Allies of sustainability

Cryptocurrencies represent only the tip of the blockchain iceberg: This is also reflected in the huge sums that have flowed - and are still flowing - into the development of this technology. In 2018, around 2.1 billion US dollars were invested in blockchain technology, twice as much as in 2017, and according to the latest estimates, this figure is set to rise to over 9 billion dollars by 2021.

Today, several large companies are investing heavily in blockchain to further explore the range of possible applications. These initiatives are aimed, among other things, at finding solutions to the many environmental, social and governance issues that companies face on a daily basis.

The fact that supply chains cannot currently be traced is one of them. In fact, the path between producer and end consumer can be long and involve hundreds of stakeholders. For the companies concerned, it is therefore difficult to ensure that all parties involved implement their requirements regarding product safety, environmental impact or social standards in an orderly manner.

Thanks to blockchain, however, these companies can track the history of their products step by step and at a significantly reduced cost. Walmart, a leading American retailer, recently announced that the use of this technology has enabled it to reduce the duration of its food product tracking process from six days to two seconds. Similarly, JD.com, the Chinese online retail giant, has announced that it will use blockchain to monitor its meat supply in order to combat illegal drug distribution in pig farms.

Another promising field of application is the distribution of renewable energies. In an electricity grid, it is not possible to distinguish electrons from renewable energy sources from those from fossil fuels. For end users, however, it is sometimes important to separate the non-renewable chaff from the sustainable wheat.

A system for tracking different energy sources already exists, but it is inefficient and tends to inhibit rather than encourage investment in green energy. In contrast, blockchain technology allows small energy producers to deal directly with nearby customers.

In this way, customers can consistently exclude the possibility of being supplied with electricity from the general power grid. The British electricity producer Centrica has launched such a model on the market as part of its local energy program.

Blockchain technology is used in very heterogeneous areas that superficially have little in common. It is currently used in areas such as money laundering prevention, cybersecurity and proxy voting at general meetings. As far as proxy voting is concerned, the current procedure is impractical and inefficient, as voting instructions are transmitted by a large number of intermediaries who are not linked to each other.

This year, blockchain was used for the first time at a general meeting. Implemented by Broadridge Financial Solutions, Banco Santander used it for the first time in such a context.

As promising as the technology may be, it is still in its infancy. Its applications entail a number of risks that need to be addressed before blockchain can develop its full potential.

One of these risks is that there is no internationally recognised standard. This is a major obstacle. Although the definition of a blockchain is fairly clear, the way each blockchain works can vary widely. Thus, some chains can only work "in silos" and cannot com- municate with others. This makes it impossible to use them on a large scale and causes additional development costs in this context.

Finally, a technology based on the guarantee that no exchange can ever be deleted contradicts the right to be forgotten. The latter has been enshrined in the General Data Protection Regulation in Europe for some time. Conclusion: Once the last reservations have been eliminated, the blockchain has what it takes to become an efficient solution to sustainability problems.