Blockchain is essential for sustainable digital finance: WEF
Emerging technologies like blockchain can be combined with environmental, social and governance frameworks to achieve sustainable development goals, the UBS executive writes
A news report published by the World Economic Forum (WEF) yesterday explained that blockchain technology is key to achieving sustainable digital finance, a new paradigm that aims at combining emerging technology with environmentally conscious business models.
The WEF news report added that sustainable digital finance was significant to take advantage of technologies like blockchain, big data, Artificial Intelligence (AI) and Internet of Things (IoT) to analyse data, power investment decisions and grow jobs in sectors supporting a transition to a low-carbon economy.
Karin Oertli, the COO of Personal and Corporate Banking at UBS stated that blockchain technology along with AI, IoT and mobile platforms acts as the cornerstones of digital finance. Combining such emerging technologies with environmental, social and governance frameworks, could help governments and corporations reach their lofty sustainable development goals, the executive explained.
“Technology lies at the heart of those attempts to prevent, or even reverse, global warming”, Oertli writes. “Intelligent products, new applications of existing technology or even entirely new business models are emerging to increase energy efficiency, reduce overall energy consumption or expand the use of renewable energies”, she added.
Oertli’s proposal on using emerging technologies to achieve sustainable digital finance is consistent with earlier research conducted by the OECD which described blockchain technology as a “digital enabler for sustainable finance” and carbon reduction.
The OECD further said that “The core properties of blockchain and other DLTs can enable deeper technological integration, standardization, and the possibility of new business models”.
Although annual carbon dioxide emissions continue to grow globally, western nations appear to have reduced their carbon footprints relative to peak levels. While Europe’s CO2 emissions peaked in the early 1990s and declined over the next decade. The US saw its peak in 2007, just before the global financial crisis.
The narrative proposing blockchain as the key element for sustainable development is a significant shift from the criticisms levelled at Bitcoin for its power consumption and resource-draining.
Though various attempts have been made to assess Bitcoin’s environmental impact, a report from MIT Technology Review last year suggests that miners may be pumping out as much CO2 per year as Kansas city. A widely published Joule study in 2018 indicated that the Bitcoin network consumes the equivalent of a quarter of Australia’s electricity.
However, the WEF noted that some of the 1200-plus climate tech startups launched since 2013 have leveraged blockchain and other emerging technologies in some form. Further, organisations like OECD still feel that the key aspects of blockchain like transparency, data auditability, process efficiency and automation can “drive the systemic changes needed to deliver sustainable infrastructure”.
Written by Harshini Nag
