How the role of Blockchain can help strengthen your ESG credentials

Piotr Blazewicz, Co-founder of MicroClash Ltd – company behind CoinClash Games

 

Investors, businesses and brands can no longer ignore the rise of cryptocurrency, with reports stating that the global market will more than triple by 2030 and hit a valuation of nearly $5 trillion. The creation of decentralised peer-to-peer payment systems has led to the boom of payment services that will quickly become the most popular way that people pay for products in the future.

It is clear that the blockchain is a rising and critical element in today’s digital economy. As well as this, companies are now striving to meet Environmental, Social and Governance (ESG) criteria, which encourages them to act responsibly. It helps investors to ensure the companies they are funding are responsible for the environment, have a good relationship with stakeholders and use accurate and transparent accounting methods. ESG criteria allow investors to avoid any losses when companies engaged in unethical practices are held accountable. This criteria holds great importance when determining the value of a company as it is estimated that the global value of global ESG assets will exceed $53 trillion by 2025.

 

Piotr Blazewicz

Exploring the evolution of ESG

The reporting of data and supply chain transparency are crucial areas where blockchain can help companies abide by ESG standards. Every business is now intertwined with ESG concerns, so by creating a strong proposition, these companies will generate real value. When using Blockchain-reporting tools, companies can store verifiable data and create reports which demonstrate their ESG credentials.

The environmental criteria involves the energy a company consumes, the waste it discharges and the resources it needs. Responsible and effective management of environmental factors is becoming an increasingly important driver of corporate value. Examples include researching, developing and implementing renewable energy solutions, boosting efficiency in carbon-intensive practices and improving energy conservation, as well as adopting clean technology.

ESG encompasses various social factors which are centred around a company’s social management and its relationship with employees. Broadly speaking, human rights, community welfare and the health of stakeholders are just a few considerations that are becoming an increasingly important component of global business. As transparency and trust are regarded as critical factors for blockchain, it makes it the perfect tool to support ESG concerns. Its ability to digitally represent assets which move along value and supply chains makes it a standout technology when monitoring traceability during industrial processes.

A report by Forbes says ESG issues were first mentioned in the 2006 United Nations Principles for Responsible Investment (PRI) report, where it then became an imperative part of a company’s financial evaluation in an effort to reinforce ongoing sustainable investments. Investors now want full disclosure of any risks a company might face up front, as well as its plans to mitigate those risks. Organisations that omit environmental policies and practices leave themselves exposed to financial and legal risks, which can then result in harm to their shareholder value, which is why many are now investing in blockchain to alleviate those risks.

 

Unleashing the potential of blockchain

The potential of blockchain and its impact on different sectors across the world is constantly growing. Its technology is set to transform how businesses and users make their lives online simpler and safer in the long term. The decentralised nature of the blockchain provides new ways to interact with other businesses, exchange vast amounts of data and securely carry out transactions.

Using distributed ledger technology, blockchain allows companies to adhere to ESG’s supply chain transparency. This is crucial when demonstrating the clear route materials take to get from a company’s warehouse to the customer. It also enables issues along the supply chain to be identified quickly and reliably traced back to their source. Companies which use blockchain to verify transparency in a way no other digital technology can, are in a position to dramatically boost their sustainability record and reporting procedures.

In addition, the blockchain utilises advanced security in comparison to other platforms, as each transaction is encrypted and has a link to the old trade using a hashing method. Security is also enhanced as each node holds a copy of the transactions that have ever been performed on the network. Blockchain networks also ensure that data, once written, can not be reverted, meaning that the technology boasts immutable data. Organisations using blockchain can reduce the costs involved when using third-party vendors and as it has no inherited centralised player, there is no need to pay for vendor costs, which is an added bonus to its ESG benefits.

 

Final thoughts

According to a report by Bloomberg, ESG investment is set to grow rapidly and already represents a third of global assets under management.

Blockchain technology might be more associated with the financial sector, but we also now see a variety of different use cases where it can play a key role for companies. Examples include the tokenisation of forests as trading for capital assets, food provenance to protect endangered species and certificates of origin for green power.

Its ability to track, trace, store and securely share the data that dictates the success of sustainability projects, programmes and policies, mean this emerging technology is well positioned to help address the growing global challenges.

The wealth of opportunities the blockchain can provide to companies is endless, and those which embrace this responsibility and take on a new way of thinking about growth will undoubtedly benefit in the future .

That’s great and good to go, hwovere, would we be able to squeeze one paragraph on what MicroClash is doing in that Space? Low energy blockchain solution, proof of stake rather than mining, ESG officer and advisor (From SF).

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