9.20.22-Sustainability-Sourcemap

LEONARDO BONANNI: Thanks, Ariel. Good morning. I'm Leonardo Bonanni. I'm the Founder CEO at Sourcemap. Sourcemap is a company I started 11 years ago out of the MIT Media Lab. We introduced the world to supply chain mapping-- the process and the technology for that process.

For the last 11 years, companies have been working with Sourcemap to mitigate some of the most severe problems in supply chains, which are almost always at the first mile of the raw material extraction, but anything from worker health and safety to deforestation, ecosystem disruption to forced labor. And supply chain mapping has, for the majority of Sourcemap's life, been an elective procedure until 2021, when both the United States government and the European Union started to require supply chain mapping as part of a variety of imports of products that could be made in ways that endanger people through forced labor, ways that endanger the environment through deforestation and ecosystem disruption.

Now, it's a tale of two worlds. We have some companies that have been working with us for years and have mapped their supply chains. And I like to think of this as a world of advocacy business. It's not enough to just be sustainable, to check the box, right?

A lot of brands are actually going out ahead of issues and identifying themselves to important environmental and social problems that they're going to solve in their supply chains. And they're actually marketing proactively to say these are the issues that matter to us, to our consumers, and we're going to go ahead and choose Sourcemap because that's going to give us the proof-positive that practices in the supply chain are up to our standards at every single step of the way.

And in some industries, we've reached a pretty critical point here. The most of the food companies in the world, most of the fashion apparel companies in the world, most of the luxury companies in the world already use Sourcemap to some degree for those materials, especially that are very high-risk. And that doesn't mean that's all we do. These are just the industries where we have a pretty good position.

There is a number of new regulations-- and I'm happy to talk about them after this-- that are coming for you. And we already have a number of customers in the pharmaceutical space, in chemicals, in automotive in semiconductors, and in all of the renewable sectors, especially when it comes to sourcing all of the raw materials we're going to need for those batteries.

So a few industries have gotten a leg up. Others are just getting the process started. How does it work? Supply chain mapping consists of effectively three steps. And this is-- you can ask Customs and Border Protection, and they also say the same thing. Supplier discovery, you need to know who all of your suppliers are down to the raw material origins. And that means farms, and that means mines, and that means GPS mapping-- all of them.

By the way, fun fact, supplier discovery, which is what we call this module, on average, Sourcemap customer discovers more than 10,000 suppliers in the process of supplier discovery-- actually 11,800 to be precise on average. Those are all companies that they didn't know they were doing business with.

Step two, traceability. Now, most people know if you're asking your tier-three suppliers about the prevalence of forced labor in their supply chains, they might not tell you the truth. So both customs and we have agreed that you need traceability, which means documentation to prove that the transactions actually flowed the way they were supposed to, that the contracts are held between the right people. And that's a huge amount of data-- fun fact, terabytes of data for each customer that uses Sourcemap to have that audit trail that stands up to muster, so that every container that arrives at Long Beach or Newark has a chain of custody report that goes with it, that shows that every step of the way all the standards were met for those high-risk materials.

And then, last but not least, the fraud detection, the analysis against third-party databases to make sure that what you think is your supply chain actually is your supply chain. And by the way, it's never the same supply chain for two days in a row.

You're going down to six or seven or eight tiers deep. It's constantly changing and you're constantly getting updates from us. Is there a supplier that is in a place where they shouldn't be? We will be the ones who let you know.

How does this work in practice? Here's an example of what we did for the leather industry in 2019, tracing back all of the leather down to slaughterhouses and farms-- in this case, in the Amazon basin. And the red overlays are those satellite images that are now available that are looking at leaf cover change-- so deforestation in real-time.

And so we're able to, as we map the supply chain that changes, also analyze it remotely. Basically, audit it from the sky for issues like deforestation. This can have people ask me, why do people submit data to source map for their customers?

In 2019, most of the footwear industry decided to boycott Brazilian leather. And within 24 hours, Bolsonaro had to put a moratorium on the fires. The brands that use Sourcemap send a big signal to their suppliers that this is going to be expected from now on. Transparency is the key to accessing the US and European market.

It's not all compliance. There is a lot of reasons-- anti-counterfeiting, anti-contamination, anti-fraud, but also building trust. B2B companies and B2C companies are using transparency and traceability as a way to build trust with their customers and their potential customers.

And so you'll see brands, that are very well-known, publishing the supply chain for their products all the way down to the raw materials just as part of their way to build a connection with their customers. And with that, I'll be available for demo and discussion after this session. Thank you.

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