NFSTs — Digital Assets for ESG and Sustainability
1. NFSTs© are a new asset class of realized, progressing or projected outputs for global sustainability impacts — such as carbon captured or mitigated, agroecology and seed banks, rural education and learning, access to opportunity, avoided slavery/exploitation, avoided poverty, etc.
2. The Economist[1] explains that “an NFT is a record on a blockchain (an immutable ledger) that can link not only to art but also to text, videos or bits of code.”
3. A non-fungible sustainability token (NFST©) is a specific “bit of code” that links to packet of unique data on a blockchain to evidence that an environmental, social or governance (ESG) impact has been achieved. The NFST owner has a property right to the data, which they can use to assert or defend a claim that that ESG impact has indeed been achieved.
4. The data they own is the evidence of that impact — digital identities of the people and places involved, geolocations, images and videos of the project, and any proof-point verified by the actual people who benefit from the impact.
5. Any claim of ESG performance or sustainability impact relies on data: who, what, how, where and when. That data should reveal what is measured and how it was verified. Without that data the claim is not credible. There are organizations claiming to ‘do good’ but we don’t know where or for whom. We don’t know what our ‘donations’ or ‘investments’ are used for or how much it cost to deliver the promised impacts (if they happen at all).
6. There are many recorded instances of certification fraud, mislabeling and promises just not being kept. Sometimes even those whom we trust to audit, measure and verify are opaque, overwhelmed or involved in the problem. Who should regular folk trust if they want to reduce their carbon footprint or preserve the environment, avoid goods that are made with forced labor, help communities become better educated or have access to nutrition or healthcare?
7. They should trust the creators of impacts who offer ESG data in bundles of discrete, time-bound, crowdsourced and peer-verified metrics. Buyers of NFSTs individuals have a license to see and have data produced by those who create impacts. This peer-to-peer channel ensures that supporters are buying the result and can transparently witness the process of the person committed to deliver the impact. For example:
- A farmer records her on-farm practices and generates geo-located data that shows she reduces carbon use and protects biodiversity. She sells these carbon and biodiversity assets as an NFST. Owners of her NFST can claim and use the data to prove that the impact they paid for.
- A teacher educates children in a village school during harvest time. He creates an avoided child labor NFST. Owners of this asset can claim and prove that they helped his students to not be child labourers.
- A worker sells their employer a single-use license to their individual responses to workplace ESH survey. The employer can use the responses as part of their Annual Reporting or show compliance to product buyers and auditors.
- An island community fishes sustainably without depleting stocks, using slave- workers or destroying marine life. They create sustainable fishing assets, avoided forced labor assets and marine ecosystem assets for NFSTs.
- A teenager chooses cosmetics without mica or animal testing. She creates an NFST to avoid child labor and animal cruelty assets.
- A meat-eater buying an NFST from a vegan providing the data that that they do not eat meat results in a net-zero impact on the carbon footprint of meat production per capita.
8. NFSTs are designed to be peer-to-peer. In all these cases the claims are supported by evidence of practice by the issuer. Every NFST is a scarce asset because for any given period, there is finite carbon or biodiversity stock on the planet, and only specific numbers of children in villages. Vegans and teenagers are specifically distributed and subscribe to specific values. Peer and consumer behaviors based on their own actions can be systemically balanced with the data they declare, get paid for, and their trust in each other.
9. NFSTs are not a currency or a security. The asset sold by the NFST issuer is the data associated with an activity that delivers an ESG output. The issuer does not promise the buyer any financial return. It is not equity in the project or a security — in other words it is NOT a fungible, negotiable financial instrument that represents some type of financial value, such as a stock, bond, or option. It is expected that after the NFST’s promised impacts are achieved, or if progress is clear, then the claim behind that NFSTs may be traded by the owners, perhaps with royalties in smart contracts with the original issuers.
10. A Bluechip© is a standard for NFSTs that requires specific data to be included when the NFST is created. For an NFST to qualify as a Bluechip© the metadata must have a bluenumber® (self-sovereign digital IDs or ‘SSID’) for the creator, the place of the impact, any entity prequalifying the creator, as well as the peer-group who will verify the impact — for example the workers earning the promised living wage, or the villagers surrounding the forest that is being preserved. The buyers of a Bluechip© must also provide their own bluenumber® so the sellers and verifiers all know to whom they are accountable. This means that a Bluechip© embeds full transparency of actors and places associated with that impact and responsibility and accountability for achieving the impact is clear.
11. The first NFST, which follows the Bluechip© standard, will be issued by Christa Barfield at 9.00am Eastern Standard Time. Christa is offering 150 ‘Beetchips’ for 55ADA (US$110) each. Beetchips will be on the Cardano blockchain. She’ll use the funds to renovate a greenhouse, hire workers and produce organic food for her community in Philadelphia. Beetchip buyers can evidence the impact of Christa’s efforts directly and own the claim of having invested in a community shared agriculture (CSA) program. Her impact will be verified by the people she hires, the volunteers who help, and ultimately those in her neighbourhood that will get fresh, organic produce from those greenhouses. Every step of the way Beetchip buyers will see that Christa is delivering impact, and they can claim and prove how their contribution made that happen.
12. NFSTs were conceptualized and designed by Puvan J Selvanathan to enable and advance data property rights. Acknowledgments to Chris Raczkowski, Srinivas Maddala, Mark Hancock, Jacob Peck, Patrick Tobler and Peter Jaschkowske for their help and support.
13. Bluechips are built on an infrastucture provided by the Bluenumber® Ecosystem for SSID. Bluenumber® lets you create wealth from your data and give consent to businesses and organizations to use your data only with direct compensation. Bluenumber® gives you a standardized, secure, digital ID in an open infrastructure for service providers and verified users to engage. Bluechip enables the use of SSID in securing data property rights.
November 2021, Munich and New York
