How Blockchain can help to drive sustainable development

Organizations can no longer afford to ignore the sustainability drumbeat. Leaders realize that if they don't embrace sustainability in their business strategy, they won't be there for long. They're under pressure from their boards and consumers. But how can businesses demonstrate that their products are truly sustainable? The answer may be distributed ledger technology (also known as Blockchain).

Isn’t Blockchain unsustainable?

Many potential exist for blockchain-based applications to assist us in creating a more sustainable future. They have the potential to give (1) greater openness about individual and group actions, as well as trustworthy provenance throughout global supply chains. (2) Enable new types of applications by strengthening accountability loops and reducing bureaucracy and power imbalances. (3) Use purpose-driven tokens to reward environmentally beneficial behavior.

Isn't Blockchain, on the other hand, unsustainable? The energy inefficiency of Bitcoin and other Blockchains is frequently highlighted in mainstream media coverage of the technology. While this technology is energy-intensive, most media coverage fails to compare the CO2 footprint of Bitcoin transactions with the CO2 footprint of state-of-the-art non-blockchain solutions such as bank transactions and also fails to compare the CO2 footprint of Bitcoin transactions with the state-of-the-art non-blockchain solutions such as bank transactions.


Lack of openness in global supply chains leads to issues such as fraud, pollution, human rights violations, and other inefficiencies. Individual and corporate sustainable behavior is so difficult to measure and not effectively rewarded at the moment. With a shared, decentralized database that stores immutable and encrypted copies of the information on every computer (node) in the network, Blockchain has the potential to give new levels of transparency.

This allows ordinarily distrustful parties, like individuals and businesses that have never met, to conduct near-frictionless peer-to-peer transactions. As a result, blockchains may be used as a transparent bookkeeping engine that anybody (public and permissionless blockchains) or a small number of individuals (private and federated blockchains) can check.

DLT (often referred to as DLT) is a term that refers to a type of This kind of openness may be used (1) in the supply chain for goods and services and (2) in institutional contexts to reduce corruption and increase accountability.

Supply chains

Supply chains are complex networks of far-flung, independent businesses that trade commodities, money, and data in a dynamic, ever-changing environment. Their basic design is similar to that of Blockchains. As a result, blockchain-based solutions can assist us in tracing the provenance of goods and services along the supply chain, allowing us to clearly identify a product's raw materials, including amount, quality, and origin.

As a decentralized network with distributed and transparent data structures, the Blockchain protocol enables a diverse group of network actors to exchange data relatively seamlessly from all across the world, replacing traditional centralized data structures with a distributed ledger, in almost real-time, allowing for automated auditing.

Goods and service provenance

Most customers and sellers are unaware of the real origins of produced products, including the constituents of the commodities they have purchased, when they arrive at their final destinations. Transparent supply chain solutions have the ability to raise the bar for customers and other downstream actors in terms of sourcing and manufacturing sustainability:

Environmental effect transparency, such as assessing diesel pollution from vehicles at shipping ports, (b) food provenance: sources, production type, and components of the food we consume, growing circumstances for plants, and animal treatment, such as false fishing equipment trapping seals or illegal fishing causing a reduction in a species' population.

Price Transparency

Many end customers are unaware of who earns what and under what conditions throughout the supply chain of the goods and services they consume due to a lack of transparency and charges imposed by certain unscrupulous middlemen. The use of blockchain-based solutions has the potential to increase accountability and responsibility in the area of human rights.

Monitoring industrial working conditions for modern-day slavery, child labor, and employee exposure to toxins, for example, or showing if farmers are paid fairly for the value they provide. However, such systems would combine Blockchain, AI, and IoT to enable complete transparency over what happens across the global supply chain.

Inefficiencies in the economy and document handling

Inefficient document handling systems have a negative impact on firm earnings across the supply chain. Maintaining the bureaucratic paper trails necessary to govern contemporary supply networks is inefficient and costly. Blockchain is being used by supply chain startups and major industry players to optimize their value chains, improve inefficiencies, free up working capital, and make goods and services more accessible.

Weakness in the institutions

Blockchain has the ability to reduce institutional flaws by increasing process openness and reducing deceit, corruption, and uncertainty.

Donation Traceability − Blockchain supports civil society accountability by tracking donations and ensuring they serve the cause of the donor, fighting bureaucracy and corruption, and delivering funds where needed without the need for sophisticated financial infrastructure. Giveth, Alice, and Aidcoin are three examples.

State corruption − Blockchains can enable near real-time transparency of what happened to taxpayers' money and international loans, as well as how the funds were redistributed, avoiding corruption and addressing public mismanagement.

By ensuring the legitimacy of the documents it handles and offering an unparalleled level of information security and integrity. Blockchain-based applications can reduce the danger of data and fund falsification as well as the problems associated with having only a single point of failure in data and fund management.

It can also aid in breaking down data silos in conventional bureaucracies when public bodies are hesitant to exchange information. Blockchain is especially well-suited to combating corruption in asset registries and transaction tracking, such as procurement systems. It reduces red tape, reduces discretion, and strengthens public integrity by eliminating the need for middlemen.

Streamlining bureaucracy and lowering transaction costs − In many industries and across jurisdictional borders, blockchain-based machine consensus and smart contracts have the potential to reduce transaction costs and bureaucracy, introducing many new use cases in (1) governance, government, and impact assessment, particularly across jurisdictional boundaries; (2) inclusion of the world's underbanked and undocumented; and (3) disintermediation: clearing institutions or governmental institutions obsolete, thereby reducing transaction costs and bureaucracy.

Governance, government, and impact assessment: − Blockchain-based applications can help with (a) carbon emissions reduction, (b) lean government, and (c) impact evaluation and governance.

Reduction of CO2 emissions

Blockchain-based e-government solutions may be able to reduce CO2 emissions, potentially leapfrogging state-of-the-art e-government systems. This would decrease the need for a physical commute to a government office (for example, to obtain a new driver's license, apply for a tax number, register a car, and so on) while also lowering fossil fuel emissions.

Tool for impact evaluation and global governance − Blockchain is particularly valuable for cross-jurisdictional governance, as it allows for the incorporation of cost-effective, transparent, and auditing procedures into the protocol, making monitoring and enforcement of all sustainability targets simpler. Every one of our everyday activities leaves a carbon impact.

By combining Blockchain, AI, and IoT, we will be able to collect more data for effective assessment and evaluation, as well as make collective sustainable behavior across organizations and geographic borders more transparent. The completion monitoring of sustainable activity might be confirmed objectively and decentralized using AI (software oracles) and IoT (physical oracles).

For example, blockchain-based solutions might bring greater transparency into the measures taken by governments (countries, cities, or regions) to reduce total emissions. International treaties would be considerably more severe if these activities were recorded on Blockchain, and transaction costs would be a lot cheaper than they are now. Impact evaluation would be simpler to trace, resulting in faster outcomes and feedback loops.

Government that is lean and transparent

Reduce the expense of bureaucracy by using more efficient e-government systems, which saves money for taxpayers. Undocumented and underbanked people are included. Furthermore, a lack of identification restricts access to credit and loans, as well as business.

Lack of Identification and Documentation

Millions of refugees attempting to migrate throughout the world are unable to be identified, with a disproportionate number of women and girls attempting to get identification due to difficulties such as freedom of movement, distance, financial charges, time limits, and illiteracy.

A lack of knowledge and awareness, as well as a lack of familial support for Complementary decentralized and self-sovereign identification solutions may be possible with Blockchain.

Banking Services

Despite the fact that the amount of unbanked people is declining, there are still almost 2 billio worldwide without access to banking services. These underbanked persons must rely on unregulated alternative financial services such as payday loans, pawnbrokers, and loan sharks, which can be exploitative and even illegal. Because of its peer-to-peer structure, Blockchain eliminates the need for costly middlemen such as banks or other organizations to verify transactions.

Updated on: 10-Aug-2022


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