Sprint 2: Challenges with Robust Due Diligence Systems for Sustainable Cocoa Value Chains
A blog by Carlos Pedraza, a Frontier Tech Hub Implementing Partner, and Harry Sharp, a Frontier Tech Hub Coach.
This post captures learning from the second sprint of our pilot — ‘Integrating satellite and ground data to improve transparency to cocoa value chain’
We’ve generated key learning about how to use our pilot technologies (field applications, earth observation data, and blockchain) to create traceability and meet due diligence requirements in the cocoa value chain in Colombia.
By understanding the needs of key stakeholders, including farmers, field workers, technical assistance teams, and buyers, we’ve validated some assumptions, exposed key business requirements, and uncovered new technical challenges.
We’ll share our insights, with a focus on our proposed approach to addressing the challenges of integrating our pilot technologies to meet stakeholder needs. It provides new avenues for experimentation and will guide our next sprint.
Figure 1. General workflow that describes the due diligence and traceability related to cacao products and the origin farms.
Challenge 1: Understanding “due diligence”
Our conversations with key stakeholders during discovery work in sprints 1 and 2 revealed there’s no single interpretation of the requirements that must be met as part of ‘due diligence’ within the cocoa value chain. This creates a challenge when thinking about how to design a technical solution that will meet business needs and legal compliance.
To understand the importance of addressing this challenge, we must recognise the crucial role that ‘due diligence’ plays in enabling access to international markets. Consumers, regulatory bodies, and international organizations are increasingly demanding sustainable and ethical sourcing practices based on evidence. Simultaneously, multilaterals, NGOs, international cooperation agencies, the private sector, and government agencies have made multiple efforts to integrate environmental and social practices into the cocoa value chain.
By implementing a robust due diligence system, the cocoa value chain can demonstrate its commitment to environmental conservation, fair labor practices, and responsible sourcing, which, in turn, enhances reputation, builds consumer trust, and enables market access to countries with stringent sustainability regulations. For example, the European Parliament has adopted a new law to fight climate change and biodiversity loss, which obliges companies to ensure products, including cocoa, sold in the EU have not led to deforestation and forest degradation.
Our current understanding is that ‘due diligence’ refers to measures adopted by a company or organization to minimize the risk associated with obtaining and acquiring raw materials or products that may be linked to deforestation or legal non-compliance. We have aligned the protocols we’re developing in our pilot with this definition.
This means our solution aims to ensure that buyers, interested in the European market, only purchase cacao that (a) is produced in compliance with Colombia's legal regulations; (b) is free from deforestation, throughout the value chain; and (c) has undergone a comprehensive risk assessment, based on accurate and verifiable compliance information.
Challenge 2: digitizing due diligence protocols and legal requirements
For those requirements that are already defined, such as zero deforestation, our challenge is to validate whether we can implement them from a technical perspective, especially in relation to legal compliance.
Whilst we’ve validated relevant legal regulations in Colombia, we’re currently exploring the feasibility of designing a digital architecture that accurately reflects the due diligence workflows, procedures, and relationships of different stakeholders, into which future users will be able to report evidence and input data in compliance with these standards.
For example, child labor is prohibited in Colombia but depending on the age of the children there are different requirements that must be applied: farmers must report if they have children in their families, whilst also providing specific evidence that there is no child labor associated with their farms. Depending on the requirement, multiple sources of input data may be needed. Our architecture will require complex attributes and rules to govern this data, and different user interfaces to meet the needs of different users.
Figure 2. Examples of attributes that buying agents must report to meet due diligence requirements regarding the cocoa producers who supply their value chain.
Challenge 3: integrating technologies
Figure 3. An example of different modules available through Galapp App. These modules will be adapted for each user with an easy-to-use interface. The deforestation module will provide deforestation risk alerts so that actors in the field can verify and mitigate any deforestation risk
To ensure a robust and transparent platform, we’ll not only need to integrate our pilot technologies (field applications, earth observation data, and blockchain) but also provide tailored configurations that meet user needs. Whilst there is a cost associated with this, we are seeking to validate that these technologies offer significant advantages in achieving traceability whilst providing cost effective and reliable risk assessments based on robust evidence.
Field applications: we’re working with a technical partner, Galapp, to create a field application that will run on mobile devices and allow different stakeholders along the value chain to record data in real-time. Farmers, field workers, technical assistants, transporters, and others can capture information related to fair and ethical work practices, child labor, zero deforestation, and more.
Our platform will enable secure storage and access to this data, which will ensure transparency and accountability. For example, farmers will be able to input the geographic coordinates of their farm into the field application; and international buyers will be able to trace the provenance of the cacao and its journey from farm, through transportation, processing, and customs authorities, to the final consumer.
Ultimately, multiple application modules will be needed for different users on the ground. We’ve prioritized the development of a field forest monitoring module that we’ll test with our pilot farmers and/or technical assistants to record and validate deforestation events or conservation action. If successful, we hope to connect these users with earth observation data to enable automatic alerts. This would be the most reliable forest monitoring system for the cocoa value chain in Colombia.
Earth observation data (using satellites): this offers a scalable way to monitor any forest on the globe. Although satellites allow us to observe any forest in Colombia, one of our biggest challenges is how to monitor forests in proximity to cacao farms that are dispersed in multiple regions of Colombia.
The data is complex to analyze and evaluate against high accuracy thresholds set by Colombian forest monitoring standards. In addition, cloud cover in Colombia has created a major challenge when using optic sensors alone. In some areas, we have found up to 80% of satellite passes have cloud interference.
Figure 4. Sentinel-2 2020 mosaic for Caqueta department
Our approach is to explore the integration of radar sensors which can penetrate cloud cover and enable forest cover to be monitored day and night. We’re also validating the feasibility of developing automated routines that will detect and mask cloud cover to enable an accurate and objective analysis of deforestation events.
Blockchain: underpins our platform solution and will provide a decentralised and immutable record of the data we record from multiple sources (field applications and satellites, buyers and other key stakeholders) and in multiple formats. It will enable this data to be securely recorded and verified in line with data standards throughout the value chain. In doing so, users will be able to trace the origin of the cacao alongside robust evidence of compliance with legal and ethical standards.
If this has tickled your taste buds and you’d like to know more please contact:
Earth Big Data: carlos@earthbigdata.com
Frontier Tech Hub: harry@hellobrink.co
If you’d like to dig in further…
👀 You can also learn about our pilot on the Frontier Tech Hub website, where you’ll find an interview with our Pioneer, Pedro Castro and the blog from our first sprint.