So iov42 is actually... I guess we can deal with the whole blockchain question you raised. We're a blockchain company, or a DLT company. Probably better to say a DLT company.
Anthony:
DLT?
David:
Distributed ledger technology. So blockchain really is a subset of a wider group of technologies called distributed ledger technology, which is basically a distributed database of transactions that happened between identities. We often talk about us being blockchain inspired rather than truly blockchain, but for a lot of people, the term blockchain is an entry point. So as soon as you say, "Yes, we're blockchain," they kind of have a reference point on where to place you relative to other organisations. So yeah, we're a blockchain company or a DLT company, has built our own technology, our own platform with specific goals in mind.
So what do we mean by that? We're very much targeting... It's permissioned. We're very much targeting enterprise and government type use cases. And the other thing I'd say about it as well as... So technology is great, making it accessible to the business is really important. So we spent a lot of time building the model between the business and the underlying technology. And that's what we use and apply in Timber Chain. So Timber Chain is about taking that model and applying it to the timber industry, timber supply.
Preferred by Nature are one of the biggest certification agencies. So they will do things such as FSC certification. They'll also do auditing and not just in timber, in all kinds of sustainability related industries. So they're looking at the whole blockchain space, DLT space, and saying this is a potential technology that could really help in this space. How do we create a more sustainable supply? So we got talking to them, they got talking to us and then, and that's how it kick started. They brought one of their clients who was an exporter out of Malaysia of tropical hardwood. So we built that first prototype with that organisation and then we're expanding out from there.
Anthony:
So this allows this timber exporter to be sure that the materials which it is exporting come from, if you like, certified forests, or they come from responsibly managed plantations or forests, is that correct?
David:
Yes it is. But I would say... So it's more than certification now. And the reality is... So blockchain in these kind of applications has the problem of... You may have heard of the garbage in garbage out.
Anthony:
Absolutely. I was going to bring that up.
David:
So blockchain is great at telling you something hasn't changed. It's not great at telling you that what was originally put in was correct. So the way we've approached that, and with this model that we built on top really allows for this kind of thing, is that we believe in these kind of scenarios where you've got multiple organisations which have different roles and different parts throughout the supply chain, they add in the data. It's about knowing the integrity of the data and the authenticity of that data, and the origin of that data. Who provided the data? Can we hold them to account for providing the data? I.e. We know who it was, who added it. And then obviously, can we be sure that the data is still what they said it was at the time they added that data? So with our model, it's all about actually it's about increasing that accountability.
It's about also making it easier. The way I think of it is we're trying to make things easier for the good actors and harder for the bad actors. That's really our goal. Because there are people and organisations, and we're fortunate to be encountering them, who really want to do the right thing. They believe that they can be sustainable. They believe that we can source timber in a sustainable way. I mean, I've seen so much frustration with the bad actors and they want to do as much as they can to make it hard for the bad actors, and it's really nice to be able to help them and facilitate that objective.
Anthony:
So your timber exporter can now assure his customers that it's an ethical product which he's providing to them. Now does that go as far as giving that information to the final consumer? I mean, the person perhaps who buys a piece of furniture or beams for putting in their house?
David:
So I think we're on the journey to that. The reality is, I mean, you can go down to your local DIY store and buy wood, and most wood you buy off the shelf in the high street has FSC stamps on it, or PFC stamps on it. So people are kind of aware of that... And I think to a certain extent on the consumer side, there's still an element of trust in there, in peer certification. What we're actually seeing, though, and it's great you've talked about consumers, because I think the consumers have had a real big influence in all the change that we're seeing. The desire of the public that we've got to do something and the pressure they're putting on politicians to try and do something about it. So we're seeing a lot of regulation coming in and regulation is saying certification isn't enough. We need more.
So if you're particularly the importer, loads of the onus is being put on the importer in all the different countries. Particularly this is the EU and UK in particular, but I know America is similar, and elsewhere, they're all looking at this, really. So he's got to do his due diligence. He's got to understand he can no longer just be concerned with his immediate supplier who maybe the exporter, but he's got to be thinking about tier two, tier three. They've got to actually be... As much data as available, going all the way back, so they can do their due diligence, they can do their risk management, and they can be much more confident in saying, "Yes, this has come from a sustainable source."
So they're currently... It's that relation between the export and the importer have been the main driver initially. Now what we're doing is expanding it both further upstream all the way back to source. We have the vision of loggers on the road with their mobile phones creating records that will go into the ledger and then flow downstream. And then all the way through to the consumer. The challenge with blockchain and DLT related technologies is the education and understanding of what they're actually being told. What does it actually mean that this thing... We don't want it to turn into just an FSC stamp again, being able to convey that, so I think we're on the journey to that consumer involvement. But I think that we'll see that, I think, because of the digital experiences that are being created for consumers, I think there'll be a way for them to consume sustainability as well through their devices, and start making choices based off what they're being told.
Anthony:
Right. Just a note on blockchain. One of the things that people continue to bring up when they're talking particularly about cryptocurrencies, which are based on blockchain, that is the immense power use for a blockchain. Now, is that environmentally supportable? Is the benefit of tracing your timber sufficiently important to offset the power, or does your system not use as much power as a Bitcoin miner and things like that?
David:
Yeah, so that was one of our primary concerns when we first set out building this technology, as as well as wanting to build something that was scalable as well as wanting be able to do this mapping, energy efficiency was right up there. And really a big part of that comes down to the choice of the consensus algorithm. So the famous issues around Bitcoin and Ethereum is the whole proof of work algorithm. So we don't use a proof of work. And whilst that's been great in terms of it really got the world thinking about this idea of DLT and blockchain and consensus and what have you, it's not a sustainable model. We have to find better ones. Obviously there's proof of stake, which the jury is still out really in terms of how the security around it in terms of do you really get the consensus you want?
The other one's proof of authority and that's the model we've gone with. So another way of thinking of proof of authority is staking your identity. So in a proof of authority network, actually the organisations running the nodes are actually known. So it's very in stark contrast to a Bitcoin or Ethereum where you don't know who's running the nodes. In a proof of authority you do know. They're actually staking their identity. So if they do the wrong thing and they're kicked out the network, then identity suffers and they don't reap any of the rewards of being part of the network. So that's the fundamental model we've gone with.
We think it sits also much nicer in the enterprise space where actually knowing where the data is is really important, knowing that who's running it fits in with the regulatory schemes that business needs to fit into. All these kind of things are really important. For us identity is really key to the whole thing. It's very, very central. And whether it be identity of organisations or individuals participating or the nodes, or identity of the assets flowing through it as well. So it's a really big thing for us is identity.
Anthony:
Okay, well looking at a completely different area, but one which is very important to sustainability. I see from the website that you've been working on carbon markets.
David:
Yeah, so we've had a really interesting journey. And I think this is probably true of a lot of blockchain DLT things. A technology trying to find the problems to solve. And part of that journey, part of that problem... Because of the model we've built and the fact that it could be used across all kinds of use cases, that's been a blessing and a curse at the same time, because we've got this great thing which we can use all over the place, so where we can use it first? So one of the very first areas we looked at is the whole thing around carbon credits and the generation of carbon credits. And actually in a way which is quite closely related to the whole forest side of things as well.
Because in the area we were looking at, it's the same source, it's the forest. So one of them is looking at forests that are being cut down in a sustainable way, and the other one is looking at forests that aren't being cut down at all and being used as carbon sinks. But being able to capture... Again, it's exactly the same principle. You've got this carbon credit, which is a created asset off the back of a forest. How do I trust that that carbon credit really is what I'm being told it is? So there's the land that represented it, the fact that it's got approval to use. There's an authority that is signed off the whole process, the methodology around it. There's some satellite data that should be attached to it to confirm that it's still a forest. So there's loads of data from loads of different sources and you need to be able to attach those to the assets.
So the time the carbon credit is presented to the market, whoever's looking at it can make a judgment. They can say whether or not they... They can make the decision whether or not they trust the carbon credit really represents what they're being told it trusts. And that was one of the fundamental things for us was that recognising that trust is very subjective. We, as IOV don't say, "You can trust this. You can't trust that." What we're trying to do is put the tools in people's hands so they can make the informed decision based on the data they're provided ,based on the guarantees around that data. And then they make the decision, "Yeah, I trust that carbon credit. I'm going to buy it." Or, "I trust that wood. I'm going to buy it." And we're looking at taking that principle beyond just timber into other things like cotton and soya and some of the other commodities, but also even further upstream like post consumption - same principles can be used in terms of circular economy and recycling and what have you.
Anthony:
Right, so will I get to the stage one day where I can scan a code on my restaurant menu and see where it's all come from?
David:
I think that's the dream, shall we say. How close we are to that... I mean, who's to say? I think one of the struggles we face, and we tried to be very, very careful with this, is the hype. I mean, I know you've been involved and close enough in this space to know that there's been a lot of hype around blockchain, and we've seen the hype come and go, come and go and what have you, and we've had ICOs and now we've got NFTs and these things are damaging the perception of the technology. So we really are very, very careful about how he present it to businesses, how we present it to the wider public, to try and say this isn't about hype. This is about real business, about trying to make real differences.
And it's not about... We haven't got a token, for example. I understand the ideas around token economy and incentivisation, but we're also seeing the harmful effects of it. When you create a gold rush, you attract all kinds of parties. Like I said, this is about the good actors wanting to do the right thing. How do we enable them? And that's where we focused our technology.
Anthony:
It's an interesting world, isn't it? And it's rapidly changing.
David:
Yeah, it is rapidly changing. There are huge challenges. And if what we're doing with the technology and others like us, we can make those small differences and it all adds up to what we're all trying to achieve. So it's exciting time at the same time with big challenges. There are opportunities to make a difference. That's what we're trying to do.
Anthony:
Yes, I think this is one of these topics that I'd like to revisit in a year's time. So maybe we'll talk again in 12 months, because I think an awful lot could develop even in a shorter time as that.
David:
Yeah, definitely. I mean definitely seeing this from... It's funny, I talk about the hype cycle. I've also seen talking to people in industry at the peak where they're like, "Oh man," like saying in banking, "This can transform the way we do banking." And then literally a year later, I could almost describe these people as depressed about the technology. And what I think's really happening is that there's been a great learning time through the hype of understanding what the technology can do, but also what it can't do. We saw far too much people trying to use blockchain for something that wasn't a blockchain problem. But now people have had gone on that journey, they're really starting to understand, "Well actually it can help me with that, so let's actually use it for what it's good for rather than using it for what it's not good for."
And I think that's going to really help it mature as a technology where it really gets applied in the right places. And we want to be one of those organisations that is helping people apply it in the right way. I always describe it as one of the most cynical blockchain companies, if that makes sense. We really want people to use it in the right way in the right place and realise the value from it as opposed to discovering later that the value isn't really there.
Anthony:
Well, that's a very important point to end on, I think. Thank you very much, David. Thank you for sharing your ideas with the Sustainable Futures Report.
David:
Thanks very much. Thanks for having me.
Thanks to David Coleman from IOV 42.
Temperatures
As we sit here sweltering in record temperatures it will be interesting to see whether predictions come true. I shall be looking at them on Friday. There are dire predictions that there will be serious illnesses and fatalities as a result of this week’s heatwave. We should know the truth by Friday. We are warned that unless we stop greenhouse gas emissions, we can look forward to extreme heat like this every year from now on. My response to that is that even if we do stop greenhouse gas emissions the risk will remain. We have increased the concentration of greenhouse gases in the atmosphere to a level which causes this sort of extreme weather. We can only avoid it by reducing the amount of greenhouse gas in the atmosphere and that is possibly the greatest challenge facing humanity for all sorts of reasons.
I'll be exploring all this on Friday. I'm always open to your ideas, so if you care to share your thoughts with me before Thursday I can share them with the rest of the listeners.
Should I Vlog?
I've been looking at the possibility of vlogging, but I'm not convinced. A vlog might be a better product in some ways, but I'm assured that I have a great face for audio. Also, where do you listen to the Sustainable Futures Report? If you're driving, jogging, working out in the gym or cooking, painting or making a sculpture you can't really watch a video at the same time. Maybe I'll do just one and see how it goes. I'll research it over August. I’ll also research pop filters.
For the moment that's it. Thanks once again to David Coleman and I'll be back on Friday.
I'm Anthony Day.
That was the Sustainable Futures Report.
Until next time
Sources
https://iov42.com/our-solutions/timber-chain/
https://www.ledgerinsights.com/two-blockchain-solutions-target-timber-supply-chain-sustainability/
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