As part of its sustainability efforts, Continental Tire Japan plans to use the PROJECT TREE blockchain initiative to ensure some of its AllSeasonContact tires use responsibly sourced natural rubber. PROJECT TREE is an initiative of Japanese conglomerate ITOCHU, which owns a rubber processing company in Sumatra, Indonesia and the UK’s Kwik Fit, a major network of tire fitters and car maintenance. ITOCHU officially launched this sustainability initiative in December 2021.
PROJECT TREE tires are sold at a premium, and money is funneled back to the farm smallholders by providing them with farm tools, fertilizer and training. The Indonesian rubber company uses blockchain during the procurement process to record the location of where the rubber was sourced to track which tires use rubber from PROJECT TREE and trace it from the raw material through to the retail sale.
Almost 60% of the world’s rubber comes from Thailand and Indonesia. According to Continental, 70% of the world’s natural rubber is used for tire production, and 85% of production is based on plantation agriculture.
Kwik Fit initially ran a four-month trial with tires from Pirelli but later added Continental and South Korean tire manufacturer Hankook. Customers were informed of a small price premium for the PROJET TREE initiative, and Kwik Fit found that sales exceeded expectations. It now expects to sell 150,000 PROJECT TREE tires this year.
The educational aspect is a vital part of the project. When the demand for rubber increases, additional land is often cleared to plant new trees, in some cases illegally and at a considerable environmental cost. Because it takes up to six years for rubber trees to produce usable latex, demand has often subsided by that time. Instead, the training helps farmers to increase yields from existing land and expand production without planting new trees.
Continental has previously engaged in blockchain initiatives to share data with autonomous vehicles and a money market pilot with Commerzbank. Meanwhile, SAP developed a blockchain prototype to keep track of tire retread activities.
ITOCHU backed another blockchain sustainability initiative by investing in coffee traceability startup Farmer Connect.