Mumbai: Technological innovation has become an essential tool in the fight against climate change and protecting biodiversity. Among the various technological solutions available, blockchain technology has emerged as a promising solution that can revolutionize environmental sustainability efforts and make significant social impacts. Blockchain technology presents opportunities to address some of the most pressing environmental and social challenges. Additionally, the capabilities available in blockchain enable more transparent reporting around compliance with ESG requirements, better auditability for regulators and help businesses declare robust alignment with UN SDG goals.
Blockchain is a decentralised, digitally distributed ledger that enables secure recording and verification of transactions across a network of computers. Blockchain operates without a trusted intermediary, relying on cryptographic techniques to ensure data integrity and immutability. This decentralized technology enables participants to conduct transactions without a central authority and relies on cryptography to maintain security. The fact that any third-party intermediary is not required to understand the transactions anchored on a blockchain provides insight that goes a long way in addressing any concerns around claims made for compliance with regulations.
Blockchain interconnects blocks, each containing records of transactions, creating a tamper-proof and transparent ledger. Transactions are verified and added to the blockchain through a consensus mechanism that establishes rules for validation and ensures the integrity of the ledger.
Today, the question is no longer “Who is using blockchain?” but “What is blockchain being used for?”. Aside from the traditional domains of businesses, the blockchain-based trust infrastructure at scale is used for tracking metrics around ESG. An emerging domain of environmental metrics is being tracked and exchanged using blockchain implementations ranging from decarbonisation of the transport sector, climate adaptation, and funding for vulnerable communities to water usage for agriculture and industry, as well as mapping land use metrics for conservation. Blockchains enable the creation of authentic data streams, which can lead to improved decision-making around the consumption of non-renewable resources, energy usage, and tracking carbon credits and offsets.
Emerging regulatory approaches around sustainability standards, fine-grained reporting requirements and media interest have driven the need to focus on themes of energy, supply chain and growth of cities as population density increases. Concepts of sustainable development such as the circular economy, innovations in agritech, and increasing usage of smart devices (IoTs) in the form of sensors make it necessary to have an underlying infrastructure which can support high volumes of data exchange while providing provenance and authenticity. Blockchain enables all that along with immutability, thus becoming a strong candidate when information technology architecture is designed.
Ongoing work on standardizing measuring systems for implementations using blockchains, harmonizing the data models, and more deeply linking to regulatory requirements around reporting are the essential activities enabling blockchain-based systems to demonstrate socially responsible business practices. Blockchain technology holds immense promise for environmental sustainability and social impact, offering solutions to mitigate climate change, promote biodiversity conservation, and foster inclusive societies. By leveraging blockchain’s transformative potential, stakeholders can collaborate to build a greener, fairer, and more equitable future for all.
The article has been authored by Dhiway co-founder & director of operations Sreevidya Satish.