How blockchain technology can be harnessed for a sustainable future

The realization that ongoing urbanization, industrialization, and agricultural practices are depleting the earth’s natural resources, thus gradually bringing socio-economic growth and everyday life as we know it, to a grinding halt, has made global sustainability initiatives more crucial than ever before. Fortunately, advanced technological tools can be implemented to play an important role, help address the most pressing concerns and thereby achieve sustainable development goals.

One such technology that has an emerging role in attaining global sustainability is blockchain. Blockchain technology is a distributed public ledger database made up of a sequence of blocks, which maintains and verifies a full history of past transactions within the network system. The global blockchain market size is expected to rise from USD 7.18 billion in 2022 to USD 163.83 billion by 2029 at a CAGR of 56.3% during the forecast period, as per the Fortune Business Insights™ report titled, “Blockchain Market Share, 2022-2029”.

While it is most widely known as the underlying technology behind digital currencies, blockchain’s potential is well beyond that. The technology has a plethora of applications under its umbrella – from land title registry to health record management including finance, transport, and supply chain management.

Here are some ways in which blockchain technology can contribute towards a sustainable future:

• Increase transparency in supply chains

Today’s environmentally and socially aware consumers demand transparency of products, value chains, and a clearly defined sustainability policy. The most important aspect of blockchain is the decentralization and application of privacy algorithms through cryptic functions, which can ensure the authenticity of data. It thus enables the tracking of materials in the supply chains. With this, blockchain can act as an important tool to help build public confidence, as brands’ ecological and ethical claims, operations, and impacts can be backed-up and verified.

• Help fight counterfeiting

Many problems like environmental damage, worker exploitation, reputational damage, and the loss of billions of dollars in authentic brand revenues each year, can be linked to the unregulated nature in which products are made. Adopting blockchain technology can decentralize a database visible to brands and consumers alike - that each product during manufacturing receives a unique identifier, providing consumers and those in the supply chain, with an online certificate cryptographically signed by the brand. It will also consequently distinguish authentic products from fake ones, helping combat counterfeiting and the negative strain it causes our natural resources, not to mention fair work practices.

• Ensuring a circular economy

Important to sustainability is the circular economy and its three R concepts. That is, reducing waste, reusing products, and recycling materials. This model ensures that products and services are traded in a closed loop. In other words, waste is eliminated, so we can better protect the earth's natural resources. In this scenario, the combination of transparency and traceability provided by blockchain can help achieve that.

• Global green finance

The secure and distributed electronic ledger of blockchain can also help in facilitating sustainable investing by creating economic return which will support environmental sustainability in various ways like improved carbon emission trading, accelerated clean energy trading, enhanced climate finance flows, and improve tracking and reporting of greenhouse gas emissions reduction. This concept of ‘Green finance’—integrating environmental protection with economic profits is continuing to gain traction within the financial industry. This creates incentives to invest in sustainability efforts, such as risk mitigation and long-term returns.

There are still a lot of opportunities for blockchain to expand into sectors like infrastructure, exchange, trading and investing, and human resource management, especially in areas where trust is essential. This will be a welcomed move for all stakeholders including the government, private retailers as well as consumers – thus increasing trust, transparency, and subsequently paving the way for a sustainable future.

The article is written by IC Ramalatha Marimuthu, IEEE Senior Member