Mission
In recent years, businesses and investors have become increasingly aware of climate change and are now taking positive action to stop it. A great example is Microsoft's initiative to become carbon neutral and eventually carbon negative. For these initiatives to succeed, multiple parties including institutional investors, major corporations, supply chain partners, environmentalist groups, government regulators, and the general public must now work together, sometimes for the first time. This new collaboration in turn requires exchanging data and building trust across traditional boundaries.
Today, this is simply not possible. Some data, such as utility bills or shipping records, are held in those institutions' data siloes and are tedious to get. Most data, though, is just not available. Most products involve multiple materials and activities to manufacture and distribute, and the data for the carbon footprint of their raw materials and activities are not available. As a result, we 're forced have to rely on broad aggregates of economic output and do not have reliable instead of carbon emissions data for any particular product.
The solution is for members of a supply chain make the carbon emissions of their products and services available, so that it becomes easy to calculate the carbon emissions of products and services made from them. Blockchain or distributed ledger technologies (DLT's) should are specifically designed for such scenarios and could be the backbone of any multi-party collaboration on climate change, because they are specifically designed for such scenarios. They allow values, in this case of carbon emissions, to be tokenized and transferred through a supply chain of multiple, disparate parties across traditional national and industry boundaries. With the blockchain, we could replace guesswork and approximations with These tokens of carbon emissions could be attached to invoices and give us hard data based on real transactions for emissions calculations.
The mission of this working group is to identify how DLT's could improve corporate or personal carbon accounting and make carbon neutral accounting and certifications more open, transparent, and credible. We're here to help
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We will work closely with the Standards - WG as part of understanding the standards and implementing the technologies for climate accounting.
Active Members
To help group members meet and interact with each other, people are welcome to add their contact information and your time zone to this page so that other participants can contact you directly.
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| Name | Company |
|---|---|
| Si Chen | Open Source Strategies, Inc. |
| Christiaan Pauw | Nova Institute |
| Robin Klemens | private interest |
Meetings
We will be part of the Hyperledger Climate Action and Accounting SIG Meetings – See you there!
Scope
The current scope of this working group includes:
- Identifying standards for corporate climate accounting and certifications.
- 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.
Ongoing Work
Many companies today are starting to account for and limit their climate impact, going as far as trying to achieve carbon or climate neutrality. These corporate initiatives often involve several steps, including:
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Yet these steps are often difficult for the companies themselves and at times met with skepticism from the general public. This is because of the challenges of data and trust.
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 products purchased, transportation of goods, travel and commuting of employees, and leased assets.
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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.
The Questions of Trust
Knowing this, it's not hard to see why the general public could be skeptical of a company's climate action claims. After all, as consumers,
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Meanwhile, institutional investors such as the Net Zero Asset Owner Alliance or Climate Action 100+ have a different trust issue. They are used to more in-depth analysis and independent verification of companies' claims, and carbon neutral certifications do not have the same level of detail as other financial ratings they are accustomed to. For example, when investing in bonds, it's not enough that one rating agency, such as Standard & Poors or Moody's, considers a bond "investment grade." They typically require credit ratings by more than one rating agency, and the ratings are in tiers from AAA (highest credit quality) to CCC (high default risk.) As climate neutrality becomes important to them, they would probably demand the same level of detail in ratings of corporate climate action.
Why DLT's
Fortunately, DLT's are by design suited for solving precisely these issues. They are an "internet of value" where data could be transacted across different organizations through a shared ledger. Furthermore, 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 data and code.
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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.
Why Open Source
Today, there are a lot of different environmental certifications, and the general public often doesn't know which one they could trust. Thus, some consumers feel that any business which makes a pro-environment claim is "greenwashing," while many businesses feel that no matter what they do, it's not good enough.
But what if we opened up the certifications process by creating open source software for verifying climate action based on data? Then anybody could study a certification and understand how it works. We could run several certifications on the same company, or even conduct studies comparing the certifications on a range of companies.
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, make a better one yourself: Take an existing certification, add your enhancements, and publish it. If people believe that your certification is better, then they could ask companies to run your code on their climate data channel.
By making the source code available, we make the carbon emissions accounting and certification process transparent, so that all stakeholders could see what went into it. This increases the trust in the results.
Furthermore, by creating free tools for gathering data, we allow certifying entities to focus on analysis, while reducing the cost of carbon emissions reporting so that it becomes possible for companies of all sizes, instead of just the large, public ones.
Why Hyperledger
Hyperledger is a permissioned ledger, so it could be used to share data and transact between trusted parties. This protects confidential business data from unauthorized parties.
Because it's a permissioned ledger, Hyperledger also does not need the proof-of-work algorithms used by public ledgers such as Bitcoins. This makes it both much faster and more energy efficient. Since our goal is to stop climate change, we would naturally want an energy efficient technology to do it with. Thus, open source not only helps reduce the cost of certifications but also make it possible for 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.
How to Get Started
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. We're working on a Carbon Neutral Accounting and Certification Minimum Viable Product (MVP) which will provide a demonstration of how to do this with Hyperledger.