- Social responsibility is the new normal for business
- Increasing transparency in complex supply chains is a challenge for business
- Blockchain may provide a solution to identify, trace, validate and assure to entire process
In Chartered Accountants ANZ’s latest publication, the Future of Business, Social responsibility is the new normal. It states "to be considered ‘a success’, businesses need to do more than make money. Increasingly, customers, shareholders and staff are demanding that businesses consider their broader role and impact on society". Accountability is also high with businesses increasingly in the spotlight.
According to the research, 87% of businesses are involved in at least one action to build their social responsibility profile, and in five years’ time, this is expected to grow to 94%. The paper notes that digital advance has accelerated this trend – a business can easily promote its ethical conduct, but there is also nowhere to hide for businesses not meeting community expectations. But it’s not just a risk, there is a strong business case for considering broader impacts. Businesses that have a reputation for socially responsible behaviour can perform better in attracting talent and growing revenue.
A key area of both risk and opportunity for business is their supply chain. Olivia Tyler, Director Sustainable Business Services at Westpac Group explained some of the current challenges to sustainable sourcing and transparency in supply chains in her TED@Westpac talk. Olivia explains the sheer complexity of the supply chains of everyday items and the level of data needed just to trace one aspect through the supply chain. This data is needed to inform decision making, but it’s not just data – it could be associated with the destruction of natural habitats or poor labour practices.
Our 2017 publication, the Future of Blockchain, noted that blockchain (or distributed ledger technology) provides transparent information to all market participants for historical and real-time transactions. In her talk, Olivia asked "What if we could combine machine learning, as an application of artificial intelligence, and blockchain – to not just identify and trace, but to validate and assure that the right thing from raw material to finished product was done correctly all the way through the process".
The Future of Blockchain suggested blockchain solutions could allow information to flow both ways; for example, individuals might be able to better understand the provenance of goods and services that they buy. This could allow more informed consumer decision making. The potential tracking of supply chains via blockchain will also provide greater transparency and simpler processes for businesses. In addition, there is likely to be less cost and time involved in tracking product sources, thus adding more benefits to businesses.
Examples are emerging of leading practices to use blockchain or distributed ledger technology to increase supply chain transparency. As I noted in April’s article on SDGs, WWF are partners in a project in Fiji using blockchain to improve transparency in the supply chain and stamp out illegal fishing and human rights abuses in the tuna fisheries industry. Sydneybased Full Profile is piloting distributed ledger technology in the grains industry. The goal will be to provide field-to-plate provenance tracking, so that buyers and consumers can be certain of where their products come from. It will also help growers and traders with smart contracts to ensure that payments are made as soon as goods are delivered or ownership changes. Additionally, Everledger helps companies to track the provenance of diamonds, allowing buyers to check whether stones were mined in regions with forced labour or whether proceeds from previous sales were used to fund violence.
In her conclusion to her TED Talk, Olivia reflects that the emergence of these technologies gives a resounding sense of hope that there are solutions and that by challenging the status quo and thinking creatively and changing our mind set around how things are done we can change the game. And as I reflect on Olivia’s earlier question, I hope that we are now past the what if stage and that it is now just a case of how quickly can we implement the technology.
The report also explores the public expectations of the audit profession, further to our recent research on what the public wants from audit – which showed strong public support for the role of auditors to be expanded into areas such as the prevention of corporate collapses. Also in that survey we asked how technology might affect the audit process, the most popular response was that respondents believed it will make audits more efficient. Technology is seen as an enabler. In that evolution, technology has a key role to play in developing the skills of the profession.
The Future of Blockchain
The applications and implications of distributed ledger technologyRead now