Blockchain: a world of utilities for sustainability.

Note: This article was initially published in Spanish and can be found here.

The opportunities offered by the blockchain technology for many of the activities of our companies and society can also be used in the field of sustainability and corporate social responsibility.

For some time now, words such as blockchain, artificial intelligence, augmented reality, 3D printing, etc. are no longer foreign to us. New solutions for different challenges or at least to try to make our lives easier, although there will always be those who think totally the opposite and think that they simply complicate matters more.

Beyond these opinions and to see what their development and final success will be, these technologies can, a priori, serve many purposes.

The case that concerns us, the blockchain is perhaps the most difficult to understand by the general public due to its technical complexity and its operation based on mathematical calculations and algorithms, and be the least "physical" and more virtual of the listed technologies.

What is blockchain and what general benefits does it provide?

Due to its complexity, we are not here to make an extensive explanation of the operation of this technology.

We can think of blockchain as a shared record of information that is maintained and updated by a network of computers instead of a central authority. This registry is protected and secured by advanced cryptography.

That is, it is a decentralized database that registers transactions of almost any type and enforces the contracts related to them automatically, according to the conditions defined by the participants.

Transaction history is added to the "chain" instead of following it through paper tracking, and because the system is distributed and encrypted, it is difficult to manipulate or hack it.

The main benefits of blockchain are:

• Transparency and immutability: as it is a shared database, the data is available to all parties involved in any type of transaction, providing maximum transparency. Once the data is created, it can not be deleted or altered.
• Integrity of the process and disintermediation: the parties to any transaction will know that everything has been done exactly as stipulated in the agreed protocol.
• Easily available and reliable data: so that any necessary intermediation by a third party is eliminated.
• Lower costs and faster transactions: block chains have great potential to reduce the overall transaction cost and time by eliminating the indirect costs of exchanging assets and the involvement of third party intermediaries.
• Access to high quality data for all: all parties involved in a transaction will have accurate, timely, consistent and complete data they need to know to make a well-informed decision.

Seeing these advantages and benefits, we can imagine various fields of sustainability and CSR where these block chains can be applied.

Reporting and controlled supply chain.

One of the aspects of CSR in which the blockchain can be applied most clearly is in the supply chain.

Its usefulness is based on specific characteristics that converge in said chain, such as:

• Lack of trust: whenever there are unknown providers, customers or service providers, blockchain can help entities to conduct transactions with greater security. Also where disputes are common and their resolution is expensive, and where proof of authenticity and property is required.
• Many parties that need a single version of the truth:when the coordination of multiple parties, processes and assets is needed.
• Where several serial steps of paperwork cause time to elapse:as in global business documentation, financing of the supply chain, etc.
• Where the reliable visibility of events in multiple parts has a high value:such as supply chains that need chain of custody tracking, provenance, traceability, faster and more reliable withdrawals, etc.
• Where auditability is important: as in highly regulated and socially responsible supply chains.

The fact that the information contained in the sustainability reports is provided by the companies themselves may be cause for suspicion in some cases.

Blockchain can contribute to making that reporting more credible and transparent, because it must be able to authenticate in a more complete and accurate way the real social, economic and environmental performance of a company, providing society with a more realistic assessment of its impact.

Block chains can democratize reporting and evaluation beyond the self-interest of management and consultants paid by the company to include integrated audiences connected to the corporation through a currently unmeasured value chain.

The performance of CSR measured through blockchain could have a time stamp and get a 100% verification by all the participants in the network and, as we have commented previously, it would be immutable so the information could not be erased or corrected without the unanimous consent of all involved.

NGOs and the third sector can also benefit.

How do entities in the third sector receive financial contributions is another subject where the blockchain has a lot to say.

For example, with blockchain it is possible that awareness campaigns launched from social networks can obtain an economic return. Transfer hundreds of euros from a mobile device at any time is now possible, overcoming the deficiencies of the current banking system.

The crowdfunding campaigns carried out would also be completely transparent and donors could have the ability to know where their money really goes and track them, which would force the directors of the NGOs to handle with responsibility the obtained resources.

Other examples would be the election of governing bodies, the voting system of the associates, the monitoring of budgets and activities or the decisions of the members of the Boards of Directors that could enter a new scenario of absolute transparency.

The carbon credit market could use a digital currency.

Applying blockchain to carbon credits to create a "carbon currency" would be the key to demystifying and consolidating the carbon market so that it can be expanded.

Carbon credits are the perfect candidate for a digital currency, since they are based on data, depend on multiple approval steps and exist separately to the physical impacts with which they are correlated.

In a world where carbon emissions and credits could be tracked transparently and reliably, retailers could sell a product and take into account the carbon impact it creates at the same time. Governments will be able to measure, track and trade emissions in a transparent manner.

And, more importantly, for the first time consumers could understand the environmental impact of the products they buy, both positive and negative, at the point of sale, and could mitigate this in an instant, with millions of micro-transactions to generate a great collective impact.

Technology with innumerable possibilities.

Startups are undoubtedly sources of innovation and many of them take into account the power of blockchain in sustainability to devise their projects.

For example, block chains are being studied in how could serve in the future to "democratize green energy" so that anyone who has solar panels on their roof could sell to other users the surplus energy they would not use in their homes. 

Another application that is being studied by another startup is focused on reducing food waste. They argue that their platform could offer cost savings to consumers of up to 30%, while eliminating up to 130 million pounds of food waste per year.

As we can see, the fields where chain blocks are applied are innumerable and here we have seen a few examples of this.

That these applications become reality depends on different factors but I am sure that in the medium term we will see how little by little they become part of our lives, contributing to the sustainability of the world in which we live.