Sustafy is an ambitious Web3 project that uses bottom-up reporting data to activate UN Sustainable Development Goals and the economic genius of 2 billion smallholder makers and farming families. The first step is an Indian launch that collects origin supply chain data from South Asian makers to solve an urgent economic/legislative challenge. New EU regulations will prevent products without Digital Product Passports from entering the EU in 2026. The European Union buys 36% of India's crafts, which means there is urgency. DPPs document a product's supply chain, circularity, sustainability, and marketing claims. The GS1 standards organization issues Digital Product Passports. 

​

Only pharmaceuticals, animal feeds, and food are exempt. The critical legislation for our project is the European Commission's "Eco Design for Sustainable Products Regulation (ESPR)." Doing nothing is an existential risk for makers everywhere.

​

Strategy: Origin supply chain data at scale.

 

How: The surest path to reliable, robust data is delivering value and creating agency for the world's 2 billion smallholding families.

​

Bottom-up reporting allows us to see the cause/effect of what we buy and use every day. Full, complete information realigns economic incentives in healthier ways and changes the relationship between consumers, makers, and growers of the world's most beautiful and delicious things. Our tagline is also our strategy: "Origin supply chain data at scale." We aim to deliver the most reliable consumer data while creating value and agency for smallholders globally via Web3-enabled services.

 

Roll-Out. Growth.

 

Our vision is a consumer-led, market-based solution to reach smallholders globally. A key project driver is preserving current handmade trade flows after the March 30, 2024 enactment date. We'll support code development with focused Kickstarters that sell desirable, transparent products. Working in well-defined, composable "chunks" allows us to keep moving forward with variable resources.

 

The Phase One pilot demos open-source-code building blocks of cross-border capabilities, like visual trackability and traceability, from origin raw materials to finished goods. A unique cryptographic number documents the raw materials/product supply chain. Fast-following, we'll extend hREA/Holochain technology to the most popular raw materials and product use cases internationally. 

​

Seed Stage relies on current resources, skills, team members, and independent Holochain/Rust developers. Product sales from ongoing Kickstarters will create the resources to program more product categories. The Kickstarters (or other crowdsourcing platforms) develop audiences, capital, regard, and the project's revenue model, which charges regulated businesses for their compliance data.

 

The Phase Two project collects and passes origin supply chain data of raw wool and woven wool cloth yardage via open-source Web3 technology to demonstrate the comprehensive Digital Product Passport qualifying process. The goal is proof-of-concept for a low-cost, blockchain-like way to solve the new EU requirements for Digital Product Passports. The large maker pool verifies that the technology is fit for use in the rural communities of developing countries. We'll keep making the building blocks of code capabilities at whatever rate we can move forward.

​

Phase Three develops Sustafy's revenue model, which charges regulated organizations for compliance data. The launch prioritizes Indian crafts, but anyone who exports components or finished products to the EU needs a cross-border solution. This stage engages buyers, retailers, designers, wholesalers & intermediaries in the creation, distribution & exchange of data that qualifies for the EU's Digital Product Passports (DPPs) and legal sale in European markets. Trackable QR codes make every event visible.

​

Growth is tricky because destructive forms of capitalism are prohibited under the Holochain software license. Venture money and the demands of maximizing shareholder value would kill the project's full promise. Consequently, our revenue, investment, and growth models will likely be unconventional. 

 

Ongoing: Create improved building blocks of capabilities and code for origin creators and products. Activate, train, and support stakeholders internationally. 
 

Changed Consumers

 

In 1776, economist Adam Smith proposed the Rational Choice Theory, which says incomplete information leads to bad decisions. Perfect information engages costs-benefits so consumers can select the best option. Real-life examples of Perfect Information are vanishingly rare, but transparent supply chains get close. 

 

Transparency, traceability, and realigned incentives will likely power countless new, positive consumer choices and drive different consumption patterns. For example, a 2017 study by Cone Communications found that 76% of consumers will refuse to purchase a product if they learn it was not made ethically. When incentives are aligned—the behavior you want, ethical making, is rewarded. When unethical behavior is punished by consumers, there is less of it over time.

 

EY's 2022 Future Consumer Index says transparent products and services drive positioning, price, sales volume, and brand.

​

• 61% want more information for better decisions.

• 84% say sustainability is important when buying.

• 80% believe brands need to be transparent on climate impact.

• 80% expect companies to take the lead for a sustainable future.

​

The Technology

 

We're building on Holochain, which has the best features of Blockchain without the high costs and problems of scale. Holochain is cheap, powerful, fast, private, and built for developing countries. It features baked-in ethics and other new Web3 services like smart contracts, data rollups, project management, real-time accounting, and more. www.holochain.org

 

Sustafy's UI is based on Resources, Events, and Agents (REA). REA is an ISO-accepted flow-state accounting system and supply chain documentation methodology. REA is expressed as a Resource Description Framework (RDF), the standard Web3 data model to facilitate data interoperability.
 

Why are These Regulations So Disruptive?

 

There is growing consensus internationally that every country needs to move towards resilient economies that are circular, sustainable, and ultimately regenerative. Until February 2022, EU regulations were focused on long-declared climate goals. Muscular updates in March 2022 respond to Russia's invasion of Ukraine, a newly swaggering China, and the pandemic. Collectively, these forces pushed Western countries into defensive postures that de-link from complete globalization. Increasingly, the West regards material and energy supply chains as vital to economic policy and national security. 
 

Supply Chains | National Security | Climate Neutrality | Sustainable Economies

​

The national security focus and defensive thinking are new and seemingly inflexible. Official EU publications claim that digitized supply chains, supported by Digital Product Passports (DPPs), are the keys that unlock self-reinforcing "Twin Transitions" of climate neutrality and sustainable economies. National security, social cohesion, and strategic autonomy are baked into the EU's definition of sustainable economies. The Twin Transitions are very closely linked. Failing on one means failing on both goals and a climate-neutral single market by 2050. "Green and Digital" are shorthand for the longer descriptions. Notably, Digital Product Passports are the first time in memory that the EU has pushed its domestic priorities beyond its borders. A corollary is major Western corporations declaring that in the future, they will only source from other democracies.

 

About Us

​

Sustafy is a project of The Jaipur Crafts Festival, which touches 7000+ sustainable, fair trade, craft, and social enterprises in 558+ countries, territories, and villages. We focus on long-term projects in neglected areas like strategy, technology, data, and market development. Everything we do activates a differentiation strategy to repair broken markets. Aiming for the level of causation brings the potential for change-making at scale. 

 

Project success means data accelerates systems change. There needs to be more actionable data on smallholders at the bottom, which makes it impossible for them to plan, grow, identify risk, satisfy markets, address externalities, or activate change. At the top of the value chain, data is the key that unlocks circularity, traceability, pervasive measurement, sustainable products, data-driven decisions, and AI models. Overcoming the new EU trade barriers is step one in the ambition to activate and celebrate economic growth for the world's bottom 25%. Supply chain data is the sea change.
 

Top-Down vs Bottom-Up Reporting

 

Crunchbase writes that there are 6,359 EU supply chain companies. Competitors have different approaches to solving the new EU regulations. They approach Digital Product Passports primarily from the top down and use conventional or Blockchain technology. 

 

Top-down methods use estimates and approximation, even if the business and regulatory environment want real-time data. Bottom-up documentation converts sustainability into operational actions, which link data to operational insights and management reporting. Competitors seem satisfied to meet the letter of the new regulations without reaching for the spirit or possibility of the available systems change.
 

Smallholders | 2 billion Livelihoods | The Bottom 25%

​

Smallholders create the world's most beautiful, delicious, and sustainable products: handmade textiles, jewelry, coffee, cocoa/chocolate, rice, corn, cereals, vegetables, fruits, and livestock. Global food security, collected cultural memory, untapped economic growth—and resilience generally reside with the world's 2 billion smallholder farmers and maker livelihoods.

​

• What if freer, fairer, more transparent markets activated the quality, sustainability, fairness, and circularity of things you use every day?

• What if we could encourage traditional techniques prioritizing soil health, water conservation, biodiversity, regenerative agriculture, greater ecological resilience, and health?

• What if Web3 technology could help the bottom 25% reach the services academics say they need? Access to new markets, finance, land security, higher bargaining power, self-organized cooperatives, greater inclusion, and equity.

• What if more straightforward selling, shipping, getting paid, and newly found agency made anti-democratic movements less attractive to the bottom 25%?

 

There are 50 or so new Web3 capabilities designed into hREA and Holochain. We intend to supply new Web3 services to origin creators in trade for their quality data. Keeping creators happy and engaged is what fulfills the legislation's requirements for reliable, robust data. Service examples: simpler micro-lending, raw materials banks, credit swaps, project management, greater certainty of payment, percentage of resale, creative recognition...etc. ​
 

Current Legislation

​

The Sustafy Transparency Project helps each of the thirteen legislation buckets being considered or already enacted in the EU and other large markets. The legislation requires documenting the individual origins of every product through the entire lifecycle and beyond. G7 and G20 countries are considering similar legislation. 

 

• German Supply Chain Act – This Supply Chain Due Diligence Act was approved in July 2021 and is planned to take effect on January 1, 2023. The legislation states that companies with 3,000 or more employees must take appropriate measures to respect human rights and the environment with their supply chains. Read more

• European Commission (EU) Conflict Minerals Regulation (Started 2017. In effect, January 1, 2021) – Ensures imported minerals and metals are derived from responsible sources only. Alongside supporting the development of interdependent local communities. More here

• European Commission (EU) Corporate Sustainability Due Diligence Directive (Started February 2022. Expected to be in effect by 2024) – The draft legislation has passed and will require large EU organizations to detect, prevent and mitigate breaches of human rights, such as child labor, as well as environmental hazards in their supply chains. More here

• European Commission (EU) Sustainability Textile Strategy (Started July 2022. In effect, now) – Fosters only durable, repairable, recyclable, and circular textiles/products that respect social rights. Factsheet here

• European Commission (EU) Eco Design for Sustainable Products Regulation (Started March 2022. Expected to be in effect by May 2023. Product Seizures begin by May 2024) – Furthers greener, circular, energy-efficient products that disclose environmental sustainability information (via Digital Product Passport). March 30, 2024.

• European Commission (EU) Corporate Sustainability Reporting Directive (CSRD) (Started March 2021. First Set of Standard Compliances begin by January 2024) – Upholds ESG+ Markets for investments, finances, and accountability for community-based products. Links to DPP Requirements and Deadline, Here.

• European Commission (EU) Unfair Commercial Practices Directive (Stared March 2022. In effect now) – Fosters consumer protection from greenwashing and other false claims through e-commerce transparency. Factsheet here with a link to 2021 Update.

• European Commission (EU) Taxonomy Regulation (Started June 2020. In effect since July 2020) – establishes six environmental objectives viz. Climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; circular economy transition; pollution prevention & control; protection & restoration of biodiversity and ecosystems that economic activity has to meet in order to qualify as environmentally sustainable. More here

• Swiss Code of Obligations – Effective in January 2022, supply chain reporting requirements relating to conflict minerals and child labor were added to the Swiss Code of Obligations.

• USA's Security and Exchange Commission's Climate Disclosure (SEC) (Started 2010. In effect, now) – Urges for all businesses with US Public companies to report climate-related financial disclosures. Track Disclosure's Progress here

• New York Fashion Sustainability and Social Accountability Act – If passed, it will require New York fashion retailers and manufacturers with over $100 million in annual revenue to make required social and sustainability information available. More here

• The USA Fabric Act – If passed, this would improve fair pay and sustainability. More here

• California Transparency in Supply Chains Act– Signed into law in 2010, it requires large retailers and manufacturers to disclose activities focused on eradicating human trafficking from the supply chain and educating consumers on how to purchase goods from responsibly managed supply chains.

 

The Revenue Model

​

Every project needs a revenue model. Holochain is tricky because the underlying software license does not allow some forms of capitalism. It isn't realistic or desirable to charge the 2 billion makers/farmers for being part of the Holochain ecosystem. The service needs to be free below the retailer/order placement level. Yet, there will have to be people offices, and hardware to perform management, oversight, and tech support for the project. So, where does the money come from? 

​

The current plan is a Freemium Model that charges regulated companies for reported data. Regulated companies would be, say, LVMH's La Samarttaine in Paris. Stores like this will have to have DPPs for anything they import. 

 

That requires passing data from, say the underwear manufacturer >DPPs > the underwear brand > La Samarttaine > LVMH > EU Bourse/stock exchange > Regulatory bodies like consumer protections for marketing claims, financial markets on ESG posture and anti-greenwashing, trackers of the Green Deal and other climate accords, etc. The governmental oversight bodies are described in the 7 buckets of EU legislation. 

 

Providing Web3 services to the bottom "pays" for high-quality reporting data (with permission) downstream. We also want to collect information consumers will find helpful/desirable...like cultural info on the making traditions, how many hands touch something, how many families that product supports etc. Retailers will have some essential, free services and pay for others, like the hard cost of what GS1 charges for the DPP.

 

Later versions will expand the maker/product categories and build out services that allow data to pass up and down chain touchpoints via economic events. 

 

Examples: Data available for AI > data translation > context > exportability >

Long-term, robust functionality requires individual and aggregate data to pass upstream and downstream. There are revenue models from many or most of these transactions: origin raw materials and agricultural practices > retailers > end-users > corporate reporting > government oversight > researchers/NGOs > stock traders & business analysts > embedded data dashboards > second use/resale.​
 

What are Digital Product Passports?​

​

Product passports provide meaningful information and insight about actors, tools, collaborations, agreements, efforts, and energy involved in a product's production, transportation, and disposal—unbounded by marketing and branding.

​

Copyright 2023-24, Scott Frankum All Rights Reserved.