Blockchain, according to experts, is a digitally distributed, decentralized ledger that facilitates the verification and tracing of complicated transactions.
By automating manual operations, the Fourth Industrial Revolution promised to boost productivity. It envisioned a world in which human creativity and technology potential was fully realized. Although its capacity to deliver on its promise is still up for debate, its negative effects on sustainability and climate change are painfully clear. The “for-profit” mindset of the Fourth Industrial Revolution has led to excessive resource depletion, climate change, and biodiversity loss. It is important to shift the focus from for-profit to for-benefit.
A balance between the economic, social, and ecological spheres is advocated by sustainability, an integrated, comprehensive, and long-term strategy. Businesses nowadays can no longer measure success solely in terms of profit maximization. Sustainability and profitability must be intrinsically linked to creating relevant enterprises. Disruptive innovation may be used to drive sustainability in the new era of technology, supported by social shifts toward a more sustainable and just society. Blockchain is one effective method for doing this.
Blockchain is a decentralized, digitally distributed ledger that aids in the verification and tracing of complicated transactions. A blockchain, like an internet in the 1990s or the smartphone in the late 2000s, is basically a new type of computer architecture that offers revolutionary new possibilities.
The distributed, unchangeable ledger and cutting-edge cryptography that blockchain technology has introduced to large-scale computer networks are the two most significant aspects.
Blockchain technology functions as a distributed ledger system that uses data for transactions or communication that is stored in a decentralized network of digital blocks that is accessible to the public (Moll & Yigitbasioglu, 2019). These blocks are almost unchangeable since each one has a digital signature and timestamp (Kokina et al., 2017; Nakamoto, 2008). The method of arranging the digital blocks into a chain of blocks using intricate mathematical reasoning is known as “hashing” (Nakamoto, 2008), thus the name blockchain.
The immutability and security of blockchain ledgers have generated confidence, which may be used for two crucial tasks that need to be handled right away. These two tasks include creating a solution for the unbanked and giving them identity, as well as monitoring and certifying a company’s Environmental, Social, and Governance score, or ESG score.
ESG Scoring:
As of now, the majority of a company’s environmental, social, and governance information is self-reported and individually evaluated.
The peculiar and difficult aspect of sustainability-focused investment research is that, unlike financial disclosures, sustainability disclosures need not adhere to common criteria. Nearly a dozen main reporting frameworks and standards have been created after years of work by standard-setting organizations; firms are free to use them however they see appropriate (see sidebar, “A quick lexicon of sustainability-reporting words”). Investors should consequently attempt to harmonize corporate sustainability statements before attempting to compare different firms.
The issue with current ESG reporting is also that there is a big gap between the financial reporting that investors rely on to make investment decisions and the way that different firms record their ESG performance, which is mostly self-reported, voluntary, and sometimes incorrect. The gap between increasing ESG engagement and trust in the results, according to Kenneth Pucker, a former COO of Timberland, a firm dedicated to sustainability, “should serve as a wake-up call for companies and investors alike.”
What we need are ESG scores that integrate and take into consideration firm size biases and industry materiality in order to clearly and objectively analyze a company’s relative ESG performance based on publicly-reported data in conformity with the underlying ESG data methodology.
Digital Identity:
The novel idea of a SoulBound Token, or SBT, which, unlike an NFT, could only be owned by one entity and one entity alone, may ultimately be the solution we need to create in the ever-evolving and inventive world of Blockchain.
This new Ethereum token standard was developed in conjunction with the Proof of Attendance protocol and combines Self-Sovereign Identity components with a new token standard and Decentralized ID (DIDs).
Together, DIDs and SBTs form a complete digital identity management system. Users have the option of selecting between a DID provider and an SBT provider if they wish to build a comprehensive digital identity management system.
Users can generate and validate their digital identities using a public key through the DID provider. By using the public key used to construct the digital identity, the SBT provider enables the user to create a private, secure database.
This might also be used to confirm the person’s identification, and there have been ideas to place documents like driver’s licenses and proofs of age and education on-chain to give extra personal identity stakes to different organizations.
As the founder of one of the fastest unicorns in the world and an entrepreneur in the blockchain ecosystem, I will always be a proponent of balancing profitability and sustainability to actualize a better future. In this essay, we’ll discuss two different perspectives on this, but I’m confident that as blockchain use rises, we’ll see applications beyond simply ESG and identity throughout the ecosystem.
