Blockchains & the Environmental Sustainability Industry
Environmental sustainability is all about preserving our natural assets and minimizing our impact on the earth for those that come after us. Anyone who has worked in the environmental sustainability industry for any length of time is familiar with the constant uphill battle. There are identifiable challenges the industry faces when trying to match suppliers of natural asset products with businesses and organizations that are looking to have a positive environmental impact. To a trained eye, these challenges are typical of inefficient markets. In such markets, funding efforts get eroded as they make their way through a slew of middlemen to their destination. Anyone who gets a sense of the challenges the environmental industry faces can start to see why blockchains hold such promise for this sector.
High Barriers to Market Entry
Buyers and sellers of natural assets often find themselves on the opposite end of the globe. Their dealings mainly happen in different national currencies while cultural and language barriers need to be overcome by middlemen. By their very nature and scale, multi-national organizations are best positioned to deal in such environments, and they are also best suited to pick up the tab.
But what hope does the environmental sustainability industry have if the only players are large scale organisations and businesses. Collectively, SMEs make up a substantial proportion of economic activity which has a direct impact on the environment, yet they are grossly underrepresented in the market due to the high barriers. Add to this that natural asset providers have no reliable market signals with which to plan on expanding their operations, and the same goes for potential new entrants.
The Problem with Opaque Markets
People want to see where their money is going. As funds are sent to the required destination, any extra steps and middlemen that these funds encounter along the way leads to loss of value and dilution of the initial investment. This is extremely discouraging to any business, and particularly so when they are engaging in efforts that are mainly voluntary and not requirements.
Beyond value erosion, such markets often foster corruption, particularly in poorer countries where officials are often on the take or happy to turn a blind eye. Imagine the disappointment of a business or organisation going through the effort of supporting an environmental initiative only to find that a corrupt middleman has sold them a natural asset that has already been sold elsewhere, one that is a counterfeit of a real project, or one that has been corruptly certified but doesn’t exist at all.
In order to develop a community around environmentally sustainable products, any contributions made need to be measurable, trackable, transparent and auditable.
Offering Something Tangible to Gain Community Support
Environmentally sustainable projects need to serve the interest of the local populations and communities. To mobilise a community into action, you need to be able to offer them something tangible. A lot of communities engage cutting down forests for the purposes of clearing land to feed their animal stock. It is difficult to mobilise these communities to stop land clearing as their livelihoods depend on it.
To be successful, you have to be able to offer them tangible monetary incentives to change their ways and to not be adversely affected. To even begin approaching such communities, you need to have metrics that they can count on and you need to be able to show them the measurable potential an environmentally sustainable activity can have in real terms. To extrapolate potential value from a market, you need a market that functions with a certain level of sophistication, one where price signals are transparent and can be used for future decision making.
Blockchain as a Tool for a Sustainable Future
We have only scratched the surface. Environmental sustainability efforts being exhausted in inefficient markets is simply not good enough for the task at hand. To have a real and lasting impact on the environment moving into the future, the environmental sustainability industry is in serious need for growth and expansion. It is an industry that is ripe for disruptive change and one where any advances in technologies that serve markets should be pounced on.
One of the key features of blockchain is its ability to remove the need for trust in third parties, and instead, allow participants to trust in a process that is traceable and auditable by all. A blockchain can democratize the disparities between market participants and encourage them to engage directly with each other, regardless of their scale. As communities begin to reap the rewards of finally being able to participate in an efficient open market, more projects can be encouraged to come onboard. Implementing blockchain solutions to the environmental industry is not just a method for modernization, if the industry is to survive and thrive well into the future, blockchain can play a vital role.
