[Coinlive Talk] Blockchain Tech: Shaping the Future for Green Financing

• Green Financing has been gaining traction in recent times. However, there remains persistent issues with regards to transparency and impact evaluation
• Blockchain potentially serves to remedy this problem by affording real-time data monitoring as well as accessibility
• Sustainability efforts can be better enhancing through blockchain as well, by inviting greater participation and involvement from the masses

With China making green finance a national priority over the course of the next few years, green financing has taken over Asia, as well as the rest of the world. Investments in green bonds has risen drastically in recent years, with the global green bond market issuing a record US$269.5 billion in 2020, an increase from US$266.5 billion in 2019, according to Climate Bonds Initiative.

Yet insufficient environmental, social, and governance (ESG) data and analytics have prohibited the growth of green financing. According to the Green Bond Principles, issuers of green bonds have to be clear about four core components: use of proceeds, evaluation process and project assessment, management of proceeds, and timely reporting to investors. Transparency and monitoring then, have become key in sustaining the growth of green finance.

Blockchain perhaps provides a viable answer to this. The tokenisation of assets can offer traceability and transparency solutions while ensuring that investments are kept adequately efficient. Some examples include the tokenisation of carbon credits, NFTs, and stablecoins. In fact, a large component of ESG lies within its premise of ensuring opt-in and participation on a large scale – which incidentally serves as the primary ethos behind decentralisation and blockchain technology: equity and transparency that is aggregated across a widely distributed system.

For long, the debate on whether sustainability efforts should be driven by trickle-down leadership or left to the masses has persisted since time immemorial. Arguably, the promises of enhanced transparency and data aggregation is perhaps best heralded by blockchain technology. In fact, there has been rising demands for transparency and granularity of green financial products such as green bonds and green loans. The call for data demonstration to measure the extent of positive environmental impact demands an openness when it concerns measurable, verifiable, and reliable data.

For instance, an IOT network integrated within a blockchain-based system allows for the measurement of real-time matching between the consumption of renewable energy as well as its generation between buyer and seller.

However, the decentralised nature of blockchain technology importantly allows for a key component of sustainability efforts – participation on a large scale.

To find out more about the use of blockchain technology in sustainability efforts, we spoke with Annabelle Huang, the Managing Partner at Amber Group.

Coinlive’s Interview with Annabelle Huang, Managing Partner of Amber Group

“We hold a strong commitment to the Whale and Dolphin Conservatory (WDC) through our partnership with them,” she says. “We actually adopted a few whales where we are auctioning naming rights, and having those naming rights certified on blockchain for provenance. This is one usage of blockchain as an underlying authority for environmental sustainability.”

WhaleFin, Amber Group’s flagship digital asset platform, serves primarily as a way for investors to build wealth while championing for greater environmental awareness using blockchain technology. Besides calling upon major companies in the crypto space to launch similar green initiatives by partnering up with climate and wildlife conservation organisations like WDC, WhaleFin has recently also adopted Salt, a humpback whale.

“Only green finance can assist in creating a green future,” Michael Wu, the founder and CEO of Amber Group says. “Entering into a partnership with WDC and adopting Salt is only the first step towards the corporate social responsibilities we’ve set up for Amber Group. Our goal is to contribute to sustainable development by leveraging the power of the crypto industry.”

Especially following Ethereum’s transition towards a Proof-of-Stake (PoS) consensus protocol, existing Proof-of-Work (PoW) layer 1 chains have been facing mounting pressure for accountability for their environmental footprint. Crypto mining contributes to an astounding portion of global energy consumption.

Bitcoin for instance, the world’s largest chain, consumes an estimated 150 terawatts of electricity every year, which is even more than what the entire country of Argentina consumes. It is no surprise then, that many are still sceptical about the benefits of blockchain technology and their capacity towards sustainability efforts.

Annabelle however, remains confident in having blockchain lead the charge for the future.

“We have been considering incorporating blockchain technology with carbon credits or other ESG focused assets,” she tells us.

“While these assets may often be illiquid in traditional markets, they have the potential to be much more liquid in the blockchain space, which then suddenly opens up a whole new area of investors.”

Indeed, for many, investing in carbon credits often shares a similar barrier to entry as say, investment in real estate in prime countries such as London or Hong Kong – there exists an incredibly high financial cost to participate in such an investment. Blockchain offers an option for even retail investors to participate in the investment by fragmenting ownership of the asset, such as carbon credits, into more affordable shares, thus opening up access to investments for the masses that would otherwise have been dominated by only the wealthy and privileged.

While top-down approaches to sustainability may be able to force behavioural changes through policymaking, a bottom-up approach seeks to influence policy change through proliferate behaviour. The premise of this is simple – that individual actions can have a massive impact when adopted on a large scale. This is of course hinged upon having low barriers of entry to participation in the first place. Just as Annabelle says, having blockchain technology serve as the underlying asset towards green initiatives helps to encourage a higher level of participation by carving up the green pie for all.

This is an Op-ed article. The opinions expressed in this article are the author’s own. Readers should take the utmost precaution before making decisions in the crypto market. Coinlive is not responsible or liable for any content, accuracy or quality within the article or for any damage or loss to be caused by and in connection to it.