Blockchain is not all about self-interest!
More and more financial institutions are adopting blockchain technology on their payment or trading systems due to its decentralisation and encryption. In addition to financial transactions, blockchain technology may also be applied to many aspects of our lives, such as network security, election and voting, real estate transactions, analysis and forecasting, you name it. It is not difficult to think of the convenience and benefits that blockchain technology can bring to the human society.
However, most people haven’t realised that rather than just for self-interests, the same technology can be used to improve our society. For instance, blockchain technology can track the donation to the charities. An established use case is Worldwide Generation (WWG) , a company that has built an application on top of Activeledger to help funds that invest in developing countries meet the United Nations 17 sustainable development goals (SDG) by monitoring their destination and use. Blockchain technology can also maintain food qualities (check out my previous blog post: What else can China do to gain trust in food safety besides advertisement bombing?), and most importantly, it can solve the environmental problems we are facing today.An about-to-happen example is to use the technology to increase the efficiency in calculating the carbon footprint that is easily to be ignored between the suppliers and its distributors. In the following paragraphs I’m going to talk about how blockchain may give a hand on solving the complex identification of carbon emissions.
How do companies know how much carbon dioxide they release?
Calculating carbon emissions is very complicated, hence, a better data control makes blockchain a compelling solution. Before 2011, enterprises only prioritised the measurement of emissions from their own operations and consumption. However, these reports only reveal a part of the carbon footprint of an organization. Besides the offices, organisations hold goods and services that continue to leave a carbon footprint, which will need to be processed ultimately.
These indirect emissions, which are classified as scope 3 sources actually stand a majority of a company’s carbon emissions. As scope 3 sources reflect an important step forward for increased accountability and accuracy, it is challenging for companies to assess the entire carbon emissions. In this case, blockchain enables the organisations to track the data inputs of carbon emissions analysis from the beginning to the end of the product supply chain.
Here’s an instance, by building the carbon emissions records through IoT devices to track fuel consumption of vehicles and optimise delivery routes. The traceability of blockchain can not only protect the data from tampering (in this case, secretly transferred to other parties perhaps by changing logs), but also determine the amount of carbon tax to be charged on at the point of sale. Moreover, blockchain improves the efficiency when communicating with third parties due to its transparency.
How about consumers? How do they know?
As consumers, our daily choices directly affect the carbon emissions, but there aren’t enough channels for us to know how much carbon footprint we generate along with shopping. According to a recent Nielsen global online study, nearly 72% of young people aged 15–20 are willing to pay more for environmentally and socially friendly products and services, suggesting that the demand for visibility of consumers’ carbon footprint is increasing, and this will further encourage companies to rethink and innovate their supply chains to meet the demand for such products.
For example, some organisations, such as Ant Financial (a financial company under Alibaba group), are trying to roll out devices that build the carbon footprints on blockchain that is open and decentralised. By doing so, consumers build awareness of their carbon footprint simply by scanning a QR code on the packaging of products they buy. Another live-case is the carbon emission associated with ‘red meat’ that human consume almost on a daily basis. As good as they taste, you probably don’t know that 1 kilograms of beef brings along 13.3 kilograms of carbon emissions. By logging in the IoT devices to record what you eat, the device enables a real version of an instant, tamper-proof transaction record to be transparent to the public, and will continue to help the development of a new era of green economy.
Besides money blockchain brings more benefits
On the way to reach Sustainable Development Goals, carbon footprint calculation is a big challenge. However, blockchain brings an opportunity to increase information transparency and significantly change people’s perception of companies and build trust. Beside the calculation of carbon footprint, the growth in adoption of blockchain will improve access to tradable carbon credits, a permit that grants a business to emit a certain amount of carbon by buying off reduced emission volumes of other businesses. This carbon credits can raise the incentives of companies to reduce carbon emissions. However, the marketplace of carbon credits is not liquid neither transparent enough. To improve the market efficiency, there are companies turning carbon credits into crypto-tokens to kill two birds with one stone.
Imagine you own a company with an optimised supply chain, and you are able to put your carbon credits onto a marketplace for sale every month. Moreover, the tokenised assets can be freely exchanged on the market. Not only is this an additional income, but it also plays a part of your corporate social responsibility. Through the use cases above, we can tell that blockchain technology has greatly changed the way companies have presented to achieve sustainable development. By utilising such technology, it becomes possible for people to engage all stakeholders in a more sustainable economic system.
