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Blockchain or distributed ledger technologies (DLT's) should be the backbone of any multi-party collaboration on climate change, because they are designed to address exactly these issues. specifically designed for such scenarios. Blockchains bring data out of the individual organizations' silos and enable multiple parties to collaborate based on data and code. They rely on independent verification to validate claims, instead of trust in a central authority.
The mission of this working group is to identify how DLT's could improve corporate carbon accounting and thus make carbon neutral certifications process both easier and more open, transparent, and credible. We're here to help
- Businesses and organizations take action on climate change by making the process simpler easier and less costly.
- Certifying entities do more by streamlining the process for verifying corporate climate action.
- General public and consumers trust corporate climate action with open and transparent analysis.
- Investment community trust corporate sustainability claims with high quality tools.
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- Identifying standards for corporate climate accounting and certifications.
- Provide Providing recommendations on how DLT's could complement or improve current industry processes .
- Implementing open source DLT software for climate accounting and certifications.
- Promoting awareness and positive action in the larger Hyperledger and DLT community.
- Educating other stakeholders on the value of DLT's and Hyperledger in climate change.
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- Auditing their greenhouse gas (GHG) emissions.
- Establishing a plan for reducing the company's own emissions over time.
- Purchasing carbon offsets to offset current emissions to achieve carbon neutrality.
- Obtaining a carbon neutrality certification from a certifying entity.
Yet these steps are often difficult for the companies themselves and at times met with skepticism from the general public. Fundamentally, companies are running into This is because of the challenges of data and trust. Fortunately, DLT's, especially an open source platform like Hyperledger, are naturally designed to solve these problems.
The Challenge of Data
A GHG emissions audit requires data from a lot of different sources, many outside of the company. The Greenhouse Gas Protocol specifies three levels of emissions: Scope 1, 2, and 3, covering direct energy use (fuel burned on site), indirect energy use (energy purchased from utilities), and all other significant activities of the business, including raw materials products purchased, transportation of goods, travel and commuting of employees, and leased assets.
The problem is that while most companies' emissions come from Scope 3 activities, data for such activities are also the hardest to come by. It would require getting data activities which are hard to get data for. At a minimum, the data would need to come from every part of the business, from purchasing to manufacturing to facilities management to human resources. This often involves manually gathering data and entering them into spreadsheets. More More importantly, it also involves data from a company's supply chain partners, such as the manufacturers of its products or components. Those manufacturers, in turn, may not have this data or may not wish to publish it for competitive reasons. Finally, what data could be obtained must often be gathered manually and entered into spreadsheets.
The high cost or complexity of obtaining the data would require a judgement call about whether the activity is "significant" to the company's overall emissions or not, or whether generic or model data would be sufficient.
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- Can we trust the data that the company has provided?
- Can we trust judgement calls, made by either the company or a certifying entity, about which activities are not relevant and which activities thus do not require data and auditing?
- How do we know if the company is in fact working on its emissions reduction plan?
- Can consumers and investors trust that the certifying entity is objective?
Why DLT's
Fortunately, DLT's are designed to address precisely this issue because they by design suited for solving precisely these issues. They are "trustless" networks and do not require trust in a single organization, whether it's the company making a climate action claim or an entity certifying it. Instead, the architecture of DLT's allows multiple parties to come together and verify all claims independently with code.
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Hyperledger Fabric channels and chain code allow additional parties to audit a company's emissions without revealing compromising any proprietary data to the company. For example, if an environmentalist group has questions about a company's reported emissions, it could develop its own smart contract for auditing emissions. It could then ask that they be deployed, possibly by a neutral third party service provider, to the company's private channel. The smart contract could audit the data and report its results without sharing the company's data with the environmentalist group.
Once the climate action claim has been verified, it could be tokenized on a public blockchain or passed along in another permissioned chain as an asset. This allows the climate action claim, whether it's the GHG emissions of a product or a company's certified carbon neutrality, to be passed down the supply chain to its customers and made visible to the general public.
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Furthermore, if the code for the certifications are open source, then anybody could extend an existing certification. So if you feel that a certification process is too lax, you can modify it: Create your own certification, write it as smart code, and share it with the world. If enough make a better one yourself: Take an existing certification, add your enhancements, and publish it. If people believe that your certification process is better, then you they could get ask companies to adopt itrun your code on their climate data channel.
By creating an Thus, open source system to audit emissions, we would not only help helps reduce the cost of carbon neutral certifications , but also make it possible for the certifications and standards them to become open and transparent, so that investors, consumers, and the general public could finally trust in the climate actions that businesse are taking.
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While carbon audits and certifications are complex, a lot of data could be obtained automatically now. For example, utility bills, corporate travel, server usage, and shipping data could all be obtained by API calls. This means that if you work for a professional services such as software or IT consulting, an automated system using the blockchain could audit your company's emissions and certify your company as carbon neutral.
As open source developers, this is an easy and direct way for us to do something about climate change.an initial proof of concept or Minimum Viable Product (MVP), we could
- Create a Hyperledger permissioned chain
- Set up separate channels for different organizations
- Allow data to be published to the channels and signed. The data would include basic information about the organization and digitally obtained energy usage data, for example from utility bills.
- Deploy chain code to calculate the organizations' GHG emissions
- Publish the GHG emissions as a token or asset.
Meetings
We will be part of the Hyperledger Climate Action and Accounting SIG Meetings – See you there!
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