How can Blockchain and supporting technologies provide support to ESG strategy and implementation?
With the demand for organisations to disclose their Environmental, Social and Governance (ESG) information so too does the need for accurate, verifiable, and real-time reporting. This can only be achieved with the support of appropriate technology.
A technology such as Blockchain enhances transparency, provides immutable information which is authenticated. Adding Smart contracting to this technology improves these credentials further by enabling self-executing abilities.
The implementation of Blockchain & Smart contracting provides information security and ensures that ESG related transactions cannot be tampered with, information is only accessible to permissioned users and smart contract implementation enables automation of data and therefore reliable assurance relating to ESG. ESG information can be extracted from daily operations that can then be securely recorded on a permissioned Blockchain. This therefore means companies cannot ‘greenwash’ by only disclosing favourable ESG news and performance whilst concealing questionable activities. Organisations can then utilise this information and provide useful customised analytics which provides credibility and brand enhancement.
Exacting the required data can also be further supporting by technology such as RPA (Robotic Process Automation). Data can be extracted via bots and compared to suppliers self-reporting disclosures thus providing a further confidence and credibility.
Current ESG reporting suffers from greenwashing with organisations simply claiming and not substantiating their sustainability and governance claims. Implementing digital transformation successfully and utilising Blockchain, Smart contracting and RPA ensures efficiency in data collection, improved accuracy, enhanced transparency and data authentication. Achieving this provides benefits such as comfort to investors with many implementing ESG protocols before committing to financial support but not only this it provides enhanced brand recognition thus benefitting overall performance.