Marc Johnson, environmental solutions architect at Protocol Labs, explains why blockchain technology is uniquely positioned to record emissions transactions and interactions across supply chains in an effective manner.
- A systemic transformation in the actions of nations, policymakers and corporations is required if we are to save society from the devastating consequences of climate change.
- We also need a complete paradigm shift in the way in which we record and report emissions information to ensure a data-driven approach.
- Blockchain can bring unparalleled transparency, traceability and verifiability to the disclosure of emissions, and transform our entire approach to fighting climate change.
The climate crisis is the single biggest challenge facing humanity today, with its impact already being felt devastatingly in many regions across the globe. In response, nations, policymakers and corporations have made significant pledges and set ambitious climate targets to rapidly reduce greenhouse gas emissions and limit global warming. However, a slew of recent reports have shown that the world is falling well short of meeting these targets, with emissions continuing to rise and global temperatures soaring to new heights.
Missing the targets
The latest United Nations Environment Programme (UNEP) Emissions Gap Report found that national pledges since COP26 (in late 2021) are making a negligible difference to predicted 2030 emissions and that we are well off course from the Paris Agreement goal of limiting global warming to well below 2°C, preferably 1.5°C.
Additionally, it finds that policies currently in place point to a 2.8°C temperature rise by the end of the century and implementation of the current pledges will only reduce this to a 2.4-2.6°C temperature rise. The report starkly concludes that only an urgent system-wide transformation, in areas including electricity supply, transport, buildings and industry, as well as the food and financial systems can deliver the enormous cuts needed to limit greenhouse gas emissions by 2030.
This report and countless others make it clear that a systemic transformation in the actions of nations, policymakers and corporations is required if we are to save society from the devastating consequences of climate change. What is also required though is a complete paradigm shift and new approach to the way in which we record and report emissions data, because in order to best inform decisions that will decarbonize our world, we need a far more comprehensive data-driven approach.
Existing methods of reporting emissions are wholly inadequate
At the moment, environmental disclosures are primarily based on annual sustainability reports, ecolabels, or other ad hoc publications. While these polished annual reports may make us feel better for a while, there is very little that verifies or validates that progress has indeed been made and commitments met. Additionally, the information behind these disclosures is often static, not always freely available to the public, and the formatting of data varies widely from one report to another.
This all means that the existing methods of reporting emissions are wholly inadequate, and are not fit for the purpose of tracking progress and effectively informing the decision-making process of key figures in government and business, as well as individual consumers. Confusion and lack of clarity leads to strategic action feeling uncertain and makes it very difficult to monitor whether pledges are being met.
Put simply, if we are to truly confront the existential challenges of climate change and our carbon-intensive economy, we must move away from the outdated and opaque reporting systems that we rely on today, towards systems that connect climate data to climate action and that are far more efficient, accurate, traceable, transparent and up-to-date, and that enable us to hold companies and policymakers to account.
Overcoming this challenge with blockchain
Fortunately, with the emergence of blockchain, we now have the technology available that allows us to realize this alternative system, and allows us to accurately and transparently account for emissions along complex supply chains in real-time. The decentralized technology allows us to build data systems that are far more useful to key decision-makers while also serving to hold them to account, that are compatible with one another and that are collectively capable of transforming climate-related information into climate action.
The cynical may ask: “what really makes blockchain technology different from the other forms of emissions reporting that have gone before it, and how could it succeed in spurring leaders and society into action where previous initiatives have failed?” Put simply, it’s the unique affordances of blockchain that have the potential to bring unparalleled transparency, traceability and verifiability to the disclosure of emissions, and to transform our entire approach to fighting climate change.
The foundation of this alternative system is the creation of an open-source, blockchain-based technical architecture that is fully digital from the beginning, built on the best original source data available, and constantly updated and evolving to include additional primary inputs. The components of this reporting system are based on the following principles, which I defined in detail in a previous report while at RMI:
- Name it. Define emissions information; use content addressing for secure, easily identified data.
- Own it. Set and maintain ownership; a blockchain removes the intermediaries.
- Record it. Create verifiable audit trails to keep emissions data connected to products.
- Trade it. Standardize units of trade to make climate-friendly products accessible.
To highlight some points further – by acting as an orderly and secure record of the events and interactions that occur, blockchains can create a verifiable end-to-end audit trail and chain of custody among all of the participants as supply chain operations take place. These comprehensive audit trails are beneficial on a number of levels – they allow for monitoring to ensure that processes occur as expected and that pledges are being met and backed by action, they can feed into the decision making process of leaders, and they can also act as the beginning of verified data collection upon which further productive initiatives can be built, including automated emissions reporting, proof of compliance, and verified carbon credits.
In addition, it is the immutable nature of blockchains that enables and instils further confidence in the tracking of the lineage of products and their associated attributes from the very beginning to the very end, or source to sale. This feature provides producers, shippers, consumers, regulators and governments with the ability to share verifiable claims to improve confidence and authenticity, and equips relevant leaders with the up-to-date information they need to make decisions, while also holding them accountable for previous decisions.
It is these characteristics of the technology that make content-addressed data and blockchain is uniquely positioned to record emissions transactions and interactions across supply chains in an effective manner. It is clear that these technologies can help us hold policymakers and companies accountable for the emission reduction targets they set by providing a transparent and immutable record of their actions and progress towards those targets – ultimately transforming our approach in the climate action space.
The technology is available, barriers to building and adopting such a system are fading away and the will to take action among policymakers and companies is growing. We must forge ahead to realize this new approach, the incentive for succeeding is nothing less than our ability to continue to survive and thrive on a livable planet.
The opinions of guest authors are their own and do not necessarily represent those of SG Voice.