Here are 13 Ways How Blockchain Features Can Support Sustainability Efforts

Sustainability has become a critical global concern. 73.2% of global greenhouse gas emissions come from energy utilization.

Businesses are increasingly searching for innovative solutions. Enter blockchain technology, a game-changer in the sustainability sector.

But, how can blockchain features support sustainability efforts?

Quick Introduction to What Blockchain Is

Blockchain:

Imagine a digital chain made of blocks, each containing information. However, once added or created, a block cannot be changed or removed. It’s a highly secure, tamper-proof ledger.

People use blockchains for a variety of purposes, including recording transactions (such as money transfers), tracking ownership (such as who owns a parcel of land), and even voting in elections.

Think of it as a public notebook that everyone can see, but pages cannot be torn out.

Thanks to blockchain’s zero-knowledge (ZK) technology, unfalsifiable proofs can be confirmed without revealing private data.

Smart Contracts:

Smart contracts exist on the blockchain. They are written in code and execute automatically when certain criteria are met.

For example, if you rent an apartment, the smart contract may release the keys once you pay the rent.

The Pressing Concern in Sustainability

Georgetown University says, “The five warmest years on record have occurred in the last decade.”

Forests have a major impact on the broader environment. Unfortunately, developing nations almost always resort to deforestation, which viciously harms us.

WHO reports that “in the Western Pacific Region alone, around 2.2 million people die each year” from air pollution.

Globally, 30% of all food produced is thrown away. This wastes resources and increases emissions.

The clock is ticking. Innovative technologies like blockchain may hold the key to tackling these complex problems.

Blockchain’s unique uses such as supply chain transparency and decentralized renewable energy networks may revolutionize sustainability efforts and pave the way for a greener future.

13 Ways Blockchain Technology Can Support Sustainability Efforts

1. Supply Chain Traceability

Blockchain is a transparent digital ledger that keeps a permanent record of every step a product takes, from the raw materials to the final product.

According to ManMohan S. Sodhi, Professor of Operations and Supply Chain at Bayes Business School, City University of London, there are 3 ways blockchain can support sustainability efforts.

1. Blockchain’s transparency makes it more difficult for shady operations like fraud or corruption to go undetected.
2. Traceability is one of blockchain’s core features. This implies that every supply chain participant who joins the blockchain can see details about each other’s activities, such as the ethical sourcing, shipping, processing, and distribution of goods and materials.
3. Traceability also enables operational efficiencies. For example, suppose a t-shirt manufacturer uses blockchain to track its supply chain. The blockchain records where the cotton comes from, how the shirts are made, and where they are shipped.

This visibility allows the company to track actual customer demand. They can detect areas with excess inventory and quickly redistribute those shirts to the most needed area.

This allows the company to fulfil orders more quickly and avoid having too many extra shirts sitting unused in a warehouse. It is a more efficient use of materials and resources, and a more sustainable approach to combat overproducing.

2. Renewable Energy Trading

A report reveals that 59% of blockchain energy projects are peer-to-peer energy markets. In a peer-to-peer energy market, people work together to exchange and purchase unused energy from one another.

For instance, the Brooklyn Microgrid project uses blockchain technology to establish a peer-to-peer energy exchange that allows residents to sell their neighbors any extra solar energy they have.

This implementation has three benefits.

1. By using blockchain, each homeowner can track the grid and other homes’ energy production and consumption.
2. This incentivizes homeowners to limit their energy usage to match their actual requirements.
3. If there is excess energy, they can sell it to other homeowners to avoid generating new energy. As a result, the energy grid is consistently stable, resulting in lower energy generation costs and decreased reliance on fossil fuels.

3. Waste Management Optimization

Since blockchain is transparent, it ensures accountability and promotes proper waste management from collection to disposal to recycling.

Sustainability consultant Oluwatosin Adebayo claims that this transparency benefits all parties, including waste generators, regulators, and environmental organizations, in two ways.

1. All parties can monitor the whole waste management lifecycle, guaranteeing legal compliance and identifying any anomalies.
2. This transparency helps prevent illegal dumping by making it easy to identify and trace any unauthorized disposal back to the responsible party.

4. Carbon Credit Tracking

Carbon credits permit companies to emit a certain amount of greenhouse gases. A single credit allows for one ton (1000 kg) emission of carbon dioxide or the same amount of other greenhouse gases.

This is an oversimplified example of how carbon credits work:

1. Companies get a set number of credits. For example, Company A and Company B have 1 credit each.
2. Company A uses only 10% (0.1) of the credit annually while Company B uses 60% (0.6).
3. So, Company A has 0.9 credits left while Company B has 0.4 left.
4. Since Company B doesn’t have enough credit to sustain its use of 0.6 credit annually, it must reduce its emissions or buy credits from Company A since Company A has excess credit.
5. So, by reducing emissions, Company A gains money while Company B loses money.
6. In conclusion, carbon credits provide businesses with a financial incentive to cut their carbon emissions.

Fun fact: The cap-and-trade system used to lower sulfur pollution in the 1990s is the foundation for the carbon credits system.

How can blockchain features support sustainability efforts? Blockchain makes it easier to track these credits since it is transparent and traceable. This ensures all parties monitor the credits’ usage to reduce emissions and fight climate change.

5. Drive Collaboration Between Companies or NGOs in Different Countries

Conventional cross-border payment systems typically require middlemen, fees, and expensive currency conversions that can take days to complete. And blockchain solves that.

The benefits of using blockchain for cross-border payment are eliminating intermediaries. So, this results in faster and cheaper transactions

Imagine you’re in the United States. You want to transfer 1000 USD to your father in Great Britain. You have two options: Wise or BUSD, Binance cryptocurrency pegged to USD.

I checked this on Wednesday at 11:50 pm. It takes one day to arrive.

You must pay 9.18 USD for fees. Additionally, you must put in an extra 10 USD to bring the amount to 1000 USD. Otherwise, you will transfer 900+ USD.

Now, let’s look at BUSD.

You pay only 0.7 USD for fees. You also need to transfer an additional 1 USD to bring the amount to 1000 USD.

Instead of one day, the approximate time to arrive is 7 minutes when using blockchain.

So, blockchain allows faster transactions. Thus, enabling quicker collaboration and quicker problem resolution.

6. Food Safety and Origin

According to IBM,

• 52% of consumers believe it is important to know the origin of the food.
• 63% of Americans stated they would be willing to spend up to 30% more on products that are openly sourced and made responsibly.

Blockchain platforms, such as IBM Food Trust, ensure food’s traceability from farm to table.

This traceability is critical for growers, processors, wholesalers, distributors, manufacturers, retailers, consumers and others who want to ensure food safety and sustainability, allowing them to make informed decisions based on reliable data.

7. Sustainable Fashion

According to Everledger, companies large and small in the luxury goods industry are beginning to realize the commercial benefits of transparency.

They can create a unique digital identity for each garment by combining blockchain, NFC, and IoT technologies.

Since blockchain is transparent and traceable, revealing the life cycle of fashion goods, from the raw materials used to the factories where they were made, provides two benefits.

1. Combat counterfeiting
2. Support ethical material sourcing.

8. Financing Sustainability-related Projects

There are many cases where NGOs or projects use the money from crowdfunding to sponsor their lavish lifestyles instead of using it as intended.

Blockchain, such as Gitcoin, can help combat that through its secure, tamper-proof platform. Since it is transparent, traceable, and permanent, donors can track the financing of sustainability-related projects to ensure that funds are used as intended and prevent fraud.

9. Encourage Recycling

Another feature of blockchain is tokenization or cryptocurrency.

IBM’s Plastic Bank is creating new recycling ecosystems in developing countries. Plastic Bank collectors have retrieved more than 11 million kilograms—roughly 550 million bottles—of plastic that was headed toward the ocean while making a livable wage.

Plastic Bank’s original locations were Indonesia, the Philippines, and Haiti. Members receive digital tokens as compensation for collecting plastic. The benefits of the tokens are

1. Buying groceries
2. Paying for health insurance and more.

Shaun Frankson, co-founder and Chief Technology Officer of Plastic Bank, says that one of Plastic Bank’s members in Bali made enough money to put food on the table and pay for her four children’s education.

10. Regenerative Agriculture

Regenerative agriculture is an initiative to encourage communities to adopt more sustainable land-use practices—usually by conservation and tree planting—to lessen carbon footprints.

This is made possible through oracles, entities that allow blockchains to read and interact with real-world data.

For example, the Green World Campaign. Using satellite data, the Green World Campaign is creating smart contracts that automatically reward land regenerators who successfully enhance soil, plant more trees, and take other steps to restore their land.

Payouts take place when oracles gather information from satellite photos and activate smart contracts, guaranteeing that rewards are distributed equally and transparently to the local population.

11. Protecting Farmers’ Financial Well-Being

Climate change is already affecting global weather patterns. Poor weather conditions can destroy farmers’ financial well-being, suppressing sustainability efforts.

Farmers worldwide can now access smart contract-powered crop insurance through insurance projects like Etherisc and Arbol.

Utilizing smart contracts, farmers can set up a policy for their small plot of land, include predetermined requirements (like a minimum quantity of rainfall), and then depend on oracles to track weather patterns.

If the oracle network reports that a particular target has been fulfilled, the farmer gets an automatic compensation. Farmers can now protect their future with only a smartphone.

12. Creating Stronger and More Accountable Public Institutions

The World Economic Forum claims that public procurement is one of the main sources of government spending and, consequently, the most common source of official corruption.

Due to the opacity between the parties involved, significant money is lost. To increase external oversight, the Colombian government developed a blockchain-based procurement system.

13. Water Resource Management

Smart water meters and blockchain integration allow us to build a decentralized network. These water meters track usage and instantly update the blockchain.

The advantages are:

1. Users can keep an eye on their consumption
2. Find leaks
3. maximize water conservation

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