Blockchain was hailed as a revolutionary technology like the Internet. Do you have any application in the sustainability space? The answer is "yes" even if the potential applications are just starting to be explored.
Blockchain is more widely associated with cryptocurrencies like Bitcoin or Ethereum, but this aspect of the blockchain is only a small part of the technology. Blockchain is a (essentially) incorruptible and highly decentralized ledger. Whereas previously a transaction record was stored on a single proprietary information system or computer, a blockchain system is stored in many. Each record or block on a blockchain contains a cryptographic hash of the previous block, a timestamp and transaction data. The record is permanent and is resistant to data changes, partly because the changes should take place on multiple registers all distributed at once. Once registered, data in a given block can not be changed retroactively without affecting all subsequent blocks.
In essence, the blockchain provides a permanent, without authorization, public and transparent registration of transactions or other activities.
Some blockchain allow applications to be built on, using technology for an endless series of use cases. This includes blockchain-based contracts that are executed automatically when the conditions set out in the contract are met, or incentive, through the distribution of precious cryptocurrencies, participation in markets able to create lists or forecasts of future events.
The devotees of Blockchain see socially revolutionary technology because it allows the disintermediation and the decentralization of previously highly centralized processes.
While a transaction or contract should have been previously administered by banks, lawyers, governments or others, blockchain has the potential to create a disintermediate economy where users can leverage technology to make transactions on their own.
The application of the blockchain to promote sustainability is also a subject of great interest to the blockchain community. For example, Blockchain for Social Impact Coalition (BSIC) is an initiative of ConsenSys, a Brooklyn-based venture manufacturing firm. BSIC incubates, develops and implements blockchain products and solutions that address social and environmental challenges in the United Nations Sustainable Development Goals, focusing on topics such as Financial Inclusion, Supply Chain, Identity and vulnerable populations, Energy and the Environment.
Even before actively collaborating with BSIC, ConsenSys has actively incubated projects such as Viant, which has partnered with the World Wildlife Fund to prototype its resource tracking and traceability platform to track down and track down fish caught in the South Pacific. The initial effort was translated into a fully traceable, geolocated, tracked and digitally signed product in every juncture in its journey from the Fiji oceans to dinner dishes at a New York blockchain conference.
The potential for supply chain track on a public, transparent and highly secure public register has an application well beyond the fishing industry. In the mining sector, this technology could facilitate local procurement initiatives or facilitate the tracking and monitoring of conflict minerals, as is already the case for a start-up called EverLedger for rough cut diamonds. The possibilities are immense and are only being explored
One could imagine how blockchain-based executable contracts, such as those developed by OpenLaw start-ups, could be developed together with community engagement initiatives and impact benefits agreements . The characteristics of the blockchain would be valuable to promote transparency and provide accountability where trust and integrity are essential in the implementation of such agreements.
Another application of the blockchain concerns the development and monitoring of "reputation", including the company's reputation for sustainability. There is already a multimillion-dollar industry around the environmental, social and governance (ESG) ratings used by wealth managers and investors to assess the sustainability of their invested companies. Blockchain could improve and make such rating processes more transparent and decentralized. For example, "token-maintained registries" were created on blockchain, which can take care of lists of anything. An example of this is the adChain registry, which is a register of websites supported by community-run advertising, performed using an Ethereum-based cryptocurrency called adToken (ADT). AdChain participants are rationally encouraged to include or reject websites from the register based on the merits of ad performance and inventory quality, using the ADT purchased to rate the proposed sites considered for inclusion in the register. . Applied in the context of sustainability, this technology could develop lists of the most sustainable companies in the world, companies that can be considered reliable in the context of stakeholder or community involvement, providing sustainable sustainable dissemination or a list of green or social quality. Unlike previous approaches to the development of such lists, blockchain processes will not be centralized, proprietary and opaque, but rather open, transparent and populated with the wisdom of a large market of experts.
Blockchain-based prediction market technology (such as the Gnosi prediction market tool) could be applied in the Environmental, Social and Governance Assessment (ESG) space to develop real-time ESG-specific ratings for companies used from investors, through market mechanisms. This mechanism would increase the ability of investors who use such data to participate in rating generation, enable market collaboration and increase process transparency. Companies could use data in real time to create key risk indicators or instantly identify how events or news affect their reputation in terms of sustainability. Technologies are even developed around the blockchain to facilitate dispute resolution. One day it may be possible to manage the company's complaint mechanisms, free of charge, through decentralized blockchain-based stationing and arbitration protocols. This technology could be built on the basis of blockchain-based control protocols (modeled according to current human rights methodologies, work standards or environmental and social sustainability audit frameworks) that allow to record transparent advertising statements subject to disputes from part of those involved.
These potential uses of blockchain are the tip of the iceberg and depend only on how creative developers and sustainability professionals can be in the search for potential use cases.
MICHAEL TORRANCE is chief sustainability officer for the BMO Financial Group.