ESG means technology
Russian invasion of Ukraine changed the world. Suddenly the winter came and we appeared in the desert of the Real. People and companies need to get real and creative. And this usually means embracing technology.
Ukraine’s vice prime minister, Mykhailo Fedorov asked Elon Musk for a Starlink connection and got it within hours. And the devices came within two days. He also published various crypto addresses of organizations supporting their army. Recently Ukrainian government contemplates regulating crypto so it can fundraise directly.
From Woke Capital to technological transcendence
Balaji Srinivasan tweeted on an interesting discussion in the EU and Germany focused on ESG taxonomy. And if weapons could be included under investments meeting the environmental, social and governance criteria as non-financial factors for assessing the material risk and opportunities of doing business.
German weapons’ manufacturers saw a window of opportunity to include weapons in the ESG taxonomy and thus increase their access to financing. Balaji comments that Germans should get bullish on nuclear energy too.
At first, including weapons into ESG seems quite odd, even unholy to contemplate. How could someone come up with such an idea?
Well, there is this meme of a woke Raytheon. And a woke CIA recruitment video with language people outside US won’t comprehend much.
But Balaji Srinivasan explains why such Hegelian syntheses, like a priest/warrior combination, might be in fact effective. The Left provides a moral justification and the Right provides the effective execution.
Balaji Srinivasan simplifies the world into three major power attractors today — The Woke Capital (NYT), the Communist Capital (CCP) and the Crypto Capital (BTC). They all oppose each other. The CCP wants you to submit because they are powerful. The NYT wants you to sympathize (and submit) because you are powerful (and privileged on some axis). And BTC wants you to be sovereign.
And the key is to find the decentralized center between them or some kind of technological transcendence (a z-axis that would transcend the inherent conflict of these three attractors). A way out of maximalism into something he calls optimalism. Because the dose makes the poison. Too little of tolerance is not good. But too much focus on tolerance flips into a new kind of intolerance. Too much sovereignty becomes impractical and solipsistic. The key to resolve this tension is a new kind of technologically enabled tribalism. Call it building epistemic communities in the cloud first.
All noble ideals are with us since the dawn of humanity. What changes is the technology that enables progress. Technology moves the Pareto frontier. One doesn’t need to make a trade-off between eco-friendly car, fast car and safe car. Tesla moved the frontier on all three dimensions. This is all-win approach and the culture of WAGMI enabled by tech.
From window dressing to technological progressivism
Messari in their Crypto Theses for 2022 mentions ESG as one of the attacks on web3 due to misconceptions about inherent energy scarcity and perceived energy intensity of bitcoin mining.
But I think ESG needs web3. The decentralized financial internet, together with the ledger of record concept by Balaji Srinivasan, can in fact disrupt ESG and 10x it.
But by and large, ESG (CSR, Sustainability) still remains a window dressing exercise for potential investors and regulators. The culture and social wars don’t help either and eroded its credibility in the recent years. Hence the stakeholder capitalism and Woke Capital memes.
But to give CSR community their deserved credit, they are often the true protopians — enthusiastic people believing in, and patiently working towards gradual progress of their companies in sustainability, equality and transparency, using technological innovations, long-term goals and measurable KPIs.
Maximalists are both dystopian when attacking their enemies, and utopian when presenting their solutions. Protopians are technological progressives and pragmatists.
Web3 in general and bitcoin in particular reduces violence. Why? Because “fiat money is backed by men with guns” and the digital gold is backed by math. No amount of violence will solve a math problem.
A practical and a directionally right example from Kenya: an unbanked person could have been robbed of cash. But mobile banking in 2007 changed the equation quite a bit.
CSR community helped to scale M-Pesa, it can help to rebuild the world with web3
Many things in life are Pareto-distributed, and it means that black swans and big disruptions for better or worse are scarce. One of the biggest successes of CSR and development cooperation was the scaling of M-Pesa and the rise of mobile banking innovation in Kenya. And from Kenya and Africa even to places like Albania.
The original Kenyan innovation of peer-to-peer transfers of mobile phone credit in the micro-finance context was scaled, thanks to a CSR team at Vodafone and a challenge fund grant from the British DFID, into the M-Pesa mobile banking revolution across Africa.
Some 15 years ago Africans leapfrogged the West not just with mobile telephony, where they skipped the landlines and went straight to mobile phones, but also in mobile banking. Instead of bank accounts and plastic debit cards, they went straight to mobile payments.
Similar world-changing innovations in web3 might come from places like India, Nigeria or Ukraine in the near future. The ESG community might be a catalyst that will help to scale these innovations or might lose, fighting them and wake up on the wrong side of history and capitalism.
If politics is the sublimation of war, alignment is the sublimation of politics
War with exponential technology is negative-sum, all sides lose. Politics is continuation of war with other means. Memetic tribes fight a social war on social media for the domination of a noosphere. But again social media being exponential tech, all sides lose and discourse suffers.
Balaji Srinivasan explains how good can be defined as helping others without self-regard. Evil is the obverse — harming others while helping yourself. Both are zero-sum. Smart means helping others while benefiting yourself. A positive-sum solution. And stupid is harming others while harming yourself.
Both war and politics in times of exponential technology means eventual destruction of biosphere, geosphere and noosphere. Our global commons. Only true alignment is the way forward.
Fiat money is backed by men with guns, as Paul Krugman says. And bitcoin is money backed by math. No amount of violence can solve a math problem. Web3 means smart contracts, DAOs, NFTs and crypto certificates.
Web3 enables pseudonymous economy, what Balaji Srinivasan calls a new digital Peace of Westphalia, as well as truly reproducible and cryptographically verified research and news reporting — the Ledger of Record.
After this tragic and stupid invasion is over, and Ukraine defends itself kinetically and memetically, hopefully without the conflict spreading to more countries, we need a new Peace of Westphalia.
It will be a more deglobalized and decentralized world. With automation, neutral web3 protocols, national tech stacks and pseudonymous economy as some of the building blocks.
Providing hope for a new civilization and the aligned movement with the rule of code, where money backed by math brings more peaceful times, than fiat money backed by men with guns ever did.
ESG can help with that.
You can read a longer version of this article called ESG needs web3 on Substack and jump right into various shifts ESG can make if it adopts web3 and some of Balaji Srinivasan’s concepts. Here are the examples:
“From the materiality matrix to the DeFi matrix”
“From the triple bottom line to triple-entry accounting”
“From mostly talking to true alignment in collective impact initiatives”
“From skills-based volunteering to DAOfying vocational training”
“From sustainability reporting to crypto oracles and the ledger of record”
“From SDGs to tech trees and vector-based theory of change”
