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Sustainability
November 06, 2019

Committing to highest transparency in our cobalt supply chain

Car manufacturing underway at Luqiao manufacturing plant in China
For an electric car to really make a dent in terms of sustainability, zero emissions in the driving cycle are not enough. One example is that we need to ensure that raw materials used in our batteries are fully traceable. Our procurement experts have now enlisted the help of cryptography to solve that.

Our strategy as a company is clear: we are going all electric. Last month we revealed our first fully electric car, the XC40 Recharge, as well as a Recharge carline that includes all our chargeable cars. By 2025, we expect half of our global volume to consist of fully electric cars, with the rest hybrids.

In order to power all those cars, we also need lots of batteries. So earlier this year, we signed a huge supply deal with two of the world’s leading battery makers: CATL and LG Chem. At the same time we are doubling down on ethical sourcing: making sure that the raw materials in our batteries, especially minerals like cobalt, come from an ethical supply chain.

Traceability of raw materials used in the production of lithium ion batteries, such as cobalt, is one of the main sustainability challenges faced by car makers. We are committed to full traceability, and so far we have worked with this in a number of ways, such as close collaboration within our supply chain, on-site visits and third party validation.

Volvo Cars XC40 Recharge

Now, we are taking that commitment even further by using blockchain technology to monitor and trace our cobalt – and we are the first car maker to do so globally. Blockchain technology, which establishes a transparent and reliable shared data network with the help of cryptography, significantly boosts transparency of the raw material supply chain as the information about the material’s origin cannot be changed undetected.

In this particular case, the data in the blockchain include the cobalt’s origin, things such as weight and size, the chain of custody and information establishing that the behavior of each participant (think of mining companies, part makers, logistics firms) in the blockchain is consistent with ethical supply chain guidelines. This approach helps create trust between everyone in the supply chain and will further help us ensure that the cobalt in our electric Volvos is sourced responsibly.

Blockchain is not a replacement for all those other ways of checking the traceability of our raw materials, but it is another important addition to our ethical sourcing toolbox. With today’s announcement, we show that we are not only recognising the challenge of ethically sourcing cobalt, but are also taking active steps to solve it.

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