Why low-carbon supply chains are turning to blockchain and digital twins

Blockchain can provide a trusted data layer that improves the quality and reliability of information moving across partners, while digital twins can convert that information into actionable optimization through simulation and prediction. The researchers frame this combination as a practical architecture for supply chains attempting to become both low-carbon and circular, where the same product or material may need to be tracked, recovered, and reintroduced into production loops.

The promise of “smart” supply chains is shifting from futuristic branding to operational necessity, especially as firms confront the hard reality that decarbonization requires visibility, coordination, and enforcement across multiple partners.

A new study, “Leveraging Blockchain and Digital Twins for Low-Carbon, Circular Supply Chains: Evidence from the Moroccan Manufacturing Sector,” published in Sustainability, states that two technologies often discussed separately, blockchain and digital twins, can generate stronger environmental results when deployed together and tied directly to circular supply chain integration. The research tests whether digital tools can move beyond compliance reporting to support real-world low-carbon and circular operations in manufacturing.

Why visibility and tust are now key to supply-chain decarbonization

Environmental performance is increasingly judged across the supply network, yet key emissions and waste drivers sit outside the factory gates. Materials can change hands multiple times before reaching a production line, and end-of-life pathways can be unclear once products move downstream. In many cases, companies cannot confidently verify where inputs came from, whether recycled content claims are accurate, or whether waste recovery routes are real. That gap leaves room for inefficiencies, fraud, and reputational risk, while also making it harder to identify the highest-impact interventions.

Blockchain, the researchers argue, is suited to this accountability problem because it strengthens traceability, data integrity, and governance across organizational boundaries. In a supply chain context, blockchain’s key value is not hype about digital coins, but the creation of durable records that multiple partners can rely on without constantly renegotiating trust. When properly implemented, such records can support environmental governance, track material flows, and help firms demonstrate compliance with sustainability requirements.

Digital twins, by contrast, address a different bottleneck: even when data exists, decision-makers often lack a reliable way to model system-wide effects before making operational changes. A digital twin is a virtual, continuously updated representation of a physical system, such as a factory process, logistics network, or material flow. It can simulate scenarios, test improvements, and forecast outcomes, allowing firms to reduce waste and energy use while improving efficiency. The study highlights that this predictive capability becomes more valuable when the twin is fed by reliable, real-time data, rather than fragmented or questionable inputs.

These technologies are complementary. Blockchain can provide a trusted data layer that improves the quality and reliability of information moving across partners, while digital twins can convert that information into actionable optimization through simulation and prediction. The researchers frame this combination as a practical architecture for supply chains attempting to become both low-carbon and circular, where the same product or material may need to be tracked, recovered, and reintroduced into production loops.

Circular supply chain integration is the force multiplier

Blockchain and digital twins are “good for sustainability,” but their environmental impact grows when they are connected to circular supply chain integration. Circular integration refers to the operational and organizational capability to run closed-loop systems, including reuse, recycling, repair, remanufacturing, and reverse logistics. In these systems, physical flows do not move in a straight line toward disposal; they circulate through loops that preserve value and reduce extraction of new resources.

This matters because circularity is difficult to scale without coordination. Reverse logistics requires shared processes for collection and return flows. Reuse and remanufacturing depend on verified product histories and quality controls. Recycling requires credible documentation of origin, composition, and chain of custody. Eco-design demands feedback loops between design choices and end-of-life outcomes. Without strong integration, circular initiatives can remain small pilots, struggling against data gaps, mistrust among partners, and uncertainty about returns.

Circular integration acts as the mediating mechanism that turns digital capability into environmental outcomes. In practical terms, blockchain strengthens circular integration by enabling traceability and data reliability for materials and environmental impacts, while digital twins support circular integration by enabling real-time modeling and predictive simulation to optimize flows. When firms link these tools to closed-loop processes, the study finds they are better positioned to align informational flows with physical flows, which is essential for operational circularity.

That integration focus also challenges a common corporate pattern: adopting technology as a stand-alone upgrade. A blockchain traceability initiative that sits beside existing procurement practices may improve reporting but not reduce emissions. A digital twin that optimizes a production cell may reduce energy use locally but fail to address upstream material impacts or downstream recovery losses. The study’s framework suggests that the biggest gains arrive when firms treat technology deployment and circular redesign as a single strategy, not two separate agendas.

Evidence from a mixed-methods study of manufacturing firms

To test these relationships, the researchers use a mixed-methods design combining qualitative and quantitative evidence from the Moroccan manufacturing sector. The qualitative phase draws on in-depth insights from 30 industry professionals, while the quantitative phase uses survey data from 125 Moroccan manufacturing firms, analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM).

This design matters because many sustainability technology claims rely heavily on conceptual arguments or case studies from a narrow set of large, well-resourced firms. By combining professional interviews with survey-based modeling, the study aims to connect real-world managerial experience with statistically tested relationships between key constructs: blockchain adoption, digital twin utilization, circular supply chain integration, and environmental performance.

The results focus on synergy rather than substitution. Blockchain adoption is linked with stronger environmental impact traceability, data reliability, and responsible governance, supporting the conditions under which circular supply chain integration can function effectively. Digital twin systems are linked with eco-efficiency improvements through real-time modeling and predictive flow simulation, strengthening the operational ability to reduce waste, energy use, and process inefficiencies.

The study reports that circular integration significantly strengthens the positive effects of both technologies by aligning informational and physical flows within closed-loop processes. In other words, digital tools appear most effective when firms have mechanisms to act on what those tools reveal, and when supply chain partners are structured to collaborate on circular loops rather than simply transact along linear chains.