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Blockchain and the importance of sustainability in new age technology

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Pratik Gauri

The Fourth Industrial Revolution promised increased productivity through the automation of manual tasks. It envisioned a world that unleashed human creativity and unleashed technological possibilities. The jury is still out on whether it will deliver on its promises, but what is surprisingly clear is the disastrous impact it has had on climate change and sustainability. The “commercial” paradigm has caused excessive depletion of natural resources, climate change, and biodiversity loss. A paradigm change from profit-making to profit-making is necessary.

Sustainability is an integrative, holistic, long-term approach that advocates a balance of economic, social and ecological dimensions. Businesses today cannot see profit maximization as the sole measure of success. Building a relevant business requires an essential link between sustainability and profitability. Sustainability in new age technology can be driven through disruptive innovation powered by social change towards a more sustainable and equitable world. Blockchain is one powerful way to do this.

Blockchain is a digital decentralized distributed ledger that helps verify and track multi-step transactions. Blockchain is basically a new form of computing architecture that brings revolutionary new capabilities, much like the internet in the 90s and his smartphone in the late 2000s.

Among the most notable features of blockchain technology are the decentralized immutable ledger and advanced cryptography that bring trust to large computer networks.

Blockchain technology works as a distributed ledger system, using communication or transactional data stored in a public, decentralized network of digital blocks (Moll & Yigitbasioglu, 2019). Each of these blocks contains a digital signature and timestamp, making each individual block effectively immutable (Kokina et al., 2017; Nakamoto, 2008). Digital blocks are placed together according to complex mathematical logic, a process called “hashing” (Nakamoto, 2008), to form a chain of blocks. Hence the name blockchain.

The trust built by the immutability and security of blockchain ledgers can now be leveraged in two key features that require immediate attention. These two functions are the monitoring and certification of a company’s Environmental, Social and Governance Scores, or ESG Scores, and providing solutions discovery and identification for the unbanked.

ESG Scoring:

So far, environmental, social, and governance information about companies is primarily self-reported and independently assessed data.

What is unusual and difficult in sustainability-focused investment analysis is that corporate sustainability disclosures, unlike financial disclosures, do not have to adhere to shared standards. Years of effort by standard-setting groups have resulted in approximately a dozen major reporting frameworks and standards. These are subject to the discretion of companies to apply as they see fit (see sidebar Short Glossary of Sustainability Reporting Terms). Investors should therefore coordinate corporate sustainability disclosures wherever possible before attempting to make comparisons between companies.

A further problem with ESG reporting today is the fact that different companies use different criteria to report their ESG performance. This is largely self-reported, voluntary, and often unreliable, a fact that is significantly different from investor-reported financial reporting. make investment decisions based on According to Kenneth Pucker, former COO of Timberland, he’s committed to sustainability: “The disconnect between his accelerating ESG activity and faith in results should be a wake-up call for both companies and investors. .”

What we need is a system designed to transparently and objectively measure a company’s relative ESG performance based on publicly reported data that adheres to the underlying ESG data framework. ESG score, which integrates and describes a company’s relative ESG performance and capacity, industry importance and company size bias.

In addition, ESG performance must be based on verifiable data reported in the public domain, including the evaluation and scoring process of the most comparable companies.

Practices include recalculating ESG scores on a more regular basis, such as weekly, in products, unlike the overwhelming practice by companies where ESG data is updated once a year to align with the company’s own ESG. It should contain the data to be updated. disclosure.

Digital identity:

In the ever-evolving and innovative world of blockchain, a new concept of SoulBound tokens or SBTs could be the answer that ultimately needs to be developed. Unlike NFTs, it is a very unique token that can only be owned by one entity. and only one entity.

Created in collaboration with the Proof of Attendance protocol, this new Ethereum token standard combines the Self-Sovereign Identity element with the new token standard and Decentralized Identity (DID).

DID and SBT work together to provide a complete digital identity management system. Users who want to create a complete digital identity management system can choose between DID providers and SBT providers.

DID providers allow users to create and verify digital IDs using public keys. SBT providers allow users to create secure private databases linked to public keys used to create digital identities.

This further confirms an individual’s identity and puts a certificate (driver’s license, college degree, proof of age, etc.) on-chain to validate the proposal to further provide an individual’s identity at various institutions. can be used.

As an entrepreneur in the blockchain ecosystem and founder of one of the world’s fastest unicorns, I always advocate combining profitability and sustainability for a better future. In this article, he discusses two ways this can be considered, but as blockchain adoption grows, he is optimistic that we will see use cases across the ecosystem, not just ESG and identification.

The author is the founder and CEO of 5ire.

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