Traceability is rapidly transforming supply chains by fostering transparency and accountability throughout every stage of a product’s lifecycle, a shift that is particularly critical for the emergence of circular supply chains. Unlike traditional linear models—where resources are taken, made into products, and eventually disposed of—circular supply chains prioritise durability, repairability, and material reuse to reduce waste and promote sustainability. This comprehensive tracking of materials from sourcing to end-of-life ensures organisations can make informed decisions on quality control, regulatory compliance, and product reuse, forming the backbone of circular economy success.
At the heart of this transformation is traceability’s ability to enable data sharing, lifecycle tracking, and compliance with evolving regulations such as the European Union’s Digital Product Passports (DPPs), set to become a standard by 2030. These passports act as digital identities for products, offering consumers real-time access to vital information on composition, sourcing, environmental impact, and recyclability through accessible technologies such as QR codes or NFC tags. For instance, Victoria’s Secret & Co. recently introduced DPPs for select clothing lines, empowering shoppers to engage with the product lifecycle transparently.
Technological advances are playing a pivotal role in realising these traceability capabilities. Blockchain technology, combined with the Internet of Things (IoT), provides a secure, tamper-proof ledger that tracks products transparently across their journey. This integration contributes to the automation of supply chain processes through smart contracts, improving efficiency and trust while safeguarding data integrity. The Eviden Digital Passport Solution, built on IOTA’s distributed ledger technology, exemplifies this by securely tracking sustainability metrics and carbon footprint data for automotive batteries, aligning with stringent upcoming EU regulations. While blockchain delivers unmatched security, its challenges such as scalability and detailed data handling are effectively mitigated when combined with IoT and DPPs, creating a robust and dynamic traceability ecosystem.
The business case for traceability extends far beyond regulation compliance. It significantly improves resource efficiency and helps mitigate Scope 3 emissions—the indirect emissions arising from supply chains—which constitute approximately 90% of many companies’ carbon footprint. Data from various sectors, including retail giant Walmart’s Project Gigaton, launched in 2017, illustrates how enhanced supply chain transparency and supplier collaboration using blockchain can reduce emissions and waste, supporting broader corporate sustainability targets. Patagonia’s commitment to using recycled materials in nearly all its products by 2024 underscores how traceability aids in rigorous material selection and emissions reduction, having already prevented thousands of tons of CO₂ emissions.
Consumer demand is a formidable driver in this shift. Surveys show that 80% of consumers expect brands to disclose their environmental impacts, 71% are willing to pay a premium for products with clear, traceable sustainability credentials, and younger generations demonstrate an even stronger preference for eco-friendly goods. Transparent product labelling enabled by traceability—such as Nestlé’s QR code-enabled coffee supply chain transparency or H&M’s blockchain-tracked cotton sourcing—enhances trust and encourages more responsible purchasing decisions.
However, implementing comprehensive traceability systems is not without challenges. Complex global supply chains involve multiple stakeholders, countries, and regulatory environments, complicating data sharing and integration efforts. High costs and resource needs pose significant barriers, especially for small and medium-sized enterprises. Power imbalances between large brands and suppliers often result in limited data transparency, and the absence of standardised protocols can fragment efforts. Furthermore, regulatory diversity adds another layer of complexity for multinational operations.
Addressing these obstacles requires collaborative approaches anchored in standardised frameworks like GS1, which provide a common language for product identification and data sharing. Platforms such as Wholechain leverage these standards to improve interoperability and foster trusted collaboration across supply chains. Experts emphasise aligning financial incentives among stakeholders to create Minimum Viable Ecosystems—partnerships where all participants benefit commercially and sustainably.
Successful traceability systems also rely on thorough supply chain mapping, standardised data protocols, strong supplier relationships, regular audits, and sustained employee training. Real-world successes like Walmart’s partnership with IBM for blockchain-powered food safety traceability, slashing recall times from days to seconds, exemplify the practical benefits. Nestlé’s coffee traceability initiative not only boosted consumer trust by 30% but also increased sales by 25%, reinforcing the commercial value of transparency.
Looking ahead, the traceability market is expected to grow substantially, driven by advancements in 5G, digital twins, artificial intelligence, machine learning, RFID, and expanding blockchain standardisation. These technologies not only enhance real-time supply chain visibility but also enable sophisticated predictive analytics and automated decision-making, further embedding sustainability into operational practices. Innovations such as Digital Product Passports are setting new benchmarks for tracking environmental, social, and governance (ESG) data alongside traditional product information.
Collaboration remains crucial to progress. Initiatives like No Palm Ingredients, which transforms agricultural waste into sustainable palm oil substitutes with transparent traceability practices, have secured significant co-financing to scale impact. Similarly, C2CA’s concrete recycling and carbon emission reduction efforts highlight the value of integrated traceability in circular construction materials, attracting major EU research funding and private investment.
In sum, traceability is much more than a compliance tool; it is the essential infrastructure for circular supply chains that reduce environmental impacts, meet evolving consumer expectations, and support resilient, profitable business models. As companies continue to invest in interoperable technologies and foster deeper collaboration, traceability will solidify its role as the backbone of sustainable supply chains, driving the circular economy forward into the next decade.
Source: Noah Wire Services
