Greenwashing has become a major issue across a number of industries, with some companies attempting to greenwash their Environmental, Social, and Governance (ESG) reporting.

Blockchain technology can play a significant role in the prevention of such malpractice through its various mechanisms - here’s how.

Enhanced Transparency:
Blockchain enables real-time tracking of ESG metrics, enabling stakeholders to independently verify claims and access original data sources. This reduces the reliance on company-issued reports and data spin.

Supply Chain Traceability:
Tracking products and materials through the entire supply chain allows for verification of sustainability claims. It also gives a transparent view on fair labour practices and environmental impacts.

Verifiable Record Keeping:
The immutable ledger provided by Blockchain makes it extremely difficult for the alteration or manipulation of ESG data and metrics recorded on it once committed to the Blockchain.

Automated Data Collection:
Smart contracts can automate collection and reporting of ESG data. This eliminates human error or malpractice, and also provides fast and accurate reporting.

Standardization:
Blockchain can facilitate consistency of ESG metrics across industries, platforms and territories, improving comparability in ESG reporting and making selection of favorable data by companies much more difficult.

Tokenization:
Of environmental assets, like carbon credits, on Blockchain make them more easy to trade and verify, thus helping eliminate double counting of favorable data or making fraudulent claims.

The descriptions provided above are all based on publicly available information, and cannot be considered as financial advice or encouragement to invest. Sources of information used in this post include Deloitte, EY and Fujitsu. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.