And once that’s done, they need to be transparent about their progress toward those goals. For listed companies, this involves setting out the details for their investors in the form of an annual sustainability report. 

Environmental impacts

The environment – and especially the climate – are what most of us think about when sustainability is mentioned.

 At COP26, 197 countries pledged to “phase down” the use of coal. More broadly, the international community’s ambitions to reach net zero carbon emissions by mid-century – as well as high prices for fossil fuels – are driving the decarbonisation of everything from cars to energy systems.

What does this all have to do with blockchain? The simple answer is data. If industries are to set decarbonisation targets and report on their progress toward meeting them, then they need to base their claims on reliable data. They want to be able to show the progress they’re making in relation to their peers, which also means using common data standards across sectors. And investors and regulators are going to want to capture that data, analyse it and make decisions based on it, all of which requires a high level of confidence in its soundness and completeness.

At Australian Blockchain Week, Scott Waller, Oceania Assurance Blockchain Leader at EY, observed that consumers have lost faith in institutions. “Surveys like the Edelman Trust Barometer[1] show we trust everything including governments and corporations less,” he said. And data is at the heart of this issue. “Web 3.0 brings trust – when data can be verified and traced to its source, this re-establishes trust. Blockchain technology is very well placed to address peoples’ issues with current systems.”

Credit where it’s due

One of the best examples of how blockchain can make this happen is the carbon credit trading scheme outlined by Howard Silby, Chief Innovation Officer at NAB, during Blockchain Week. Put simply, industries that are carbon-intensive will take a while to build new infrastructure that doesn’t produce excess carbon. In the meantime, if they can buy carbon credits from companies that do less harm to the atmosphere, they can offset their impact – while also rewarding the less-damaging companies with a swift injection of cash.

As this practice becomes more widespread, a global market for carbon will emerge that incentivises bigger emitters to accelerate the decarbonisation of their business due to the cost of buying credits. That looks likely, thanks to the outline of a global mechanism established at COP26 – and this is where NAB’s blockchain application comes in.

“We have collaborated with six other banks globally to create a carbon settlement platform,” he said. “This facilitates safe and transparent carbon credits trading. We have already executed the first real trades.” Using blockchain to settle transactions provides secure records of every trade and enables the credits to be traced across their entire lifecycle – a boon to traders and data miners alike.

That’s not the end, either. For now, trades are settled in fiat currency, but the financial settlement leg of the trade can also be brought on to the blockchain. “We want to settle both sides of the trade on the chain and are looking at introducing a form of digital cash,” he explained. “The system can’t be regarded as fully operational until we don’t have to settle partly in fiat – later this year we will do this with stablecoins on-chain.”

Building confidence

Apart from offsetting their emissions by buying credits, carbon-intensive businesses can gain a holistic picture of their carbon footprint in ways previously impossible due to the many different parties involved in most industries.

Take construction, for example. During his Blockchain Week session, Laszlo Peter, Head of Blockchain Services, Asia Pacific at KPMG described a decentralised platform that can enable all parties in a building project to track and unify everything that contributes to its overall carbon footprint. He explains that buildings have masses of materials coming in and many organisations involved in construction, so a distributed environment is handy and distributed technology is paramount. KPMG are developing platform for a multi-sided marketplace where all participants can trust each other and collaborate on tokenised assets that can be offset with collaborators globally.

KPMG is working in partnership with the New South Wales government to roll out this Building Trustworthy Index[2] in the state – and is developing the application in ASX Synfini’s DLT as a service environment.

Building a more sustainable economy is everyone’s responsibility. Because it is inherently collaborative and connects otherwise fragmented data, Blockchain is uniquely positioned to help us get a handle on the way we use carbon – and the cost we attach to that. I’m convinced it will be critical infrastructure for the transition to net zero emissions – and I’m excited about the ways in which Synfini can help forward-looking organisations make that shift happen.

[1] https://www.edelman.com.au/trust-barometer-2022-australia

[2] https://home.kpmg/au/en/home/media/press-releases/2021/06/kpmg-creates-revolutionary-new-building-assurance-solution-based-on-blockchain-25-june-2021.html