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The impact of blockchain technology on ESG reporting reliability

How blockchain can be a way to show the transparency of companies in the face of demands for social, environmental and ethical responsibility

In the capital markets, the world's investment funds devote increasing attention to the actions of companies that act responsibly with respect to climate and environmental, social and governance responsibility, gathered under the acronym ESG. As a result, one third of the assets traded already belong to corporations that prioritize commitments to businesses concerned with ensuring the sustainability of the planet.

In the international economic community there is a concern with the development of systems that guarantee the adequate follow-up of the information presented by the

companies in their non-financial reports, which also stand as a trend. In March, the European Community defined rules that encourage the use of governance attributes.

Experts recognize that current classification systems are insufficient.

Even companies specialized in ranking and ESG classification tend to seek universal technological solutions, capable of increasing the control and transparency of corporate procedures.

“ESG, an acronym for Environmental, Social and Governance, aims to establish an assessment of the social and environmental responsibilities of companies. The information is useful for 'socially responsible investors' to choose where to invest.”

Blockchain solutions

In the effort to identify and monitor the processes of local and regional markets, increasingly integrated into networks, blockchain technologies tend to be highlighted as the best alternative for generating indicators.

Technologies facilitate management in the production chain, through which all actors have shared and transparently the record of their actions. For example, in agriculture, the entire planting part benefits from adding value. Among other reasons, because it helps to identify, in fact, where all the resources are being placed. There is the possibility of pointing out points that generate carbon footprints and the entire record of the use of fertilizers and pesticides. But also from Industry, it is possible to register from how suppliers produce or extract the inputs to be used in the production process. That way, everything is transparent, with immutable and shared data.

In the process of preparing and presenting non-financial reports, the application of blockchain tools is a differentiating variable between producers who follow environmental, social and governance guidance and those who are accused by consumers to be unfair, spoiling ecosystems, improper wages, and bringing slow poisons in the food.

Why we suggest the blockchain and ESG combination

"ESG reports are a very important tool for the ethical and sustainable actions of organizations, because they record processes, so that society has more objective knowledge about corporate activities. Information sharing combined with technology increases transparency and gives more control to all market actors, assigning responsibilities to producers and traders at each stage. Blockchain really is a powerful technology and how we are going to use it is the question. We continue to use it in line with our purpose and values ​​of sustainability and growth for organizations and a positive impact on society." Júlia Ramalho - Co- Founder & Co-CEO of DdF.

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