The digitisation of processes and systems is a clear, ongoing trend in industrial operations. Therefore ISCC certified companies and the ISCC scheme were curious to investigate how digital technologies such as blockchain could be applied to the certification process to bring benefit to all. In this project Asahi Kasei, Arçelik, Borealis, EVBox, Itochu, ISCC, Marubeni, Neste, Philips Domestic Appliances, Shell, and Trinseo came together with Circularise to explore applying digital technologies to the mass balance process.
ISCC PLUS is a chain of custody certification scheme designed to guarantee the bio-based, or circular content of chemicals and plastics. The certification requires companies to follow the mass balance or material segregation chain of custody models. As mass balancing can be implemented in already existing manufacturing processes, it is the method of choice for most ISCC PLUS certified companies.
“Though multiple chain of custody models exist, at Borealis, we believe mass balance is the best model for right now to replace virgin materials in the materials mix, as we aim for a more circular future. We’re proud to be a part of this project where the information linked to the materials is digitally tracked, transferred, monitored and controlled throughout the supply chain.”
- Chris McArdle, Vice President Circular Economy Solutions and New Business Development at Borealis
ISCC PLUS is a reliable standard for mass balanced products. Its integrity is relies upon having all major parties in the supply chain certified, otherwise the material certification is invalid. This creates an adoption challenge for the certification, as all companies must separately decide to adopt the certification.
If the certification process is streamlined, more companies and products can be certified, therefore increasing the flow of sustainable materials and facilitating the transition to sustainable operations in the chemicals industry. The increased supply means that economies of scale can be reached for sustainably sourced materials, making them a competitive alternative to virgin sourced materials.
The aim of the project was to investigate how a blockchain infrastructure, such as the Circularise software platform, could be used to bring benefit to the entire ISCC PLUS value chain.
The ISCC scheme was happy to support the project focusing on how to apply blockchain technology to complement their scheme and align with the trend of digitisation of heavy industries. All parties involved were interested in the wider topic of supply chain traceability and how certifications can be incorporated into digital product passports, to gain more granular and reliable product sourcing data.
Francesca Reverberi, Senior Vice President and Chief Sustainability Officer at Trinseo says; “Having an unswerving belief in scientific approaches, Trinseo fully supports this blockchain initiative to enhance transparency and accuracy of the flow of sustainable materials in the value chain. The collaboration with Circularise and ISCC Plus will definitely benefit all stakeholders including end-users while driving the realisation of circularity.”
Members of the supply chain are interested in obtaining a greater level of visibility beyond the information received in the sustainability declarations required for ISCC PLUS certification.
Parties early in the supply chain like Borealis are interested in implementing standard reports to ensure that each member of the supply chain possesses a valid ISCC certification, as this is annually revised. Similarly, material suppliers like Neste are looking for a way to communicate to downstream customers that they are ISCC PLUS compliant. This means companies need to be able to prove the chain of custody according to ISCC PLUS requirements, and using blockchain provides extra assurance of this via the creation of immutable records.
“We aim to drive a positive impact on biodiversity, while achieving a nature-positive value chain. To make sustainability a shared benefit to society, transparency along complex value chains is required. This is currently not easily available. Our goal in this project led by ISCC, Circularise and forerunner companies is to enable complex value chains to learn and take full advantage of innovative digital solutions, aiming to efficiently share data and validate sustainability characteristics of their products. Transparent product sustainability attributes will benefit industry, consumers and society.”
- Isabella Tonaco, Vice President of Strategy Execution & Marketing at Neste.
Parties further down the value chain are also interested in gaining more granular information on the sourcing of the certified materials they are purchasing. For example, being able to see from the material chain of custody specifically where it came from and what base feedstock it came from. Such data would then allow brands like Philips and Arçelik to make more specific sustainability claims about the composition of their products. The “digital thread” through the supply chain that blockchain provides, also interests companies to help them figure out how to engage with consumers and incentivise sustainable consumption.
Nihat Bayız, CTO at Arçelik Global explains; “We are excited to be part of the project to work with Circularise and ISCC PLUS certification that enables a transparent and digital flow of information regarding innovative and sustainable materials through the supply chain, which will help us ensure the tracking of accurate and transparent data, and ease overall circular economy implementations in the lead-up to full transition.”
Companies are curious to investigate how blockchain can be utilised to include checks on their bookkeeping process that automatically confirm compliance with ISCC standards and streamline processes.
ISCC PLUS certification requires strict bookkeeping in order to trade sustainable material credits, which is often a manual process of record keeping on spreadsheets. Therefore certified companies were also eager to explore how a digital solution could be applied to help automate the bookkeeping process. An ideal solution would ensure correct mass balance keeping, preventing negative stock in quarterly periods, and correctly adjusting balances from correct locations when credits are transferred.
From an auditing perspective, it was identified that a more standardised data format for sustainability declarations could lead to greater processing and auditing efficiency. This would further improve the scalability of sustainable certification schemes such as ISCC PLUS.
To begin the process of digitising the ISCC PLUS certificates, Circularise created a new module of its software - MassBalancer. The first step of setting up the software is to create the business user profile, which includes adding the ISCC PLUS certificates for the specific manufacturing sites. This allows the company to prove to members of the supply chain that their business possesses valid certificates to trade sustainability credits.
For ISCC PLUS, sustainability credits are sent in the form of a sustainability declaration which contains information about the sourcing of the material and information linking it to a particular transaction between companies. Sustainability declarations can now be automatically generated using the MassBalancer software and sent to a customer with the batch of physical material. As sustainability declarations are received and sent, the balance of sustainability credits and record of transactions are automatically updated for the quarterly reporting required by ISCC.
When this information transfer is conducted over blockchain, the digital records are immutable, meaning that the information cannot be altered and sustainability declarations cannot be duplicated. This immutability means that certifications are even stronger, as records cannot be tampered with, and sustainability credits cannot be allocated (sent) twice.
With the MassBalancer software that has been developed, it is our aim to make mass balancing scalable across all product lines within businesses.
“As a supplier of plastics, fiber, and synthetic rubber, ISCC PLUS mass balance certification is becoming more important for us to advance the strategy. Many of our products are currently in the process of obtaining ISCC PLUS certification with much effort and time. A more efficient certification process is needed to achieve a sustainable society, and we have found that digital technology can plays a major role in this process.”
- Akira Nishizawa, Managing Director at Asahi Kasei Europe GmbH
Automation of manual bookkeeping processes frees up time and resources which can be dedicated to scaling mass balance and other sustainable business initiatives. Having an automatic system for record-keeping and credit balancing also drastically reduces the risk of human error and over-allocation. Digitising chain of custody information is also the first step to obtaining reliable supply chain visibility through systems like digital product passports.
“Certification will become more digital in the future. It will allow certification schemes to simplify the auditing process of supply chain actors and reduce the risk of mistakes. Companies will have an easier way to show compliance and adhere to auditing rules,” said Jan Henke from ISCC. “We are excited to have tested Circularise’s traceability software on ISCC procedures.”
With digitisation, not only is there a significant time saving for companies maintaining certifications, but it can also further strengthen the reliability of the certification. A system that’s easier to manage also decreases the barrier to entry for obtaining certifications and increases their scalability within businesses.
Making it easier to prove the sustainable sourcing of materials ultimately means more sustainable materials in use.
As sustainability declarations are currently self-generated by certified companies, a digital system could help create a consistent standard for this system which would also streamline the auditing process. This in turn increases the capacity and efficiency for auditors to deliver effective service and serve more customers (certified businesses).
To transform whole industries into more sustainable practices, a collaborative, system-level approach is required. Each actor in the supply chain has influence over this transition and value to gain through a coordinated innovation. Certifications play a key role in ensuring the reliability of sustainability claims, and it is clear that digital technologies will play a role in further strengthening the integrity of certification schemes. Improving the scalability of certifications throughout supply chains and internally within businesses can now be achieved by increasing the efficiency of the bookkeeping and certificate trading processes.
“At EVBox, our business model is based on building scalable and intelligent electric vehicle charging solutions in order to contribute to a greener future. We are very happy that this project with Circularise provides us with reliable tooling which enables us to trace the ISCC PLUS certified materials in our supply chain. We’re very curious to see how this project will evolve in the future in order for us to bring more sustainable solutions to the market."
- Wijnand Diemer, Senior Director, Product Management AC Development at EVBox
As a supply chain traceability software provider, Circularise will continue to develop its offering to meet the needs of industries such as chemicals and plastics, to facilitate the transition to the widespread use of sustainable materials. Our ethos is to act as a facilitator of system-level solutions by providing reliable and secure information transfer throughout supply chains. As more companies join our network, the richness of data transferred drastically increases, providing increasing value for Circularise software users.
“We are very proud to have worked with Circularise on this progressive initiative with ISCC. We are also very grateful to those who agreed to participate in our call to action. Marubeni has a complex relationship not only with the chemicals industry, but also with various other industries, and our contribution to the circular economy is essential for our future growth. In order to promote the use of recycled and bio-based chemicals, the use of Digital technology to instantly communicate and disclose information on raw materials to various stakeholders is becoming a reality.”
- Riichi Yamada, General Manager, Business Innovation sec. Chemical Dept.-Ⅳ at Marubeni Corporation