Blockchain for Sustainability: Empowering Ecological and Humanitarian Efforts

Blockchain can radically improve operational and financial processes by providing a decentralized, transparent, and tamper-resistant ledger for enterprise activities. While less frequently discussed, sustainability initiatives supported by blockchain continue to have a significant impact, particularly on environmental, social, and governance (ESG) standards, as well as corporate social responsibility (CSR) programs.

By leveraging blockchain’s inherent features, diverse enterprises, agencies, and organizations can more effectively demonstrate their plans and progress towards achieving stated goals. This transparent demonstration provides a verifiable record to regulators, clients, and other interested stakeholders, helping to avoid reputational risks and the negative impact of poor record-keeping, including accusations of greenwashing, skepticism, and reduced trust.

Such efforts gain even greater significance as industry expectations evolve, with sustainability reporting becoming increasingly mandated. In 2024, 96% of the world’s top 250 companies issued regular sustainability reports, a figure heavily influenced by regulatory requirements, particularly for listed entities. While growing awareness drives blockchain adoption, a clear understanding of its potential for a sustainable future requires exploration of specific applications across key domains. These domains include environmental sustainability and social impact, alongside a consideration of the obstacles associated with the sustainable use of the technology itself.

Blockchain for ecological sustainability

Many companies, regulators, and customers view ecological sustainability as business-critical, particularly as they strive to make more informed and ethical purchasing and investment decisions. Blockchain can help ensure that such initiatives and their requirements remain verifiable and transparent across diverse applications.

Supply chain management

As consumers prioritize ethically sourced products with minimal environmental impact, supply chain transparency continues to gain importance across various industries, including the farm-to-table movement, fashion, and manufacturing. Companies can leverage public blockchains, such as Cardano, to create a fully traceable supply chain, from the sourcing of raw materials through to production and eventual consumer purchase. For instance, blockchain verification can strengthen claims of fair-trade coffee origins. The entire process has the potential to be traced on the blockchain, from land use to yield growth, worker compensation, and reforestation efforts.

Circular economy models

Addressing the 2.1 billion tonnes of annual waste in the European Union (EU) necessitates promoting and securing a robust circular economy, which represents an economic model focused on minimizing waste and maximizing resource use by keeping products and materials in circulation for as long as possible through reuse, repair, refurbishment, and recycling. This model can achieve complete transparency through blockchain's capabilities, from product lifecycle tracking to the verification of recycled content, fostering greater trust and accountability within the circular system.

For example, a reusable packaging manufacturer aiming for lifecycle visibility may encounter limitations when building on traditional networks. However, by integrating blockchain functionalities such as real-time QR code registration, data sourcing, and material provenance, it can establish comprehensive tracking and the verifiable execution of circular economy commitments. Plastiks actively demonstrates this potential by integrating blockchain to offer verifiable plastics recycling on Cardano for leading brands such as Danone.

Renewable energy and microgrids

Blockchain can also play a significant role in the renewable energy sector. Peer-to-peer (P2P) energy trading empowers customers to monetize their surplus energy generated by sources such as residential solar panels. This benefits broader energy provisioning and individual consumers, reducing expenditures while amplifying local renewable resource integration.

In contrast, most existing energy markets remain inefficient, relying on intermediary brokers, and are further hindered by complex processes. Blockchain can help overcome these challenges by delivering secure, fast, and transparent transactions while maintaining data accessibility for network participants. Moreover, blockchain-based microgrids can further assist small or remote communities with energy transactions, eliminating the need for extensive, centralized energy systems—the large-scale infrastructure of national power grids and transmission lines. This functionality delivers more dependable power to underserved populations.

Carbon emissions tracking

Evolving regulations, such as the EU’s Corporate Sustainability Reporting Directive (CSRD), which mandates comprehensive emissions disclosure from 2024, underscore the growing need for transparent environmental accountability. Blockchain technology presents opportunities for secure verification of carbon emissions and offsetting initiatives.

Recognizing this evolving landscape, the Cardano Foundation actively prepared for the EU Markets in Crypto Assets (MiCA) regulation, implemented at the end of 2024. Collaborating with the Crypto Carbon Ratings Institute (CCRI), the Foundation generated a report detailing Cardano network sustainability indicators, positioning itself among early providers of this required information. While MiCA outlines disclosure requirements, Cardano's current reporting for compliance does not yet employ blockchain for enhanced data verification. The significant potential of blockchain to securely record and verify such data remains a distinct capability from this initial compliance endeavor.

Environmental intelligence

Built on Cardano, EcoMandala introduces a novel approach to ecological initiatives by merging Earth observation, artificial intelligence (AI), blockchain, and non-fungible token (NFT) technology to create a dependable data source for decentralized applications (DApps). The project demonstrated its potential through the successful proof of concept developed with initial support from Project Catalyst Fund 12. This initial success led to a pilot program with Digifarm, also funded through Project Catalyst, which showcases the application of satellite-based decentralized agricultural applications (DApps). Further scaling its impact, EcoMandala now collaborates with the Syngenta Foundation in India, supported by Project Catalyst Fund 13, aiming to uplift subsistence farmers through agricultural insights and Earth observation data.

Leveraging AI-enhanced satellite imagery and blockchain oracles, the platform delivers tamper-resistant, real-time environmental data for applications ranging from prediction markets and on-chain insurance to precision agriculture and environmental monitoring. The open-sourcing of its satellite oracle system encourages the development of independent applications, expanding the utility of blockchain technology into tangible, real-world solutions. These solutions include enhanced transparency and efficiency in agriculture, carbon credit verification, and biodiversity conservation.

Blockchain for sustainable humanitarian efforts

In the immediate aftermath of a natural or manmade crisis, humanitarian intervention and aid necessitate quick action, often without fully considering sustainability. The future of humanitarian efforts, however, increasingly requires a greater focus on the sustainability of these activities. Aid organizations and major humanitarian institutions, including the United Nations, already seek to integrate interventions with sustainable practices. Blockchain technology offers a means to bridge the gap between traditional humanitarian action and sustainability, as discussed in more detail below.

Ethical supply chain management

Human rights abuses, notably forced labor and human trafficking, constitute a profound global humanitarian challenge. The International Labour Organization (ILO) estimates that, as of 2022, 27.6 million individuals were subjected to forced labor across all nations and economic sectors. While this intricate issue defies simple solutions, blockchain presents promising avenues for strengthening compliance and ethical sourcing.

Features such as digital identity verification can enhance transparency in labor recruitment, improved supply chain tracking offers greater visibility into production processes, and secure record-keeping of fair wages and working hours can foster accountability. However, the practical application of blockchain in this domain necessitates careful consideration of existing social and legal frameworks, robust implementation strategies, and collaboration across diverse stakeholders to avoid unintended consequences and ensure meaningful impact.

Transparent aid distribution

The Cardano Foundation has maintained a longstanding, award-winning partnership with Switzerland for UNHCR. This novel, community-supported model seeks to bridge the gap between traditional funding models and blockchain through the charity stake pool “With Refugees” (WRFGS). This approach, referred to internally as “impact staking,” enables donors to contribute funds while verifying that their donations reach intended recipients.

Fostering financial inclusion

Obtaining access to financial services and capital is crucial for building economic empowerment and helping underserved communities escape poverty. Yet, this remains difficult with traditional financial models and organizations. For instance, in 2024, the World Bank estimated that 1.4 billion people worldwide remain unbanked, meaning they lack access to bank services or similar financial institutions.

While in-person or online microfinance options help narrow this gap, they often lack the transparency and permanence that public blockchains, such as Cardano, can provide. Additionally, microfinancing may not be available in an individual's local currency, or they may face high inflation if residing in a region with unstable economic conditions. Conversely, blockchain-based microfinance and financial tools can remove the need for blind trust and remain accessible worldwide.

Evaluating the sustainability of blockchain activities

The growing focus on ESG factors has prompted efforts to assess the sustainability of blockchain-based activities. While frameworks exist, applying them to a decentralized infrastructure presents unique hurdles, particularly in quantifying and standardizing data across both on-chain and off-chain activities. For example, the differing ESG ratings for Cardano, as provided by Green Crypto Research and CoinDesk Data (formerly CCData), show that Cardano performs more favorably in the former based on established criteria.

Environmental considerations

• •Energy Consumption Measurement: Accurately quantifying the energy consumption associated with various digital assets and their underlying consensus mechanisms remains a complex task, often relying on estimates and approximations.
• •E-waste and Hardware Lifecycle: Assessing the environmental impact of hardware production, use, and disposal related to digital asset mining and infrastructure remains in its early stages of development.
• •Carbon Footprint Attribution: Determining the precise carbon footprint of transactions and network operations, considering the diverse and global nature of energy sources, poses a significant challenge.

Social considerations

• •Accessibility and Financial Inclusion: Measuring the extent to which digital assets promote or hinder financial inclusion for diverse populations requires robust data and standardized metrics.
• •Labor Practices and Supply Chains: Evaluating labor standards within digital asset development companies, mining operations, and related technology supply chains proves difficult due to the decentralized and often opaque nature of the industry.
• •Community Engagement and Impact: Quantifying the social impact of digital asset projects, including their engagement with communities and contributions to social good, lacks established indicators.

Governance considerations

• •Decentralization and Accountability: Assessing governance structures in decentralized networks and determining accountability mechanisms for decision-making processes proves complex.
• •Transparency and Disclosure: Standardizing reporting and disclosure requirements for digital asset projects and related entities, both on and off-chain, remains a significant challenge.
• •Regulatory Compliance and Legal Frameworks: Navigating the evolving and often fragmented regulatory landscape for digital assets requires adaptable governance indicators to ensure compliance across jurisdictions.

Despite these considerations, a public, permissionless blockchain like Cardano offers a compelling pathway toward sustainable blockchain practices. For instance, the network’s transparent and auditable nature fosters accountability while energy-efficient consensus and decentralized governance lay a robust foundation for addressing quantification and standardization. By embracing open collaboration and continuous development, Cardano can spearhead the evolution of verifiable and responsible blockchain solutions that address the growing scrutiny of ESG principles.

Blockchain for a sustainable future

As regulators, businesses, humanitarian groups, and consumers become increasingly aware of environmental issues, new approaches must emerge to ensure that business sustainability initiatives keep pace with stricter regulations and government and shareholder oversight. Blockchain technology provides a cost-effective, verifiable, and immutable solution to many key challenges businesses encounter in their sustainability efforts. The technology can help establish a single source of truth and a competitive edge for organizations seeking to meet the evolving demands of a complex global economy.

Explore how public blockchains like Cardano can help enterprises implement sustainability solutions.