How blockchains can solve greenwashing and contribute to climate action

As concerns about climate change and environmental sustainability continue to grow, many organizations are turning to innovative solutions to help address these pressing issues. One such solution is blockchain technology, which has the potential to revolutionize sustainability work across a range of industries.

On April 25, a whitepaper from the World Economic Forum (WEF) presented blockchain as a tool to combat climate change. The white paper highlighted the benefits of using blockchains in the climate action community. From improving market transparency to democratizing access to climate action, the WEF wrote about various benefits of using blockchain in sustainability work.

To further explore blockchain’s potential in sustainability, Cointelegraph reached out to industry leaders to get their insights on how blockchain can combat greenwashing, how it is currently being used in environmental efforts, and the long-term benefits it brings to the world of climate action.

Solves the “greenwashing” problem.

Greenwashing, a form of advertising that deceptively makes products seem more sustainable than they actually are, has gained notoriety in recent years. In one survey, 68% of US-based executives admitted that their companies are guilty of greenwashing.

According to Daniela Barbosa, CEO of the Hyperledger Foundation, the problem lies in verifying whether the companies that claim to be “green” really stick to their claimed sustainability plans and goals.

The manager believes that it is necessary to set up a system that tracks and keeps track of these things. She emphasized that digital ledger technology (DLT) is the right tool for the job. Barbosa explained:

“With the inherent transparency and immutability of DLT, companies and entire industries can capture and document transactions such as carbon credits or sustainable sourcing throughout their business, bringing new credibility to sustainability claims.”

Barbosa believes that reliable record-keeping systems will encourage companies to adopt sustainable practices, which will help them meet climate goals and build consumer confidence.

Related: Carbon market gets much-needed boost from blockchain technology – Web3 exec

Meanwhile, Gene Hoffman, CEO and president of Chia Network, also echoed Barbosa’s sentiments. According to Hoffman, the current infrastructure in the carbon markets is restrictive and does not contribute to innovation throughout the value chain. As a result, companies are limited in their ability to be transparent about sustainability efforts throughout the organization.

Blockchain’s current use in sustainable initiatives

The days of companies pretending to be sustainable and eco-friendly may soon be over due to blockchain technology and DLTs. Currently, blockchain has penetrated various initiatives made by prominent organizations worldwide.

“There is a growing range of applications leveraging DLT and related technologies, including green finance, sustainability reporting, climate accounting and supply chain traceability,” Barbosa told Cointelegraph.

The leader highlighted efforts such as Genesis 2.0, a collaboration between the Bank for International Settlements (BIS) Innovation Hub, the Hong Kong Monetary Authority and the United Nations (UN) Climate Change Global Innovation Hub. The project involved two prototypes for digitizing bonds with future carbon benefits included in the value. These were tracked, delivered and transferred using blockchain, smart contracts and other related technologies.

Apart from this, Barbosa also highlighted how the Government of British Columbia launched the Energy and Mines Digital Trust pilot which builds verifiable sustainability reporting. The project uses blockchain to protect data and information.

In addition to these, Hoffman sees the Climate Action Data Trust (CADT) as the most impactful climate initiative using blockchain technology. CADT aims to establish trust in carbon credit-related data among multilateral and governmental organizations.

Although not led by Web3 natives, the initiative uses a public distributed ledger technology to solve the problem of promoting internal peer-to-peer collaboration.

Furthermore, Hoffman also emphasized the importance of the Carbon Opportunities Fund, which builds on the foundations of CADT. The project provides a reliable means of transparently obtaining carbon credits directly from project developers with end-to-end transparency. This approach increases efficiency and transparency in climate markets that were previously opaque, according to Hoffman.

Long-term benefits of using blockchain in sustainability work

As blockchain gains more adoption in the climate action space, the industry could reap more of its long-term benefits, according to executives. Victor Genin, senior solution architect at BNB Chain, believes that one of the best benefits of using blockchain in the sustainability sector is ensuring compliance.

Genin explained that blockchains can provide a means to track goods, services and resources across the supply chain. “This creates an opportunity to monitor environmental compliance and ensure that sustainable practices are followed throughout the life cycle of a product or service,” he added.

Apart from these, Genin highlighted that there are other benefits such as “increased transparency and accountability, traceability, energy efficiency, waste reduction and collaborative approaches.”

Despite all the benefits that blockchain can bring to the table, Hoffman believes it’s still not a “magical solution.” However, the executive believes that when designed and implemented responsibly, blockchain technology can serve as the necessary foundation or framework to achieve greater transparency, accountability and security in climate action.

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