Blockchain for Sustainability: The Benefits

Ms Kon Sui Jin (Executive Director, TRST01) and Ms Earlene Tan (Programme Manager, Singapore Blockchain Innovation Programme).

As the world faces pressing environmental challenges, the world, societies, and businesses are increasingly looking for ways to reduce their environmental impact and contribute to sustainable development.

In this post, we will explore the potential for blockchain technology to contribute to sustainable development. From improving supply chain transparency to enabling more sustainable business models, blockchain can offer numerous benefits to businesses looking to achieve their sustainability goals, especially in the way of Security, Sustainability, and Inclusion (SSI).

Here are some of the ways blockchain technology can contribute to sustainability:

  1. Life Cycle Assessment – the holy grail of sustainability, Life Cycle Assessment obliges every actor in the ecosystem to jointly and systematically trace the path of every product and its environmental impacts from cradle to grave, and grave back to cradle again in a circular model.

Blockchain, with its ability to capture and store data immutably, provides an ideal solution to tracking and exhibiting such data so that no one single actor is able to tamper with this data for their own purposes and in so doing provides the impetus for the entire ecosystem to collaborate in ways that are positive to the environment. This joint group policing act based upon the technology and qualities of the blockchain, coupled with other monitoring technologies such as IoT and AI will eventually move businesses on the road to environmental sustainability and a circular, regenerative economy.

  1. Supply chain transparency and Safety: An integral part of the Life Cycle Assessment as discussed in point 1 above has to do with the ability to correctly diagnose the supply chain. With blockchain, businesses can track the origin and lifecycle of products, ensuring greater transparency, accountability and safety in supply chain operations.

In so doing, consumers are given greater assurance of the ethical origins of their product, the processes that had taken place in handling of these products, and, the safety and origin of the products that they consume.

  1. Sustainable business models: Blockchain technology enables the development of sustainable business models by incentivizing ESG-aligned behavior through the use of smart contracts and tokenization.

Data relating to materials, energy inputs, sourcing information and sustainability initiatives are all forms of value waiting to be unlocked through the blockchain. Take for example, customers earning loyalty tokens for purchasing a favorite beverage, and then through recycling schemes, earn more tokens for carrying out sustainable actions on behalf of the company.

Whole ecosystems of tokens can emerge from this model of behavior incentivization, each with their own unique perks and even multi-brand/party collaborations which allow the consumer to choose how they would like to do their part to support the causes they believe in – each action edging the planet in a healthier direction, and empowering the consumer in ways they never had in the past.

  1. Carbon credit creation and trading: Blockchain technology can, with a greater degree of accuracy record the data that enables the creation of carbon credits, which are certificates that represent a reduction or removal of one ton of carbon dioxide emissions. Due to the verifiability and immutability of the data that goes into the creation of such blockchain based carbon credits, the market value of such credits tend to be a lot higher than those that are not created using blockchain technology to record their environmental and societal benefits.

Additionally, by using blockchain, carbon credit trading can be made more transparent and efficient, reducing the cost of compliance and enabling greater participation in the carbon market.

In fact, these business endeavors have spawned a new practice called Regenerative Finance (ReFi for short), where regenerative principles are embedded in blockchain protocols to enable and incentivize better practices in the protection of the environment.

  1. Green energy management: Blockchain technology can enable the management and tracking of renewable energy generation and consumption, facilitating the integration of renewable energy sources into the grid and reducing reliance on fossil fuels.

By shifting from centralized to decentralized energy distribution paradigms, renewables can be seamlessly integrated into energy grids. Localized and flexible pricing mechanisms align well with a distributed approach, effectively managing the variability of supply and congestion within the network to ensure efficient energy distribution.

This is a great example of how one of the central philosophical tenets of blockchain technology, which is democratization and access is manifested in the world’s search for a more sustainable form of powering the economy; by allowing energy providers who had heretofore no access to the energy market and were unable to monetize the resources they had, are, in this context, because of blockchain technology, finally able to stand side by side the large players who had previously, through sheer size, muscled these smaller players out of the market.

In a nutshell, blockchain, like sustainability, aims to solve a common problem, and that is the Tragedy of the Commons, where too many common pool resources and the power to use and exploit them are held in the hands of the few. By understanding the breadth of technological applications of Blockchain, we are able to better to employ them in our race against time to save the only home that we know – Planet Earth.

Part II of this article will discuss real world examples of each of the areas explored above in order to provide a complete picture of how small pockets of industry have already started on the journey towards a circular and sustainable economy using blockchain as a technological enabler.

About the co -aurthor and Singapore Blockchain Innovation Programme

Ms Earlene Tan, Programme Manager at the Singapore Blockchain Innovation Programme (SBIP), holds a Master in Finance (Technology) and is an advocate for commercializing basic research in the field of blockchain in order to produce viable and much needed solutions for real world problems that can be solved through data security and sovereignty.

At the Singapore Blockchain Innovation Programme (SBIP), we are dedicated to exploring the potential of blockchain technology and driving innovation in this exciting field. Through our research, development, community events and partnerships, we aim to connect blockchain enthusiasts and innovators and create a vibrant ecosystem for blockchain development.

** This article first appeared as a thought leadership piece in on the SBIP website. Link here: The Benefits of Using Blockchain for Sustainability | SBIP

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