5 ways companies can strengthen social responsibility through blockchain

Since the emergence of blockchain in 2008 as a distributed ledger for retail transactions, there has been an increase in the literature exploring the features of blockchain technology. The recent explosion of interest in blockchain-based applications is due in part to its innovative nature, strong underlying theoretical cryptography foundations, distributed consensus algorithms, and decentralized databases. However, there is a more fundamental attraction to blockchain technology in its inherent accountability, also called the value chain. In the value chain, every blockchain transaction is verified and held in the blockchain, building the chain itself and providing full transparency for all users.

Meanwhile, with increasing consumer access to information and the international commitments to combat global warming, companies have realized that corporate social responsibility (CSR) is no longer a nice-to-have, but a critical requirement. Blockchain can support a beneficial, circular economy at scale. The idea of ​​a circular economy involves reducing materials, waste and reusing products to ensure a “closed loop” or “cycle” and protect resources.

As blockchain technology becomes known and users further establish its functionality, new ideas about possible applications become widespread. These ideas take the form of proposals and projects that are already underway in various market sectors. Financial institutions, healthcare organizations and public offices are keen to invest in new blockchain implementations.

Blockchain can encourage a circular economy in businesses by leveraging blockchain’s inherent high transparency and traceability. Companies implementing blockchain can confidently authenticate social responsibility claims and track resources via records on the blockchain from the point of extraction to distribution and consumer purchase. Applying blockchain’s high point-to-point accountability to CSR standards gives consumers peace of mind and confidence, from corporate customers to individuals. Individuals can monitor activities and ensure their integrity without trusting any other party. Furthermore, consistent adoption of know-your-customer (KYC) guidelines, perfectly suited to blockchain’s detailed record-keeping, will strengthen a company’s image and commitment to human rights and the fight against possible fraud or corruption in the most transparent way possible.

The story does not end here. Modern supply chains create mountains of paperwork. Just take the ocean shipping industry, which accounts for the shipping of 90% of goods in global trade. IBM estimates that shipping requires an average of 30 signatures from different organizations and 200 communication instances. The environmental consequences of international shipping are placed on top of paper-based, resource-intensive processes. In addition, fraud, manipulation of data and products, human error, high vulnerability to delays and lack of transparency are further shortcomings affecting international supply chains.

Blockchain technology gives companies the ability to back up their claims, from the success of their environmental programs to their track record on human rights throughout the value chain. In addition, it makes the client experience easier. Because compliance is built in and the data in each block can only be improved, not changed, making it reliable and irreversible, blockchain technology makes transactions easier at every stage of the supply chain. Blockchain technology can eliminate human error and corruption, improve process efficiency and fairness while reducing costs and transaction delays.

Then, independent blockchain reporting tools allow individuals and organizations to prove transactions, provide audit trails and comply with environmental, social and governance (ESG) requirements. There are potentially game-changing gains for businesses looking to minimize risk and media headlines. Of particular interest are efficiency and reputation management advances resulting from automatically displaying evidence of customer interactions and purchases, certification of ESG and policy compliance, and delivering reliable real-time event data online.

Final thoughts

Blockchain technology enables a high level of transparency and visibility. The internal benefits of adopting blockchain technology are significant, from increased consumer trust and loyalty to improved efficiency and security. Beyond that, there is potential for support from the public and private sector for sustainability initiatives and innovation.

Is your company considering blockchain technology to improve CSR-related disclosure?

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