As concerns about climate change and environmental sustainability continue to grow, many organizations are turning to innovative solutions to help address these pressing issues. One such solution is blockchain technology, which has the potential to revolutionize sustainability efforts across a variety of industries.
On April 25, a World Economic Forum (WEF) whitepaper featured blockchain as a tool to fight climate change. The whitepaper highlighted the benefits of using blockchains in the climate action community. From improving market transparency to democratizing access to climate action, the WEF wrote about various benefits of using blockchain in sustainability efforts.
Digitisation of the VCM is one of the leading use cases for #blockchain innovations in the climate action space.
The “Blockchain for Scaling Climate Action” Paper by @wef explores key examples & use cases, including the Climate Action Data Trust.
— Climate Action Data Trust (@CAD_Trust) April 27, 2023
To further explore blockchain’s potential in sustainability, Cointelegraph reached out to industry executives to get their knowledge on how blockchain can combat greenwashing, how it’s currently being used in environmental efforts, and the long-term benefits it offers to the world of climate action.
Solving the “greenwashing” problem
Greenwashing, a form of advertising that deceptively make products seem more sustainable than they actually are, has been gaining notoriety throughout the past few years. In one survey, 68% of executives based in the United States admitted that their firms are guilty of greenwashing.
Outside, @xrbham are making themselves heard loud and clear on the samba drums
And highlighting @HSBC_UK #greenwashing with their greenwash bath pic.twitter.com/2740R1YCND
— Isabella Salkeld (@SalkeldIsabella) May 5, 2023
According to Daniela Barbosa, the executive director of Hyperledger Foundation, the problem lies with verifying if the companies who claim to be “green” are truly adhering to their professed sustainability plans and goals.
The executive believes that it’s necessary to set up a system that tracks and keeps a record of these things. She highlighted that digital ledger technology (DLT) is the right tool for the job. Barbosa explained:
“With the inherent transparency and immutability of DLT, companies and whole industries can capture and document transactions such as carbon credits or sustainable sourcing throughout their operations, creating new credibility to sustainability claims.”
Barbosa believes that trustworthy record-keeping systems will incentivize businesses to adopt sustainable practices, which will help them achieve climate goals and build consumer trust.
Related: Carbon market gets a much-needed boost from blockchain technology — Web3 exec
Meanwhile, Gene Hoffman, the CEO and president of the Chia Network, also echoed Barbosa’s sentiments. According to Hoffman, the current infrastructure of carbon markets is restrictive and not conducive to innovation throughout the value chain. As a result, companies are limited in their ability to be transparent about their sustainability efforts across their entire organization.
Blockchain’s current use in sustainable initiatives
The days of companies pretending to be sustainable and environmentally friendly may soon come to an end because of blockchain technology and DLTs. At the moment, blockchain has penetrated various initiatives done by prominent organizations across the globe.
“There is a growing range of applications leveraging DLT and related technologies, including green finance, sustainability reporting, climate accounting and supply chain traceability,” Barbosa told Cointelegraph.
The executive highlighted efforts like Genesis 2.0, a collaboration between the Bank for International Settlements (BIS) Innovation Hub, Hong Kong Monetary Authority and United Nations (UN) Climate Change Global Innovation Hub. The project involved two prototypes for digitizing bonds with future carbon benefits included in their value. These were tracked, delivered and transferred using blockchain, smart contracts and other related technologies.
Apart from this, Barbosa also highlighted how the Government of British Columbia launched the Energy and Mines Digital Trust pilot which is building verifiable sustainability reporting. The project uses blockchain to protect its data and information.
In addition to these, Hoffman sees the Climate Action Data Trust (CADT) as the most impactful climate initiative utilizing blockchain technology. The CADT aims to establish trust in carbon credit-related data among multilateral and governmental organizations.
Although it is not being led by Web3 natives, the initiative utilizes a public distributed ledger technology to address the issue of fostering internal cooperation among equal peers.
Furthermore, Hoffman also emphasized the significance of the Carbon Opportunities Fund, which builds on the foundation of the CADT. The project provides a reliable means for transparently sourcing carbon credits directly from project developers with end-to-end transparency. This approach enhances efficiency and transparency in climate markets that were previously opaque, according to Hoffman.
Long-term benefits of using blockchain in sustainability efforts
As blockchain gets more adoption in the climate action space, the industry could reap more of its long-term benefits according to the executives. Victor Genin, the senior solution architect at BNB Chain, believes that one of the best benefits of using blockchain in the sustainability sector is ensuring compliance.
Genin explained that blockchains can provide a means to track goods, services and resources across the supply chain. “This creates an opportunity to monitor environmental compliance and ensure that sustainable practices are followed throughout the entire lifecycle of a product or service,” he added.
Apart from these, Genin highlighted that there are other benefits such as “increased transparency and accountability, traceability, energy efficiency, waste reduction, and collaborative approaches.”
Despite all the benefits that blockchain can bring to the table, Hoffman believes that it’s still not a “magical solution.” However, the executive believes that when it’s designed and implemented responsibly, blockchain technology can serve as the necessary foundation or framework for achieving greater transparency, accountability, and security in climate action efforts.
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