Now, track ESG with blockchain tech

In recent times, Environmental, Social, and Governance (ESG) responsibility has grown exponentially. The World Economic Forum in Davos this year put sustainability at the forefront of the agenda, with topics like “How to save the world” and “Better business.”, an indication that it is currently being discussed at the highest levels.

ESG is viewed by corporations in many ways: some see it as a sound business strategy, others as a self-regulatory effort, and still others think of it as a fresh spin on marketing. Notwithstanding the driving forces, it is obvious that successful ESG business outcomes will have a profoundly positive influence on society.

Greenwashing, or the act of creating unfounded claims about sustainability and environmental policies to enhance corporate image and minimise ESG-related criticism, has become a frequent practice in a world where economic performance is so strongly tied to reputation and trust. In response, reporting of ESG measures is coming under increased scrutiny and enforcement from regulatory organisations globally.

However, ESG norms and laws remain hazy—benchmarks encompass a wide spectrum of factors, with no generally accepted standardisation. Companies struggle to establish a means to track pertinent data points in an effective and trustworthy manner, as they are unsure of what to measure or where the data is kept. In the end, progress is incredibly hard to define, uphold, and measure, and many companies simply do it wrong accidentally or because there isn’t yet agreement on what getting it right actually entails. Companies require quantitative measurements that validate their claims and evaluate their progress when highlighting ESG accomplishments. Just setting targets is insufficient considering that authorities and customers who are more socially and ecologically sensitive are scrutinising company ESG behaviour. This entails choosing KPIs, assessing where they are right now, set-ting goals, and then creating and putting into practise a plan to achieve those goals.

Blockchain provides a clear remedy. It offers immutable certification and automatic reporting of any number of data points. For instance, several businesses have pledged to considerably reduce or completely eliminate their carbon impact. A block-chain can be used to track and compare data about an organisation’s carbon emissions (such as flight miles or freight shipments) and credits (such as genuine, confirmed offsets).

Repsol, a global energy company for example, has already begun digitising parts of its downstream supply chain, which refers to any resource that originates in a refinery or industrial complex before being transformed into a product in subsequent supply chains. Blockchain is used to generate a digital asset that replicates the physical resource that will flow along a supply chain. This asset will register all of the details that characterise the quality and regulatory compliance of its physical counterpart.

In the broader petrochemicals business, there are many further prospects for blockchain and sustainability, with sustainable fashion being one example. The garment sector uses a lot of chemical dyes and polymers (petrochemical goods), and by using blockchain, we can measure their carbon impact or how much recycled material is used during production.

Blockchain can exhibit trust in an environment that urgently needs it. Organisations may be held accountable for their actions with a clear and verified record of ESG measures, and those who are making progress can be recognised appropriately. The ESG era is here, is India ready?

(The writer is founder,

India Blockchain Alliance)