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Blockchain and ESG

Written by:

Sarah LC Smith

Our recent session in the ESG Council series was on Blockchain and ESG.  Here are some of the key takeaways from the session.

 

 

What is blockchain?

  • It’s a classification – like an operating system
  • Blockchain has been in play for 30 years+ which means this technology is maturing. 
  • If you think of blockchain as the platform, "smart contracts" are the programming code that can run on top of them, so an invoice could be a digital asset transacted on the blockchain. You can then program a smart contract that governs that digital asset which automates, in this case, invoicing.
  • A node is an entity that connects and can transact on a specific blockchain platform.
  • Blockchain has a distributed ledger with distributed nodes, that records in real-time so everyone has the same information at the same time, and we have one source of truth.
  • Blockchain is Web3, the next evolution of the internet

What’s the problem blockchain is trying to solve?

  • Blockchain removes the inefficiency in transactions and allows for greater automation.
  • Blockchain removes the potential for fraud.
  • It solves the 'double spend' problem, meaning, two or more parties can exchange something of value without a third party entity (like a bank or a title company, etc)  

Who owns it, regulates it, governs it?

  • Consortiums, governments, and companies are all a part of the blockchain.
  • Companies should manage their own ledgers, contracts, and transactions, just like they do with the supply chain - to manage Security on data, transparency, who has access to it, and price books)
  • Panelists agreed that can work together to help manage the technology and continually improve it, but companies need to own and secure their own nodes.
  • Experts argued there are times and use cases for public and private blockchains and even hybrid ones too.

How can blockchain help us with ESG?

  • Blockchain can be used for ESG reporting and in holding entities accountable.
  • The technology supports transparency.
  • It allows entities to prove their emissions and creates one source of truth as a registry.
  • Blockchain allows us to know the carbon intensity of the supply chain as its being tracked.  As an example:  measuring flaring with a temperature sensor or measuring electricity usage on a pipeline

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