How the blockchain could transform sustainability reporting
Forget Bitcoin. I’ll let the get-rich-quick crowd focus on this and its cryptocurrency cousins.
I’m excited about the hard-working underlying technology that makes Bitcoin possible — the blockchain ledger system — and its potential to revolutionize corporate sustainability and social impact.
Right now, we are experiencing a crisis in cultural confidence. We don’t trust our institutions because they are all talk and no action. We view corporations with suspicion. This is why I believe the blockchain dramatically will change the way we view, influence and forge trust in companies based on proof, not words.
Here’s how I think this could unfold.
Consider how companies measure and report their corporate sustainability. Typically, information made public about a company’s sustainability — if it’s made public at all — is self-reported by that very company. Even if its environmental or social performance is independently substantiated, it’s through a narrow certification body — think the Fairtrade movement or the U.S. Green Building Council, which handles the LEED system — that verifies a vertical slice of a company’s environmental, social and governance (ESG) policies and impact.
Blockchain has the potential to flip this on its head. That's because it can authenticate a richer, more accurate global ledger of a company’s actual social and environmental performance, providing society with a more realistic assessment of its impact.
Decentralized by nature, blockchain can democratize reporting and assessment beyond the self-interest of management and company-paid consultants to include holistic audiences connected to the corporation through a currently unmeasured value chain. Think about it: Customers and employees, investors and nonprofits, mayors’ offices and neighborhoods, a supply chain from organic farmers to industrial parts manufacturers to shipping firms — all independently verifying their interactions in a company’s social and environmental performance.
Here’s where tokens, a type of cryptocurrency, come in handy: Tokens provide incentives for stakeholders measuring a company’s ESG performance — whether that’s to record miles traveled and energy consumed in transport or to review the impact of a company’s volunteering initiatives in the community. Tokens even could be used to reward a company for improving its public benefit.
ESG performance measured via blockchain could be time-stamped and 100 percent verified by all participants in the network. And would be immutable — meaning that the information could not be erased, fudged or corrected without the unanimous consent of all involved.
One issue: blockchain technology consumes considerable energy, a challenge that will need to be addressed.
Blockchain will shine light on corporate performance, but just as important it will reward purpose-driven, social-impact businesses that are already intentionally working to create public benefit.
As someone who’s been building socially responsible businesses for nearly three decades, blockchain gives me the power to create even more social impact. At the same time, it distributes influence and accountability to all of us who play roles in business or client outcomes.
Blockchain means that you and I get a new, more powerful voice in corporate behavior — and responsibility for our own actions as citizens as well. Count me in.