With the blockchains potential to embed trust into our digital and physical asset transactions — what role could it play in helping us achieve the UN Sustainable Development Goals ? Will Global Reporting Initiative GRI / Global Compact / Integrated Reporting be able to leverage the LIMITLESS potential of BlockChain ?

What has the blockchain got to do with the SDGs / GRI / Global Compact and IIRC ?

When the unknown person going by the name of Satoshi Nakamoto created blockchain technology in 2008, he had a single vision: a peer-to-peer electronic cash system. What he didn’t realize is that his creation was not limited to this one application. The ability to be integrated into various industries from logistics to healthcare, from energy to agriculture has led to blockchain being referred to by many as a disruptive innovation.

Although blockchain is gaining popularity quickly, it has yet to be embraced by the public sector. The blockchain is an exciting new technology that can potentially produce solutions to several of our pressing development challenges. At the same time, there are many unanswered questions.

The most effective way to get these questions answered is to bring blockchain as an integrating platform that weaves through global innovators, investors and policy makers together, to co-create solutions that contribute to the achievement of sustainable developing goals (SDGs) through a multi-sector, multi-stakeholder process and knit them in a GRI / Global Compact / Integrated Reporting kind of Sustainability Framework .

The SDGs are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. There are 17 goals, all of which are underpinned by more tangible targets, and all of which require global cooperation, fast action, transparency, better management of resources (or assets) and trust — these are all things which blockchain can help us deliver.

The goals were created in response to major sustainability challenges such as resource scarcity, waste generation, greenhouse gas emissions, water scarcity, poverty, hunger and equality. With the blockchain providing better transparency and more trust, many of the positive actions already trying to tackle these major issues can start to gain traction.
It would perhaps be fickle to be too critical of the global economic system given the tremendous progress made towards so many of the Millennium Development Goals. Indeed, the goal of halving the number of people living on less than $1.25 a day was achieved seven years earlier than planned.

Despite this apparent success, there is a tangible sense of unease at the way the global economy functions, and particularly how wealth is distributed. It led to Thomas Picketty’s 2014 book Capital in the Twenty-First Century topping the New York times best seller list for non-fiction. It and other works have prompted a renewed exploration of the global economic system, and how inclusive it is. Indeed, that year the World Economic Forum cited global inequality as the biggest risk the world faced.

Financial exclusion

Central to this inequality is access, or lack thereof, to the banking system. A whopping 3.5bn people around the world lack access to a bank, with an astonishing 37 million Americans estimated to be ‘unbanked’ at the current time. It’s resulted in a clear and distinct divide between the financial haves and have nots.

Largely this is down to the business model of the banks that rely heavily on the network effect. This sees every new customer (and of course every dollar they deposit/borrow) increasing the value of the network the bank has. The problem is that building such a network can be costly, especially for customers with little to deposit and borrow.

Serving the bottom of the pyramid
It’s resulted in various projects to provide access to finance for the worlds poorest, from mobile banking to microfinance, and whilst the work of people like Muhammad Yunus have been tremendously important, I believe that the blockchain could be even more powerful.

Companies such as Wala are leading this charge. They’re a mobile financial platform, not dissimilar to the hugely successful M-Pesa, but the difference is that the platform is built on the blockchain. The company has announced a partnership with M-vendr, the provider of mobile Point of Sale (PoS) apps for small retailers and informal traders. The deal is a significant step for digital currencies in emerging markets, combining free banking services with a simple and accessible way to purchase goods within over 30,000 merchants across 15 countries.

A major facet of traditional banks is the way they process our identity, with many banks less interested in understanding your character as they are complying with regulations. By using blockchain, many of these challenges evaporate as a consistent digital ID follows each individual around.

Avoiding a traditional bank-led approach means not having to replicate legacy banking systems that bring large transaction costs with them. In a stroke, the partners will be able to use the distributed ledger technology of the blockchain to make the process and recording of transactions simple and efficient. Not only that, because they’ll be integrating it with existing microfinance networks it will be designed around the consumer from the start.

While zero-fee financial services are the immediate goal, the trust and transparency brought about by the blockchain could also lay the foundations of a modern infrastructure that solves other problems for the unbanked, such as credit scoring.

The progress in achieving the Millennium Development Goal SDG 1 on Poverty so quickly is considerable, but ledger technology such as that provided by the likes of Wala provide a glimpse into a possible future where the unbanked and underbanked are increasingly enfranchised and empowered to become active participants in the global economy.

This new carbon currency could make us more climate friendly
If you know something is bad for you but you don’t know how to measure it, how can you reduce it? Take calories, for example. If we want to lose weight, we need to reduce our calorie intake. To do this we can use the information found on packaging and in apps to monitor our calorie intake and adjust to what is healthy. Let’s apply this analogy to the environment. Just as many of us are clogging up our bodies with invisible calories, so every day we clog up our world with invisible greenhouse gases. Wouldn’t it be great if we could count, take control of and reduce our carbon emissions just as we take control of our diets?

We might not realise it, but every financial transaction has a climate consequence — whether it is obvious, such as filling up your car with petrol or booking a long-haul flight, or subtle, like when you buy a coffee or a new pair of shoes, or even increase your cloud storage plan. Our daily choices leave a carbon footprint. We know this, and we are all aware of the monumental climate risks posed by carbon emissions. Demand for solutions is growing.

The Paris climate agreement codified the pressure on countries to reduce their emissions and companies are increasingly under the same spotlight from investors, shareholders, employees and customers to reduce their carbon footprint, demonstrating that their business models are aligned with delivering a stable climate. Consumers, led by socially conscious millennials with increasing buying power, want to purchase greener products and invest in sustainable projects. In fact, 72% of people between the ages of 15 and 20 are willing to pay extra for environmentally and socially responsible products and services. But until now, despite huge advances in technology, monitoring and reducing our impact on the planet has been difficult.

So how can we start having a positive impact on an individual level, without dramatically changing our lifestyles?

Credit where it’s due
One important thing we can all do is to protect a powerful ally in the fight to reduce carbon — forests. These powerful ecosystems act as a natural “carbon sponge”, whilst at the same time protecting plants and animals, and providing economic opportunities for local communities. High quality sustainable projects to protect rainforests are among the most effective ways of delivering large-scale, cost-effective emissions reductions in the short term and achieving science-based emissions targets.

Carbon credits, which put a price on carbon reductions and provide revenue for such forestry protection projects, therefore represent a clear way in which companies and individuals can be empowered to reduce or offset the negative or unavoidable impact of their business and choices on the environment. By placing a value on the ecosystems that support our planet, carbon credits internalise the invisible costs of everyday choices and allow a sustainable market place to emerge.

However, since its inception, carbon trading has suffered from some issues that have suppressed its potential. The market is beset by a lack of visibility, which prevents people from trusting the carbon credit as an asset. Differing standards and regulations in different jurisdictions and the potential for double counting (where the same credit is sold more than once) have resulted in a lack of confidence from potential market participants. And without a universal ledger it isn’t easy to track how much carbon you’ve used or — if you offset it — what the impact of your reduction has been on a tangible level. As an individual, it is hard to incorporate carbon credits into your daily life.

Yet even if every country satisfied their Paris commitments to reduce carbon emissions, this would still not be sufficient to create a safe climate. Individuals and businesses will need to do more to plug this gap, and we urgently need to find a way to help them do this, while working on longer-term shifts in parallel.

Most of us subscribe to the science of climate change, but few of us actually make strenuous efforts to reduce our carbon footprint. We might buy the odd energy-saving lightbulb, yet many of us will still board a flight to see Grandma at Thanksgiving. A single flight from New York to Denver, let us remind you, produces the equivalent CO2 emissions of driving a car 7,500 miles a year–which is to say, a lot.

Would it make a difference if we were actually incentivized to make more environmentally-friendly choices? That is, if we were rewarded in hard currency that we could spend on real things? That’s the hope behind CarbonX, a new loyalty program founded on blockchain technology.

It works like this. CarbonX buys carbon offsets under a United Nations-backed scheme called REDD+. This certifies greenhouse gas reductions from forestry and ecosystem remediation projects around the world. CarbonX converts those credits into a cryptocurrency, in the form of a token called CxT. Then it sells on these tokens to retailers and manufacturers, who use them to incentivize consumers to make more sustainable choices.

So, you might get a token for taking a ride-hailing service instead of a personal vehicle, or if you buy locally-produced seafood rather than importing it from South Asia, where it incurs lots of air miles. Consumers are rewarded with the tokens at the time of purchase, which they store in a digital wallet and can then use to buy other products and services. For example, if Home Depot offered you a token for buying a fuel-efficient lawnmower, you might be able to use that against another purchase from the store.

This fulfills SDG 13 on Climate Action .
Which other SDGs blockchain can really help achieve ?

Just imagine taking the commendable progress already made through initiatives such as the Kimberly Process (for conflict diamonds), 3TG (for conflict minerals) or the UK’s Modern Slavery Act and integrating them throughout the supply chain using blockchain technology. Well — this is exactly what is starting to happen with the Kimberley Process piloting blockchain technology to create a seamless and continued global process for the Kimberley Process Certification Scheme. This is a great example of applying blockchain to help achieve SDG 10 — Reduced Inequalities by using the blockchain to verify the diamonds are in fact conflict free.

One of the most important aims of the SDGs is to tackle poverty (SDG 1 — No Poverty) and inequalities (SDG 5 — Gender Equality & SDG 10 — Reduces Inequalities) and this is exactly what BanQu is doing using blockchain technology. BanQu allows those in developing countries (e.g. farmers) to create an economic identify on the blockchain regardless of how little land or income they might have and regardless of gender. This not only allows them access to credit but also opens them up to the global economy. Further to this they have a ‘verifiable identify’ in the supply chain allowing better equality as their ‘identify’ will be linked to their product in the blockchain.

Take the case of procurement of raw materials through a blockchain platform which would allow ‘asset tagging’ of raw materials. This technology would allow for full transparency and traceability throughout the supply chain which will ensure products are actually sourced in line with their sustainability claims (e.g. conflict mineral legislation such as 3TG). This example supports SDG 12 — Responsible Consumption and Production.

This concept is being put into action by UK based company Provenance who has piloted tracking fish through supply chain to guarantee that sustainable claims aren’t falsified as the product moves from the point of being caught to the supermarket shelf. This means that customers looking to buy ‘sustainably caught’ fish can be sure that the ‘claim’ associated with that fish hasn’t been duplicated and that their purchase is actually supporting the sustainable fishing industry. According to Provenance this works by allowing traditional fisherman to send a simple text message to register a catch; this creates a new ‘asset’ on the blockchain with a unique ID and every time that fish product moves through the supply chain, the blockchain ID is sold with it. This unique ID can also have other environmental data attributed to it such as Life Cycle Assessment data along with relevant audit information to demonstrate that the fish were caught legally and sustainably. This is not only an example of blockchain helping to achieve SDG 12, but also SDG 14 — Life Below Water.

As companies transition towards a circular economy (which is highly relevant to SDG 12 — Responsible Consumption and Production) it is exciting to read about an Ethereum-based German company called Slock.it. This tech start-up is developing a ‘Universal Share Network’ powered by blockchain technology which will allow underused assets such as temporarily vacant apartments, office space, shipping containers, or machinery to be utilized. Essentially they are developing an automated and fully verifiable infrastructure for the ‘Sharing Economy’.

In October 2016 Wal-Mart partnered with IBM to use blockchain to track a ‘packaged produce’ item in the U.S. and a pork product in China. This allowed Wal-Mart to obtain vital data, for each product, on how and where the food was grown or reared and who inspected it. This means that when a contaminated product is identified they can identify exactly which farm it originated from and only recall those affected rather than the entire product range; this will save thousands of tonnes of food waste. According to the FAO, one-third of food produced for human consumption is wasted — predominantly within the supply chain — and therefore this is another example of blockchain contributing towards the global goals; in this instance SDG 2 — Zero Hunger.

The range of applications speaks volumes for the potential this technology has to both speed up and instigate action towards the global goals. Siemens collaboration with LO3 Energy, for example already demonstrates action under SDG 7 — Affordable and Clean Energy. The residents of Flint (Michigan) are campaigning to combine blockchain with IoT to build more trust into their water network. This is an example of SDG 6 — Clear Water and Sanitation and should ensure that there is never a repeat of the awful contamination emergency of 2014–16.

Moving away from utilities, blockchain technology is also being applied at city level in Dubai where a city-wide pilot is underway to integrate blockchain with city services. This would greatly reduce wasted time, effort and resources and could play a crucial role under SDG 11 — Sustainable Cities and Communities. Similarly, blockchain is being utilised at a rural level where the Programme for the Endorsement of Forestry Certification, who is responsible for more than 300 million hectares of certified forests, has been investigating blockchain as an alternative solution for tracing provenance; an example of SDG 15 — Life on Land in action.

Sustainability data & blockchain
Access to data needs to be immediate and accessible from anywhere. Dashboards should be easy to share with all stakeholders who need to monitor sustainability programs, and act based on the trends and opportunities uncovered. In addition, data should be the foundation for key performance indicators used to measure success — and gain C-level and investor support. For companies without the necessary experience and tools, this may mean building a process to collect data and ensure it is accurate.

As organizations grow in their sustainability journey, they will be able to dive deep into data and analytics to address complex issues.

We are now on the cusp of a new era: The way we capture, analyze and use sustainability data is about to be transformed. Global Reporting Initiative (GRI) will need to evolve .

As part of its Sustainability and Reporting 2025 project, GRI predicts three trends:

1. Dynamic sustainability data exchange,
2. greater emphasis on critical global issues, and
3. ‘near-real-time’ interactions to become the norm.

On the horizon, blockchain applications could be the way people manage and host sustainability data, and drive markets like carbon trading to develop transparency and build trust with senior decision makers, many of who still consider sustainability to be a bit of an unknown and hard to quantify.

I think that the above examples only scratch the surface of blockchains potential to help achieve the SDGs; to meet the goals we must collaborate on a global level and with ‘trust’ fully integrated — I think blockchain might be the tool to help us do this.

Since SDGs are highly relevant to the welfare of the whole society, government and other public agencies need to get actively engaged in the conversation to fully harness the power of blockchain technology. From its birth, the technological advancement of blockchain is through global collaboration.

The blockchain 3.0 will require even more of such intensive collaborations.
Blockchain technology is at a nascent stage of development, but there are signs that it is exiting the hype-cycle of inflated expectations and entering a more pragmatic phase of exploration (Figure ).

Block Chain Maturity Cycle

Educating key stakeholders, both in the private and public sectors, about the technology’s benefits remains a big challenge.

Supply chains are an ecosystem that prefers conservative innovation and is dominated by industrial players with complex business models that are not easy to reengineer.

However, companies cannot afford to sit out the evolution of blockchain.

They must be realistic about their expectations and use pilot schemes to learn and adapt their strategies.

The closer the use case is to a real business challenge, the better the chances of productive feedback will be.

Companies will also need to weigh the risks of adopting the technology against the numerous opportunities it has to offer.

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