WEF Building Blockchains

Fourth Industrial Revolution for the Earth Series
Building Block(chain)s
for a Better Planet
In collaboration with PwC and Stanford Woods Institute for the Environment
September 2018
Building Block(chain)s for a Better Planet is published by
the World Economic Forum System Initiative on Shaping
the Future of Environment and Natural Resource Security in
partnership with PwC and the Stanford Woods Institute for
the Environment. It was made possible with funding from the
MAVA Foundation. It forms part of a series of reports from
the Fourth Industrial Revolution for the Earth project, run in
association with the World Economic Forum Centre for the
Fourth Industrial Revolution.
About “The Fourth Industrial Revolution for the Earth”

series
The “Fourth Industrial Revolution for the Earth” is a
publication series highlighting opportunities to solve
the world’s most pressing environmental challenges by
harnessing technological innovations supported by new
and effective approaches to governance, financing and
multistakeholder collaboration.
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Contents Preface
The Fourth Industrial Revolution
and the Earth
The majority of the world’s current environmental problems can be traced back
to industrialization, particularly since the “great acceleration” in global economic
3 Preface activity since the 1950s. While this delivered impressive gains in human progress
and prosperity, it has also led to unintended consequences. Issues such as climate
4 Foreword change, unsafe levels of air pollution, depletion of forestry, fishing and freshwater
stocks, toxins in rivers and soils, overflowing levels of waste on land and in
5 Executive summary
oceans, and loss of biodiversity and habitats are all examples of the unintended
7 Our planet: The challenge and consequences of industrialization on our global environmental commons.
opportunity
As the Fourth Industrial Revolution gathers pace, innovations are becoming
9 The building blocks: Overview of faster, more efficient and more widely accessible than ever before. Technology
blockchain and its maturity is becoming increasingly connected, and we are now seeing a convergence of
the digital, physical and biological realms. Emerging technologies, including the
12 The blockchain opportunity for Internet of Things (IoT), virtual reality and artificial intelligence (AI), are enabling
our environment societal shifts as they seismically affect economies, values, identities and
14 Blockchain game changers for possibilities for future generations.
the Earth
There is a unique opportunity to harness the Fourth Industrial Revolution – and the
22 Blockchain blockers and the societal changes it triggers – to help address environmental issues and transform
unintended consequences how we manage our shared global environment. Left unchecked, however, the
Fourth Industrial Revolution could have further unintended negative consequences
26 Conclusions and for our global commons. For example, it could exacerbate existing threats to
recommendations environmental security by further depleting global fishing stocks, biodiversity and
resources. Furthermore, it could create entirely new risks that will need to be
31 Acknowledgements
considered and managed, particularly in relation to the collection and ownership of
32 Annex I environmental data, the extraction of resources and disposal of new materials, and
the impact of new advanced and automated machines.
33 Annex II
Harnessing these opportunities and proactively managing these risks will require
34 Endnotes a transformation of the current “enabling environment” for global environmental
management. This includes the governance frameworks and policy protocols,
investment and financing models, the prevailing incentives for technology
development, and the nature of societal engagement. This transformation will not
happen automatically. It will require proactive collaboration among policy-makers,
scientists, civil society, technology champions and investors.
If we get it right, it could create a sustainability revolution.
Working with experts from the environmental and technology agenda, the “Fourth
Industrial Revolution for the Earth” project is producing a series of insight papers
designed to illustrate the potential of Fourth Industrial Revolution innovations and
their application to the world’s most pressing environmental challenges. Collectively
and individually, these papers offer insights into the emerging opportunities and
risks of this fast-moving agenda, highlighting the roles various actors could play
to ensure these technologies are harnessed and scaled effectively. The papers
are not intended to be conclusive, but rather to act as a stimulant – providing
overviews that provoke further conversation among diverse stakeholders about
how new technologies driven by the Fourth Industrial Revolution could play a
significant role in global efforts to build environmentally sustainable economies,
helping to provide foundations for further collaborative work as this dynamic new
agenda evolves. This particular paper looks at blockchain and the planet. Previous
papers in the “Fourth Industrial Revolution for the Earth” series have looked at
how the Fourth Industrial Revolution could transform ocean management, enable
sustainable cities, and build an inclusive bio-economy that preserves biodiversity,
as well as examining how artificial intelligence could be harnessed to address
economic, social and governance challenges related to Earth systems.
Building Block(chain)s for a Better Planet 3

Foreword
Blockchain1 is a foundational emerging technology of the Fourth Industrial Revolution, much like the
internet was for the previous (or third) industrial revolution. Its defining features are its distributed and
immutable ledger and advanced cryptography, which enable the transfer of a range of assets among
parties securely and inexpensively without third-party intermediaries. It is also democratized by design
– unlike the platform companies of today’s internet – allowing participants in the network to own a
piece of the network by hosting a node (a device on the blockchain). Blockchain is more than just a
tool to enable digital currencies. At its most fundamental level, it is a new, decentralized and global
computational infrastructure that could transform many existing processes in business, governance
and society.
Dr Celine Herweijer
Partner, PwC UK Blockchain has received considerable hype, ranging from “cryptomania” in the trading markets in
Innovation and 2017 to widespread discussions about the breadth and depth of its potential impact across public
Sustainability Leader and private sectors and society in general. It has also invited scepticism related to its scalability and
the high-energy use of early blockchain platforms.2 As of early July 2018, the total cryptocurrency
market cap (spanning 1,629 currencies) stands at about $254.67 billion.3 As the architecture for
this transformational technology matures and as both the blockchain hype and scepticism begin to
rationalize, there is a significant opportunity to shape how blockchain is developed and deployed.
A number of blockchain applications and platforms are becoming widely known, starting with
Bitcoin, which pioneered cryptocurrency (and crypto-assets), followed by Ethereum, which as a
platform for building decentralized applications through smart contracts has inspired a whole new
“token economy”. The emergence of applications in voting, digital identity, financing and health
illustrate how blockchain can potentially be used to address global challenges.4 There is now also
emerging enthusiasm about blockchain’s potential to support global efforts to advance environmental
Dominic Waughray
Head of the Centre sustainability. To date, however, there has been little appraisal of the use-cases or systematic
for Global Public orientation to vital environmental opportunities and challenges, much less of how to build the public-
Goods, private collaborations and platforms that will be needed to realize these nascent opportunities.
World Economic
Forum This report focuses on the application of blockchain to address pressing environmental challenges
such as climate change, biodiversity loss and water scarcity. It looks at emerging applications,
including those that might be the biggest game changers in managing our global environmental
commons, while assessing the potential challenges and developing recommendations to address
them. Some of these applications could dramatically improve current systems and approaches, while
others could completely transform the way humans interact with – and manage – our environmental
stability and natural resources.
Throughout this assessment, it is emphasized that the potential for blockchain lies in its architectural
ability to shift, and potentially upend, traditional economic systems – potentially transferring value from
shareholders to stakeholders as distributed solutions increasingly take hold.
Sheila Warren
Project Head, If harnessed in the right way, blockchain has significant potential to enable a move to cleaner and
Blockchain and more resource-preserving decentralized solutions, unlock natural capital and empower communities.
Distributed Ledger This is particularly important for the environment, where global commons and non-financial value
Technology,
challenges are currently so prevalent.
World Economic
Forum’s Centre for
the Fourth Industrial However, if history has taught us anything, it is that such transformative changes will not happen
Revolution automatically. They will require deliberate collaboration between diverse stakeholders ranging from
technology industries through to environmental policy-makers, underpinned by new platforms that can
support these stakeholders to advance not just a technology application, but the systems shift that
will enable it to truly take hold. It is our hope that the following overview of the opportunities, risks and
suggested next steps will stimulate stakeholders to embark on an exciting new action agenda that
builds blockchains for a better planet.
4 Building Block(chain)s for a Better Planet

Executive summary
Background Principal findings

Blockchain has the potential to transform how humans Our research and analysis identified more than 65 existing
transact. It is a decentralized electronic ledger system that and emerging blockchain use-cases for the environment
creates a cryptographically secure and immutable record through desk-based research and interviews with a range of
of any transaction of value, whether it be money, goods, stakeholders at the forefront of applying blockchain across
property, work or votes. This architecture can be harnessed industry, big tech, entrepreneurs, research and government.
to facilitate peer-to-peer payments, manage records, track
physical objects and transfer value via smart contracts. Blockchain use-case solutions that are particularly relevant
across environmental applications tend to cluster around
This potential to fundamentally redefine how business, the following cross-cutting themes: enabling the transition
governance and society operate has generated to cleaner and more efficient decentralized systems; peer-
considerable hype about blockchain. Despite this hype, it to-peer trading of resources or permits; supply-chain
remains a nascent technology with considerable challenges transparency and management; new financing models for
that need to be overcome, from user trust and adoption environmental outcomes; and the realization of non-financial
through to technology barriers (including interoperability and value and natural capital.
scalability), security risks, legal and regulatory challenges,
and blockchain’s current energy consumption. The report also identifies enormous potential to create
blockchain-enabled “game changers” that have the ability to
However, as the technology matures and its application deliver transformative solutions to environmental challenges.
across sectors and systems grows, there is both a These game changers have the potential to disrupt, or
challenge and an opportunity to realize blockchain’s substantially optimize, the systems that are critical to
potential – not just for finance or industry, but for people addressing many environmental challenges. A high-level
and the planet. This opportunity comes at a critical juncture summary of those game changers is outlined below:
in humanity’s development. As a result of the “great
acceleration” in human economic activity since the mid- “See-through” supply chains: blockchain can create
20th century, which has yielded impressive improvements in undeniable (and potentially unavoidable) transparency in
human welfare, research from many Earth-system scientists supply chains. Recording transactional data throughout the
suggests that life on land could now be entering a period of supply chain on a blockchain and establishing an immutable
unprecedented environmental systems change. record of provenance (i.e. origin) offers the potential for full
traceability of products from source to store. Providing such
Fortunately, an opportunity is also emerging to harness transparency creates an opportunity to optimize supply-
blockchain (and other innovations of the Fourth Industrial and-demand management, build resilience and ultimately
Revolution) to address six of today’s most pressing enable more sustainable production, logistics and consumer
environmental challenges that demand transformative choice.
action: climate change, natural disasters, biodiversity Decentralized and sustainable resource management:
loss, ocean-health deterioration, air pollution and water blockchain can underpin a transition to decentralized utility
scarcity. Many of these opportunities extend far beyond systems at scale. Platforms could collate distributed data on
“tech for good” considerations and are connected to global resources (e.g. household-level water and energy data from
economic, industrial and human systems. Blockchain smart sensors) to end the current asymmetry of information
provides a strong potential to unlock and monetize value that exists between stakeholders, enabling more informed –
that is currently embedded (but unrealized) in environmental and even decentralized – decision-making regarding system
systems, and there is a clear gap within the market. In design and management of resources. This could include
the first quarter of 2018, for example, 412 blockchain peer-to-peer transactions, dynamic pricing and optimal
projects raised more than $3.3 billion through initial coin demand-supply balancing.
offerings (ICOs).5 Less than 1% of these were in the energy
Raising the trillions – new sources of sustainable
and utilities sector, representing around $100 million of
finance: blockchain-enabled finance platforms could
investment, or around just 3% of the total investment for the
potentially revolutionize access to capital and unlock
quarter.
potential for new investors in projects that address
environmental challenges – from retail-level investment in
green infrastructure projects through to enabling blended that are effective, holistic, relevant and deployable. Currently,
finance or charitable donations for developing countries. such collaborative efforts are few in number, making it
On a broader level, there is the potential for blockchain to almost impossible for stakeholders to fully harness the
facilitate a system shift from shareholder to stakeholder potential opportunities that blockchain technology provides.
value, and to expand traditional financial capital accounting
to also capture social and environmental capital. Collectively, Harnessing blockchain technologies to drive sustainable and
these changes could help raise the trillions of dollars resilient growth and a new wave of value creation will require
needed to finance a shift to low-carbon and environmentally decisive action. The opportunities that blockchain offers
sustainable economies. . need to be developed and governed wisely, with upfront
Incentivizing circular economies: blockchain could and continual management of unintended consequences
fundamentally change the way in which materials and and downside risks. A variety of measures will be needed,
natural resources are valued and traded, incentivizing from ensuring compliance with privacy rights, improving
individuals, companies and governments to unlock financial security and clarifying accountability in case things go
value from things that are currently wasted, discarded wrong, through to establishing standards for minimizing
or treated as economically invaluable. This could drive energy consumption. These responsibilities are shared by all
widespread behaviour change and help to realize a truly stakeholders.
circular economy.
Establishing new global platforms or accelerators focused
Transforming carbon (and other environmental)
on creating a “responsible blockchain ecosystem”, rather
markets: blockchain platforms could be harnessed to use
than just incubating specific projects, would be a valuable
cryptographic tokens with a tradable value to optimize
and much-needed next step. Such a platform could support
existing market platforms for carbon (or other substances)
stakeholders from across different sectors to develop
and create new opportunities for carbon credit transactions.
effective blockchain solutions for environmental challenges,
Next-gen sustainability monitoring, reporting and help ensure blockchain technology is sustainable (i.e. good
verification: blockchain has the potential to transform both for people and the planet) and play a crucial role in building
sustainability reporting and assurance, helping companies out the necessary governance arrangements at industrial,
manage, demonstrate and improve their performance, while state and global levels.
enabling consumers and investors to make better-informed
decisions. This could drive a new wave of accountability Finally, today’s hype surrounding blockchain can lead to
and action, as this information filters up to board-level the temptation to try to use blockchain to solve everything.
managers and provides them with a more complete picture A reasoned and structured approach is needed to help
for managing risk and reward profiles. practitioners assess whether and how to deploy blockchain
Automatic disaster preparedness and humanitarian for delivering new environmental solutions. The following
relief: blockchain could underpin a new shared system for three broad principles should be the starting point for any
multiple parties involved in disaster preparedness and relief such assessment:
to improve the efficiency, effectiveness, coordination and
trust of resources. An interoperable decentralized system – Will blockchain solve your actual problem?
could enable the sharing of information (e.g. individual relief Consider whether blockchain is actually needed to solve
activities transparent to all other parties within the distributed the problem by clearly identifying what the problem
network) and rapid automated transactions via smart is and whether distributed ledger technology is really
contracts. This could improve efficiencies in the immediate needed to deliver your envisaged solution.
aftermath of disasters, which is the most critical time for – Can you acceptably manage the downside risks or
limiting loss of life and other human impacts. unintended consequences? Consider the risks and
Earth-management platforms: new blockchain-enabled challenges posed by a blockchain-enabled solution,
geospatial platforms, which enable a range of value-based the technical and commercial feasibility of being able to
transactions, are in the early stages of exploration and mitigate these and the likely time frames to realize them.
could monitor, manage and enable market mechanisms that – Have you built the right ecosystem of
protect the global environmental commons – from life on stakeholders? Blockchain’s value as a solution
land to ocean health. Such applications are further away in multiplies when more players participate and when
terms of technical and logistical feasibility, but they remain stakeholders come together to cooperate on matters
exciting to contemplate. of industry-wide or system-level importance. New
partnerships and opportunities are more likely to
These game changers, and the more than 65 use-cases emerge from multidisciplinary ecosystems.
identified, offer the exciting potential to build a sustainable
future; however, as with many emerging technologies,
there are a number of risks to manage and challenges
to overcome. In broad terms, the challenges relate to
blockchain’s maturity as a technology, regulatory and legal
challenges, stakeholders’ trust in the technology, and
their willingness to invest and participate in applications.
Managing and overcoming these risks and challenges will
require stakeholders to work together to develop solutions

Our planet: The challenge and
opportunity
The challenge are set to intensify as global trends are expected to put
an increasing strain on finite resources. The current world
From an anthropocentric perspective, the past century population of around 7 billion is expected to grow to nearly
(particularly the past few decades) of human existence 10 billion by 2050. As the world becomes more populous
has marked a very successful period for population and and the global middle class grows in size, it will increase
economic growth.6 the demand for energy, transport, food and water. Under
current approaches, as our consumption of resources
The “great acceleration”7 in human activity, particularly since continues to rise, so do the levels of waste, plastic and
the mid-20th century, has delivered exponential economic pollution. To put this in perspective, 8.3 billion tonnes of
growth. Real output grew five-fold in the four centuries plastic have been created in the past century, more than
leading to 1900, before accelerating more than 20-fold in 70% of which is now in waste streams. Alongside this,
the 20th century.8 The past 60 years and, in particular, the societies are under growing social and economic strain from
past 25 years, have witnessed an increased acceleration mounting inequality, youth unemployment, the threat of
in human economic activity. The recent past is an example automation and geopolitical volatility. Many of these issues
of markets working to their fullest extent, as technologies are exacerbated by environmental deterioration.
have driven progress and real commodity prices have
fallen, despite a 20-fold increase in demand for certain While we have seen a progressive increase in environmental
resources.9 The follow-on effects have included impressive interventions over the past four decades, the breadth and
improvements in human welfare as the number of people depth of environmental challenges and the pace with which
living on less than $1.25 a day has been cut by one-half they are evolving demonstrates the need for governments,
since 199010 and more than 700 million people have moved regulators and businesses to adapt more quickly than
into the global middle classes.11 before. Business as usual is clearly not enough, and the
evidence shows that progress made over the past four
Yet, from an Earth-systems perspective, the human decades has been insufficient for the scale of the challenge.
success story is not so positive. The stress on the Earth’s
natural systems caused by human activity has worsened The opportunity
considerably in the 25 years since the 1992 Rio de Janeiro
Earth Summit in Brazil. While these challenges are urgent and extraordinary, they also
coincide with an era of unprecedented innovation, technical
Underpinning these extraordinary human advances has change and global connectivity – the Fourth Industrial
been the consistently steady state of the Earth’s global Revolution.
environmental systems provided by the so-called “Holocene
equilibrium”. Global patterns of temperature, precipitation, This industrial revolution, unlike previous ones, is underpinned
seasonality and the overall health of our atmosphere, by the established digital economy and is based on rapid
cryosphere, hydrosphere and biosphere have remained advances in technologies such as blockchain, artificial
predictable for much of the past 10,000 years. During this intelligence, the Internet of Things, robotics, autonomous
period, they have functioned within a “Goldilocks” zone – vehicles, biotechnology, nanotechnology and nascent
not too hot and not too cold – for humans.12 quantum computing among others. It is also characterized
by the way in which the combination of these technologies
However, as a result of the great acceleration in human increasingly merges the digital, physical and biological
economic activity since the mid-20th century, research realms, and collectively increases the speed, intelligence and
from many Earth-system scientists suggests that our efficiency of business and societal processes.
planetary systems could now be entering a period of
unprecedented environmental systems change. This change The Fourth Industrial Revolution generates opportunities
can be observed across six critical challenge areas, with for global growth and value creation that far outstrip
implications for the planet and human prosperity, and the advancements of the past century. Left unguided,
demands transformative action early in the 21st century, as these advancements have the potential to accelerate the
illustrated in Figure 1. environment’s degradation. However, they also create an
opportunity for governments, regulators and companies to
Over the coming decades, these six critical challenges make the Fourth Industrial Revolution the first sustainable

industrial revolution by harnessing these rapidly evolving few years, the focus will likely be on fixing these technical
technologies to overcome the world’s most pressing limitations and addressing regulatory and legal challenges.
environmental challenges. As the technology matures, there is both a challenge and
an opportunity to realize blockchain’s potential – not just for
finance or industry, but for people and the planet.
Blockchain for the Earth
This analysis explores the opportunity to harness blockchain
The Fourth Industrial Revolution includes a new phase to address environmental challenges, including climate
of blockchain-enabled innovation. The computational change, loss of biosphere integrity and water scarcity.
architecture of blockchain technology creates a wide range Potential and emerging use-cases and game-changing
of potential uses. For example, by providing an immutable, solutions are explored. Emerging opportunities include the
distributed ledger, it can help to facilitate peer-to-peer management of supply chains and finite resources, enabling
payments, manage records, track physical objects and the financing of environmental solutions and incentivizing
transfer value via smart contracts, all without a third party or behaviour change.
manual reconciliation.
The challenge is to unlock the potential in a way that ensures
During 2017 and 2018, blockchain has received considerable inclusion, safety, interoperability and scale. Whether or not
hype regarding its potential to create wide-reaching impact, the technology succeeds will not be exclusively determined
with proponents projecting that it could account for as by its technical performance, scalability and resilience. It will
much as 10% of global GDP by 2025. There has also been also depend on the level of responsible development and
considerable scepticism with regard to its performance adoption, and will require fit-for-purpose and supportive new
and scalability that has thus far kept crypto-networks from regulatory and legal systems, investment landscapes and
seriously disrupting centralized systems. During the next societal understanding and acceptance.
Figure 1 – Global challenge areas
Climate change Biodiversity and conservation Healthy oceans
Today’s greenhouse gas levels may be the The Earth is losing its biodiversity at mass The chemistry of the oceans is changing more
highest in 3 million years, rising to 412 parts per extinction rates. One in five species on Earth rapidly than at any time in perhaps 300 million
million in May 2018.13 now faces eradication; this will rise to 50% by years, as the water absorbs anthropogenic
the end of the century unless we take urgent greenhouse gases. The resulting ocean
action.15 acidification and warming are leading to
unprecedented damage to fish stocks and corals.17
Economic and human impact: Economic and human impact: Economic and human impact:
Changes in precipitation, extreme storms, rising Current deforestation rates in the Amazon Basin Some 8 million tonnes of plastic are predicted to
sea levels, coastal inundation and heatwaves could lead to an 8% drop in regional rainfall by enter the oceans each year.18 Plastics – and the
directly affect people’s security, economic 2050, triggering a shift to a “savannah state”, toxins they often carry – accumulate in the food
well-being and health. For instance, deaths with wider consequences for the Earth’s chain and find their way into humans. Estimates
caused by extreme heat in Europe could rise to atmospheric circulatory systems.16 Biodiversity suggest around 6,400 microplastics per year are
150,000 a year by 2100.14 loss has a direct human impact – threatening ingested by the average European shellfish
energy, clean water and food supply. consumer.19
Water security Clean air Weather and disaster resilience
The world’s demand for water has grown by Around 91% of the world’s people live in places In 2017, the world suffered 710 geophysical,
around 1% per year. By 2030, we may fall 40% that fail to meet World Health Organization meteorological, hydrological and climatological
short of the amount of fresh water needed to (WHO) air-quality guidelines.24 “natural-loss events” – almost triple the number
support the global economy as pollution and it suffered in 1980.26
climate change affect the global water cycle.20
Economic and human impact: Economic and human impact: Economic and human impact:
For 1.9 billion people, water scarcity is already a Around 7 million people die annually from These events caused approximately $330 billion
reality – this number is expected to rise to 3 exposure to air pollution – one death out of in damages, less than half of which was covered
billion by 2050.21 Microplastic fibres were found every eight globally.25 by insurance.27 In parallel, 23 million people were
in 83% of tap water samples around the world22 displaced.28
and more than 90% of bottled water analysed.23
Source: PwC

The building blocks: Overview of
blockchain and its maturity
Blockchain basics For example, the creation of Ethereum in 2015 (now a $25
billion crypto-network) showed that blockchain was more
Blockchain is a decentralized (distributed) electronic ledger than just a niche technology for the financial sector, but
system that records any transaction of value whether it also offered a new, decentralized, trusted and transparent
be money, goods, property, work or votes.29 It is also an platform that could benefit a wider range of industries and
interlinked and continuously expanding list of records stored issues, with developers naturally seeking out areas where it
securely across a peer-to-peer network. 30 Every participant could add the most value.
with access can simultaneously view information with no
single point of failure, creating trust in the system as a As the volume of coders proficient in blockchain has
whole. increased, start-ups and established corporations alike
have begun to invest in tools, data, people and blockchain-
Each “block” is uniquely connected to the previous blocks enabled innovations. ICOs have also emerged as a new
by including the hash31 of the previous block in the new crypto-based alternative to classic early-stage capital/
block. Digital signatures are then used to authenticate debt finance, creating opportunities to quickly fund new
transactions. This structure means that making a change blockchain technology ventures. This has encouraged more
without disturbing the subsequent records in the chain is investors, speculators and entrepreneurs to take an interest
extremely difficult. These characteristics make blockchain in this emerging and potentially powerful technology.
cryptographically secure and currently tamper-proof.
At the same time, a number of converging global trends
Verification of transactions is achieved by participants have helped to create an environment conducive to the
confirming changes with one another, replacing the need proliferation of blockchain. Increasingly, digitalization
for a third party to authorize transactions. Decentralized and connectivity of the global economy, along with the
consensus makes blockchain platforms immutable, and emergence of powerful global tech firms, has meant that
updatable only via consensus or agreement among peers. corporations have become increasingly open to adopting
This design is meant to protect against domination of the blockchain and other emerging technologies of the Fourth
network by any single computer or group of computers. Industrial Revolution. Developments in computer processing
power and networked computer systems have facilitated
Blockchains can be public, private (permissioned) or hybrid advances in blockchain programs, while the domination
systems. Unlike public blockchains, whereby transactions of smartphones has made digital wallets possible and
can be validated by anyone and there is no access control increasingly relevant. Alongside this, there has been a
– private blockchain participants or validators must be proliferation of IoT and AI applications that can automate
authorized by the owners of the blockchain. Between the big-data collection and processing for use in blockchain
two there are hybrid systems, combining both private- and platforms.
public-ledger characteristics.32
Taken together, these advances in technology and an
emerging global enabling environment have created a
Why now? platform from which many blockchain applications are now
being launched.
Distributed computing and cryptography have both existed
for decades. However, in 2009 these ideas came together in
the form of Bitcoin: a cryptocurrency network. Though initially Blockchain capabilities: Now and in
slow to take hold, more recently there has been a proliferation
of its use and a rapid increase in the number of transactions.
the future
As the world became enamoured with Bitcoin, both large
It is worth noting that the technology itself is still very
corporations (first financial institutions, then others) and
smaller-scale technology entrepreneurs saw a bigger picture. new, and there is a considerable way to go to build trust
The underlying technology behind Bitcoin had the power to among businesses, investors and regulators in relation to
cut intermediary and reconciliation costs and revolutionize blockchain applications.
manual, frequently disjointed, opaque processes to increase
their efficiency. Thus, broader ideas and conceptual However, blockchain’s potential – and at least some of the
applications for blockchain technology emerged. associated hype – stems from a combination of its current

Figure 2 – A look at blockchain technology
The blockchain is a decentralized ledger of all transactions across a peer-to-peer network. Using this
What is it? technology, participants can confirm transactions without the need for a central certifying authority.
Potential applications include fund transfers, settling trades, voting and many other uses.
How it works:
The requested Verification

transaction is The transaction is
broadcast to a P2P verified by participants
Someone requests network consisting of the blockchain.
a transaction. of computers,
known as nodes.
Once verified, the

transaction is
combined with
other transactions
The new block is then added to the to create a new
The transaction existing blockchain, in a way that is block of data for
is complete. permanent and unalterable. the ledger.
Key current features Benefits Challenges
Cryptocurrency Smart contracts • Enables decentralized systems incl. • Adoption challenges

A cryptocurrency is a digital currency Smart contracts use a digital protocol peer-to-peer transactions • Technology barriers
that uses strong cryptography to to automatically execute predefined • Increased transparency, tracking • Security risks
secure financial transactions, control processes of a transaction without and traceability • Legal and regulatory challenges
the creation of additional units, and requiring the involvement of a third • Immutable, reliable and shareable • Interoperability risks
verify the transfer of assets. The first party or intermediary. They were ledger of transactions
• Energy consumption challenges
blockchain was developed in the initially built upon the Ethereum • Reduced transaction costs via
financial sector to serve as the basis protocol and operate on the basis of disintermediation and automation
for the cryptocurrency “bitcoin”, individually defined rules (e.g. • Promotes dynamic pricing
which continues to be the blockchain quantity, quality or price • Access to markets for investors
application best known to the general specifications) that enable an and issuers, incl. non-traditional
public. autonomous matching of distributed assets
providers and prospective customers.
• Enables effective monitoring,
auditing and compliance
Source: PwC
capability and the anticipated technology development performance and scalability, as these are limitations that
roadmap, which suggest that as the technology matures it currently keep them from challenging centralized incumbents.
could become a foundational technology like the internet and In particular, these limitations relate to blockchain’s distributed
could dramatically improve operating efficiencies in some verification protocols.
sectors while completely disrupting others. Two of today’s
most prominent blockchain applications – cryptocurrencies To avoid the use of an intermediary, blockchain applications
and smart contracts – illustrate this potential. are characterized by a distributed verification process, which
is designed to achieve consensus on the content of the
Cryptocurrencies are designed to be used as an alternative distributed ledger. The following two mechanisms are most
to real currencies and to create new token economies that, commonly used for verification of a transaction to establish
among other things, could capture and monetize currently consensus:
unrealized economic value, while smart contracts use a digital – Proof of work (PoW) – Each block is verified through a
protocol to automatically execute predefined processes of a process called “mining” before information is stored. The
transaction without requiring the involvement of a third party data contained in each block is verified using algorithms
or intermediary. that attach a unique hash to each block based on the
information stored in it. Users continuously verify the
The next few years of blockchain will focus on fixing the hashes of transactions through the mining process in
most severe technical limitations of blockchain networks’ order to update the current status of the blockchain
Figure 3 – Timeline of blockchain developments
Open-source movement Bitcoin Blockchain platforms and smart contracts Blockchain scaling – the future
1940s – Cryptography emerged 2008 – Satoshi publishes a white 2015 – The Ethereum project is Expansion of blockchain Expansion and evolution of Use of blockchain for social
paper describing the bitcoin created, introducing smart platforms such as bitcoin and the networks that form the purposes including messaging,
digital currency contracts and blockchain apps crypto market exceeds $100 infrastructure layer of the crypto games, social networks and rating
billion (over 1,000 different stack (e.g. protocol for security systems
cryptocurrencies) tokens)
1980s – Open-source communities;
digital money; distributed computing 2009 – First bitcoin transaction
between Satoshi and Hal Finney Potential
Growth of decentralized wide-scale application of
2017 – First proof of stake Emergence of new platforms e.g blockchain to sectors beyond
applications (dApps) to create
verification on Ethereum Corda, Openchain and Stellar finance (e.g. governance, real
1980s – 2000s – Development and large-scale decentralized
platform estate, energy and more)
use of cryptography (e.g. ECDSA, services
SHA functions) 2011 – Market exceeds $1 bn
2013 – Emergence of numerous new Blockchain scaling –

ICO fundraising is born – the first Emerging methods of verification – “proof of authority” (PoA), bespoke ledgers that are the value of blockchain is projected
1990s – P2P networks; Manifesto Mastercoin issued “proof of importance” (PoI) and “proof of history” (PoH) customized for a specific to exceed $176 billion by 2025,
purpose and $3.1 trillion by 2030
1990s 2008-2015 2015-2018 Future developments
Source: PwC
assets. Doing so requires an enormous number of multistakeholder efforts to experiment, adopt and apply the
random guesses, making it a costly and energy-intensive technology, building trust when doing so. The speed at which
process – one that also faces speed constraints as the such technical developments could unfold makes it crucial
network grows. Early blockchains such as Bitcoin use for the notion of responsible blockchain to be rapidly adopted
PoW verification. by all stakeholders, in particular the burgeoning developer
– Proof of stake (PoS) – PoS simplifies the mining community.
process. Instead of mining, users can validate and
make changes to the blockchain on the basis of their Like any new and evolving technology, further advances in
existing share (“stake”) in the currency. This approach blockchain are difficult to predict accurately as the technology
reduces the complexity of the decentralized verification (and its potential) are evolving so fast that it can be hard to
process and can thus deliver large savings on energy and know how much of the hype will be realized and, in turn, how
operating costs. Increasingly, emerging blockchains such exactly the broader enabling market will mature. How far and
as Ethereum, NEO and WAVES use PoS verification. how fast blockchain evolves will be somewhat a function of
how quickly (and successfully) technical, regulatory, scalability
and other challenges – including trust – can be overcome
To date, PoW has been the most frequently used verification (see below). One area to watch will be the financial and social
method in conjunction with blockchain technology. In light incentives created as these will likely determine the aspects
of concerns regarding cost, energy intensity and scalability, on which developers focus and where investment flows. We
however, emerging blockchain applications rely increasingly can also expect the most transformational blockchain use-
on PoS and other less cost- and energy-intensive verification cases to emerge where collaborative and multistakeholder
methods. Recent and emerging verification methods include ecosystems are built to tackle matters of industry-wide or
(but are not limited to) “proof of authority” (PoA), “proof of society-wide importance – such as decentralized energy
importance” (PoI) and “proof of history” (PoH), which are also platforms.
deemed to be less cost-, energy- and time-intensive (see
Glossary for terms). Second-layer “proof of stake” solutions Looking further afield, expected advances in AI, distributed
currently being developed for the Ethereum platform, such computing and quantum computing will likely support – and
as Casper, Plasma and Sharding, should address the potentially accelerate – blockchain’s technological evolution.
fundamental scalability challenges of Ethereum and pave the If it truly lives up to its promise, this new global computational
way for more innovative and scalable protocols. architecture could rewire commerce and transform how
society operates, becoming one of the most significant
Once the networks that form the infrastructure layer of the innovations since the creation of the internet. The opportunity
cryptostack are built, technologists will increasingly turn to harness this innovation to help tackle environmental
their energy to building decentralized applications (dApps) challenges is equally significant.
on top of this infrastructure. We are also likely to see the
emergence of numerous bespoke ledgers customized for
specific purposes. In parallel, there will need to be a focus
on developing fit-for-purpose regulation, and on industry and

The blockchain opportunity for our
environment
While blockchain has the potential to become a powerful cases also represent opportunities to unlock and monetize
foundational technology used across different sectors to (or tokenize) economic value that is currently embedded
tackle a wide range of challenges and opportunities, if it is to within environmental and natural resource systems, but
be truly transformative for our global environment, it will need which has been largely unrealized to date. Examples include
to be deployed in the right areas. Figure 4 highlights six of opportunities to build an inclusive bio-economy, capture the
the world’s most pressing environmental challenges and the value of intact forests and create new markets for trading
priority action areas to successfully address them. natural resources.
In meeting these challenges, there is wide scope for Currently, the majority of use-cases identified are in the
innovation and investment. There is potential for blockchain to concept or pilot phase, with only a handful having been
provide solutions in and of itself and also to facilitate solutions fully developed. Climate change and biodiversity were the
that involve other Fourth Industrial Revolution technologies. challenge areas where most use-cases were identified, with
Indeed, more than 65 existing and emerging blockchain use- fewer developed in the areas of water resource management,
cases for the environment were identified through desk-based ocean management and clean air so far. Recent investment
research and interviews with a range of stakeholders from figures highlight the largely untapped nature of the
the industrial, technological and entrepreneurial sectors, in opportunity. In the first quarter of 2018, for example, 412
addition to research associations and governments. blockchain projects raised more than $3.3 billion through
ICOs.33 However, less than 1% of these were in the energy
Figure 5 provides a glimpse of such blockchain applications and utilities sector, representing around $100 million of
by environmental challenge area. The snapshots are not investment, or around 3% of the total investment for the
intended to be exhaustive, but to provide an initial overview, quarter.
represent the most prominent innovations and stimulate
a more concerted action agenda. These snapshots show The 65-plus use-case solutions identified as being particularly
that each environmental challenge area stands to benefit relevant across environmental applications tend to cluster
from the use and deployment of blockchain, and that the around the following cross-cutting themes:
majority of solutions operate by transforming an underlying – Enabling decentralized systems
economic, industrial or governance system. Many of the use-
– Peer-to-peer trading of natural resources or permits
– Supply-chain monitoring and origin tracking
Figure 4 – Priority action areas for – New financing models, including democratizing
addressing Earth challenge areas investment
– Realization of non-financial value, including natural capital
The challenge for innovators, investors and governments is to

identify and scale these pioneering innovations both for people
Climate change Biodiversity and Healthy oceans and the planet – while also making sustainability considerations
• Clean power
• Smart transport options
conservation
• Habitat protection and
• Fishing sustainably
• Preventing pollution
central to wider blockchain development and use.
• Sustainable production and restoration • Protecting habitats
consumption • Sustainable trade • Protecting species
• Sustainable land use • Pollution control • Impacts from climate change While blockchain-based solutions hold great promise,
• Smart cities and homes • Invasive species and (including acidification)
disease control there is also a lot of hype associated with the technology.
• Realizing natural capital
On its own, it is not necessarily transformational for the
environment. However, the potential of blockchain to help
solve environmental challenges can be amplified exponentially
when it is combined with other emerging Fourth Industrial
Revolution technologies such as AI, IoT, drones, 3D printing
and biotechnologies. When it is applied this way – as a
Water security Clean air Weather and disaster
• Water supply • Filtering and capture resilience “cocktail mixer” for other emerging technologies – blockchain
• Catchment control • Monitoring and prevention • Prediction and forecasting
• Water efficiency • Early warning • Early-warning systems starts to become a truly game-changing technology. Some of
• Adequate sanitation
• Drought planning
• Clean fuels
• Real-time integrated adaptive
• Resilient infrastructure
• Financial instruments
those game-changing examples, drawing on emerging use-
urban management • Resilience planning cases in Figure 5 opposite, are set out in the next section,
“Blockchain game changers for the Earth”.
Source: PwC

Figure 5: Blockchain applications by challenge area
Climate change Biodiversity and conservation
• Peer-to-peer renewable energy-trading systems • Data ledger for optimized transport logistics • Cryptocurrency for investment in habitat • Transparent monitoring of
• Crowdsale for renewable energy investment • Blockchain-based decentralized restoration and species conservation supply chain transactions
• Optimized distributed grid management delivery networks • Tracking geographic reach and movement of • Real-time traceability of
• Authentication of renewable energy • Peer-to-peer vehicle sharing endangered species supply chains
certificates • Smart parking system for • Incentivization for farmers to
Sm optimized mobility protect habitats Su
ar t nd st
ta ain
er t
sy tran
management
bi n a ab
ow st Ha ctio tion le
n
p em spo e
ot or
a tra
ea r t pr rest de
Cl
Rea
l
ntro
Sma homes
ptio d
le
and
lizin ital
n
con ction a
prod stainab
n co
Biodiversity and
cap
rt cit
• Blockchain- Climate change • Ledger for • Timber and • Recording of
g na
conservation
sum
based land, collection and other natural pesticide use
utio
ies
u
corporate, civil verification of resources on agricultural
tu
Su
Poll
ral
and asset ESG data provenance land
registries • Soil properties data tracking • Incentivized system
• Citizen loyalty and collation from • A decentralized for responsible
reward platforms Sustainable distributed sensors natural asset exchange Invasive species and waste management
• Decentralized voting land use • Blockchain-powered platform disease control
platforms for climate platform for carbon
action offsetting
• Secure paperless • Waste-to-energy
transactions • Blockchain-enabled sustainable mining blockchain solutions
• Automation of data collection and management • Digital data platform for species tracking and
for better sustainability accounting disease control
• Financing sustainable land use
Healthy oceans Water security

• Tracking fish provenance • Incentivized ocean plastic recycling initiatives • Water monitoring and management • Decentralized, catchment-based
• Monitoring of illegal fishing activities • Transparent ledger for faster, safer • Micropayments for water meter donations approach to improving water quality
and more efficient shipping • Water quality control in
catchment areas
Pr Ca
e
g po ven pl
y tc
in ly llu tin p co hm
sh ab tio g su nt en
Fi tain n er ro t
s at l
su W
Imp nge (in tion)
cha idifica
acts
ac
hab ting
y
Dro ing
Healthy oceans
plan
ienc
itats
effic ter
from luding
• Real-time • Decentralized • Precipitation Water security • Blockchain-

tec
ugh
Wa
monitoring of and intensity enabled
n
c
Pro
ocean monitoring and

clim
open-source peer-to-peer
t
temperature and ledger of ocean forecasting trading of excess

ate
pH data • Automated crop water resources

• Incentivized collection insurance for drought • Cryptocurrency-
of data on ocean Protecting periods Adequate enabled smart meters
conditions species sanitation
• Incentivized investments in
ocean conservation
• Asset-backed token system for clean, accessible

drinking water
• Fundraising for marine wildlife conservation
• Hyperlocal water data for monitoring water quality
• Efficient water treatment systems
Clean air Weather and disaster

resilience
• Extreme weather impact analysis • Real-time monitoring of natural hazards
• Air pollutant data collation from • Local and real-time monitoring of • Ledger to identify, verify and • Decentralized weather sensors
distributed sources particulates and NO2 transact weather data generating automated alerts
• Automated activation of • Intelligent methane Ea
air-filtration devices monitoring systems rly
n
io ing sy -wa
M
ict st
e d
on re
st rn
ur n
ed reca
pt g a
em in
ito ve
r
p
P fo s g
rin ntio
ca rin
d
g n
lte
an
an
Fi
e
Res ning
ctur
Weather and
infra silient
plan
Clean air • Enhanced disaster • Automatic

ilien
stru
emergency rerouting of
resilience
Re
ce
disaster response power to

Ea
prevent blackouts
rly
s
el
• Decentralized
fu
w
ar
mini-grids improving
a
ni
le
ng
Financial disaster resilience

C
• Cryptocurrency payments • Automated air-quality instruments

for EV public charging monitoring system
• Enabling safe and reliable AV • Early detection of toxic
implementation chemical leaks • Disaster recovery funding
• Decentralized disaster insurance platforms
• Management of transactions in response
to extreme weather event
Source: PwC • Crowdsale for adaptation investments

Blockchain game changers
for the Earth
In addition to enhancing current efforts to address from 100% renewable energy use34 to zero deforestation,35
environmental issues, there is enormous potential to conflict-free minerals or 100% recycled material36 pledges.
create blockchain-enabled “game changers” in which the However, global supply chains are often complex and
application of blockchain, often in combination with other opaque, and companies frequently struggle to implement
Fourth Industrial Revolution technologies, has the potential their commitments or showcase their achievements in the
to deliver transformative or disruptive solutions. absence of better visibility into their supply chains. Such
The following set of potential game changers are defined by provenance, traceability and transparency of data across
five important features: supply chains is also critical to business management in a
broader sense – from improving enterprise-risk management
1. Transformational impact (i.e. it could completely disrupt practices to enabling corporate disclosure and reporting.
or alter current approaches)
2. Adoption potential (i.e. the potential population size is Blockchain-based solutions are providing, for the first time,
significant) full transparency and traceability within the supply chain.
3. Centrality of blockchain to the solution (i.e. blockchain is This can build confidence in legitimate operations, expose
a vital cog in the solution) illegal or unethical market trading or activities, mitigate
4. Systems impact (i.e. the game changer could really shift quality or safety problems, reduce administrative costs,
the dial across human systems) enable greater access to finance, improve monitoring,
5. Realizable enabling environment, including political and verification and reporting, and potentially help avoid
social dynamics (i.e. the enabling environment can be litigation. As these solutions become more mainstream,
identified and supported) they will likely push companies to be aware of their actions,
and enable them to clearly demonstrate responsible
The eight most significant game changers are listed below. and ethical operations in a cost- and time-efficient way.
Some of these are cross-cutting and more overarching Better corporate data will also enable investors and asset
in nature (but clearly have significant ramifications for managers to implement responsible investing practices with
environmental challenges), while others focus more improved effect.
specifically on environmental challenges. Although some
of these game changers could improve the efficiency of Solutions that harness blockchain for supply-chain
existing markets, others could drive transformational shifts management are some of the more advanced applications
in how we operate and how we tackle environmental currently observed that address environmental challenges.
challenges.
For example, in agriculture, blockchain has been used,
thanks to its ability to provide a verifiable record of
1. ‘See-through’ supply chains possession and transaction, to manage and authenticate
harvesting of resources to ensure sustainable practices. The
Transactional data throughout the supply chain can be
Instituto BVRio has developed an online trading platform it
recorded through the blockchain and an immutable record
has termed a “Responsible Timber Exchange” to increase
of provenance (i.e. origin) can be created, offering the
efficiency, transparency and reduce fraud and corruption in
potential for full traceability of products from source to store.
timber trading.37
Providing such transparency creates an opportunity to
optimize supply-and-demand management, build resilience
In 2016, Provenance, a UK-based start-up, worked with
and ultimately enable more sustainable production,
the International Pole and Line Association (IPLA) to pilot
logistics and consumption. There are a number of potential
a public blockchain tuna-tracing system from Indonesia to
applications, some of which are more advanced and
consumers in the UK.38 Similarly, Carrefour Supermarkets
specifically address environmental challenges.
have recently introduced an application where customers
can scan products to receive information on a product’s
Corporations are facing increasing regulatory, reputational,
source and production processes. Ventures such as
investor and consumer pressure to address supply
FishCoin are developing a utility token tradable for mobile
chain risks, such as corruption, human rights violations,
phone top-up minutes in an attempt to incentivize fishers
modern slavery, gender-based violence, water security
to provide information on their catch. The data captured
and environmental degradation. An increasing number of
is then transferred down the chain of custody until it
companies are responding with bold public commitments –

Spotlight on illegal fishing
There was explosive growth in the United Nations (FAO) estimates that which is convened by the United
harvest of fish from the ocean in the approximately 20% of the global fish Nations Secretary-General’s Envoy for
second half of the 20th century, as catch is IUU – robbing governments the Ocean, Peter Thomson, and
large industrial ships ventured out and legitimate fishers of up to $23 Sweden’s Deputy Prime Minister,
from local waters to reach every billion per year.42 The appetite for Isabella Lövin, and is being explored
corner of the sea, trailing miles of tackling this issue is clearly growing, for its capability, along with other
hooks or nets large enough to catch with a number of related initiatives technologies, to enable the
Boeing 747s. As a result, two-thirds of emerging in recent years. These eradication of IUU fishing.
the world’s fish stocks today are include the Tuna 2020 Traceability
overexploited.40 The cost of Declaration43 and the Global Dialogue Blockchain-enabled smart contracts
mismanagement is high. A recent on Seafood Traceability.44 could, for example, potentially
study found that reforming underpin innovative tenure
management of the world’s fisheries Global markets could play a vital role arrangements that give specific
could increase the total annual catch in creating incentives for better resource rights to communities or
by 16 million tonnes and increase management by offering the prospect fishers. Additionally, blockchain could
annual profits by $53 billion, while of better prices and better market be used to track a fish from “bait to
improving the health of ocean access for fish that come from plate”, providing a transparent view of
ecosystems.41 well-managed fisheries. The potential the fish’s origin. This could be
of blockchain to help unlock this complemented by DNA barcoding,46
One important challenge facing the opportunity has caught the attention which allows the rapid identification of
industry is illegal, unreported and of members of the global fishing seafood in trade by matching fish
unregulated (IUU) fishing. The Food industry, global retailers and the products to a standardized genetic
and Agriculture Organization of the Friends of Ocean Action45 network, library for all fish species.
reaches consumers. Such data could also be invaluable for blockchain applications can track fish all the way from the
governments seeking to better manage global fish stocks.39 boat to the plate, they cannot guarantee they were caught
how and where the data claims. Other technologies, such
From a consumer angle, the complexity of supply chains as satellite monitoring and handheld DNA sequencers, could
means that it is difficult for consumers to know how their potentially help overcome this concern.
consumption habits and purchasing decisions are affecting
the environment, or the associated working and living Looking into the future, blockchain has the potential to
conditions along the supply chain. Using blockchain tools connect all stakeholders in a global supply chain – from
to enable retailers and consumers to transparently track workers in factories through to logistics companies, retailers,
products from source to shop floor will enable more informed consumers, investors, NGOs and regulators – under one
purchasing decisions. platform. A platform that provides the data, traceability,
transparency and control or compliance mechanism that the
Current barriers to scaling blockchain applications for given user needs would be a truly transformational proposition
supply-chain traceability and management include: the for workers in the informal economy and consumers alike.
interoperability of blockchain solutions with existing systems
for supply-chain management; the lack of supply-chain
standards in place for blockchain solutions or providers; the
2. Decentralized and sustainable
transactional capacity of blockchains versus the capacity resource management
that big data from supply chains will require; and the
regulatory implications regarding data security and privacy Centralized utility systems can often struggle to match
among participants. An additional challenge is ensuring the supply and demand optimally, are prone to single points of
reliability of information entered on the blockchain – e.g. while failure, and suffer from distribution losses and leaks across

the network. For energy, decarburization also relies on the issues, using smart contracts to optimize coordination,
emergence of renewable distributed energy resources. enabling genuinely local markets for energy trading.
Blockchain could initiate a fundamental transition to global For example, installation of blockchain software with
distributed utility systems. Platforms could collate distributed integrated smart contracts, coupled with smart-meter
data on resources (e.g. household-level water and energy technology, allows for traceability and verification of energy
data from smart sensors) to end the current asymmetry sources, efficient peer-to-peer trading, better balancing
of information that exists between stakeholders, enabling and optimization of energy load and demand. Peer-to-
more informed – and even decentralized – decision- peer trading also has the potential to support and bolster
making in regards to system design and management of renewables uptake as well as minimizing the need for
resources. This could include peer-to-peer transactions, energy companies, energy traders and payment providers,
dynamic pricing and optimal demand-supply balancing. It and reducing energy transportation losses. Furthermore,
would reduce intermediaries, make systems more efficient, transactions can be securely and automatically recorded,
cost-effective and resilient, and increase local sharing of with smart contracts on a blockchain establishing a
resources to bolster efficient use of resources, which in turn transparent process that users can trust, but with better
will make distributed models more attractive. protection against cyber-attacks and without revealing
personal information.
Decentralized energy grids
Decentralized energy grids, linked to the emergence of A network of companies using these types of solutions
renewables and distributed generation sources around the has emerged, though most are currently at trial stage.
world, are a rapidly emerging phenomenon. Decentralized LO3 Energy and Siemens Digital Grid, for example, have
energy grids have the potential to cut costs at the same launched the Brooklyn Microgrid project,47 an early example
time as increasing energy efficiency, improving reliability of an open-source and scalable blockchain platform for
and supporting renewable energy integration. Coordination the energy sector. “Prosumers” (consumers involved in
issues across these grids, however, remain largely the design, manufacture or development of a product or
unresolved. Blockchain can provide the solution to these service), generating their own solar energy from rooftop
Spotlight on new energy management platforms

The transition to low-carbon energy Foundation (EWF),49 with an also a growing need to verify
systems will be critical in enabling ecosystem of large utility, information purchases of such “green” electricity.
governments to meet their climate and communication technology (ICT), In electricity grids that draw from both
commitments as part of the 2015 energy and blockchain partners, renewable and non-renewable energy
Paris Agreement on climate change. including those bringing blockchain- sources, electrons from renewables
Scaling up the amount of renewable based energy trading to real-world are indistinguishable from electrons
energy generated in the global energy markets. The foundation is a global generated from fossil fuels. Because
mix is a central part of this transition. open-source, scalable blockchain of this, a secondary market can exist
However, integrating high percentages platform designed specifically for the to represent the environmental and
of renewable energy such as solar and energy sector. It is currently in beta social benefits of the electricity
wind into traditional energy grids can release and allows companies to purchases through Certificates of
present challenges to their stability develop and test applications to Origin (also termed Renewable Energy
and predictability. This is largely support, for example, micropayment Credits or Guarantees of Origin).
because renewable energy can be channels, data analysis and However, the system for buying such
intermittent and is often generated benchmarking, certificates of origin, certificates is often a complex
from smaller-scale and less smart and microgrid management, process, with many organizations
centralized sources than traditional renewable energy procurement and acting as intermediaries, which adds a
fossil-fuel generators. To facilitate the trading, electric-vehicle charging and time, labour and cost burden to the
generation and distribution of demand response. Platform process, and can breed a lack of trust
renewable energy at the scale innovations include a more energy- as to whether they were accurately
needed, a range of transactive energy efficient, decentralized proof of counted and traded. Blockchain’s
technologies enabling electricity authority (PoA) protocol, a secret ability to enable verification,
storage, energy trading, demand transaction feature to encrypt smart traceability and transparency could
forecasting and management, will contracts and protect personal data, significantly streamline this complex
need to be integrated into new, and a light-client version for small IoT process and introduce confidence into
intelligent “smart grids”. Blockchain devices to overcome potential the market. It could also reduce the
offers exciting potential to help knit platform-scaling issues. barriers to entry for smaller
such technologies and grids together. organizations, encouraging further
As government-mandated targets for participation in markets for Certificates
To help progress these solutions, Grid renewable energy supply and of Origin and helping to grow demand
Singularity and the Rocky Mountain corporate commitments for sourcing for renewable electricity.
Institute founded the Energy Web renewable energy50 increase, there is

panels, have been autonomously trading in near-real time in developing countries of about $2.5 trillion.51 Employing
with customers (neighbours) in the local Brooklyn market in blockchain-enabled finance platforms could potentially
New York. revolutionize access to capital and unlock potential for new
investors in projects that address environmental challenges
Decentralized grids additionally have the capability to build – from retail-level investment in green infrastructure projects
local energy resilience: for instance, through rerouting through to charitable donations for developing countries.
power in response to a natural disaster, or in areas around
the world where energy scarcity is prevalent. The Brooklyn Blockchain-enabled platforms could be employed to
Microgrid, for example, has a built-in microgrid control unlock access to capital. Its ability to seamlessly manage
system, enabling redirection of electricity towards hospitals complex financing environments means it can integrate a
and community centres. wide number of stakeholders, making it feasible for projects
and ventures to crowdsource funds from a large number
Looking further ahead, the global transition to electric of diverse investors rather than just several large investors.
mobility could be integrated into decentralized energy Regardless of the number of investors, the decentralized
systems, further adding to energy-system storage and framework could also significantly increase efficiency and
demand-supply balancing. BlockCharge by RWE and Slock. lower transaction costs, both formal and informal.
it are developing a mobile phone app, which links to a
blockchain-based network that allows electric vehicle (EV) The “tokenization” of financial investments opens up this
owners to charge their car via any charging station network opportunity for a wider group of stakeholders to invest.
and to be billed for the energy consumed.48 The EVs Investors with larger amounts of capital would share
interact automatically with the stations, and the electricity the same automated process as investors with very
payment process is autonomous. This type of charging small amounts of capital; therefore, access and entry
information, for regions and in aggregate, can help increase requirements are democratized. This will remove the need
the management and optimization of decentralized grid for third parties and could enable projects that attempt to
solutions. tackle environmental challenges to access capital quickly,
without being delayed by the red tape that is often a part of
Decentralized water doing business with big institutions.
Blockchain, combined with other Fourth Industrial
Revolution technologies, could enable a step-change in the Early applications have emerged. The Sun Exchange
optimization of distributed water management. Real-time launched a blockchain-based platform for crowdselling solar
transparent data on water quality and quantity can inform assets, connecting people who want to invest in solar with
conservation, dynamic pricing and trading, and spot illegal those who want access to it. This enables financing of solar
extraction or water tampering. projects in sub-Saharan Africa, where high upfront costs
and political barriers can prevent financing from traditional
Blockchain could become a core part of the solution investment-capital sources, which inhibits widespread
to enable “off-grid” water resources, analogous to deployment. In addition, the decentralized platform
decentralized energy systems. Household smart meters facilitates cross-border investments and repayments
can produce large volumes of data that can be used to (avoiding exchange fees associated with national currency).
predict water flows, spot inconsistencies and check leaks. A further example is the Clean Water Coin, which uses a
Blockchain technology could also support peer-to-peer blockchain platform to quickly and efficiently raise funds for
trading of water rights in a given basin, allowing water clean-water projects worldwide.52 Other nascent projects
users willing to share their excess resources to become are looking at tokenizing carbon credits (e.g. Poseidon),
“prosumers” without relying on a centralized authority. The while the Natural Asset Exchange blockchain platform and
next stage will be to combine blockchain with machine its Earth Token cryptocurrency aims to create a Natural
learning and the Internet of Things to create a truly Asset Marketplace that connects certified producers of
decentralized water system where local resources and natural capital assets with consumers of these assets.
closed-loop water-recycling gain value.
Looking ahead, blockchain could be a real game changer
Realizing fully decentralized utility solutions will require for “blended finance” investment in projects seeking to
sufficient regulation to assure the security and integrity of deliver the UN’s Sustainable Development Goals. A platform
the software, ownership and control of intellectual property could efficiently facilitate the complexity of such transactions
rights and the transferring and trading of resources, which, where different types of funding, traditional and non-
in some instances, will be virtual. These are surmountable traditional assets, and multiple stakeholders with multiple
challenges and the reward is the critical transition of utility requirements are involved.53
infrastructure and markets to a decentralized, decarbonized
and more water-secure future. The overall “token economy” created by the proliferation
of crypto-networks is still in its infancy. Quality projects
represent only a small proportion of all the blockchain
3. Raising the trillions – new sources projects that have been created to date, but the possibility
of sustainable finance to finance projects and practices that have a positive
environmental benefit is just beginning to be demonstrated.
The UN estimates that there is a funding gap of $5 to $7
trillion per year to meet the SDGs, with an investment gap

Spotlight on global soft commodity value chains
The destruction of forests destroys governments, non-government A number of initiatives have emerged
biodiversity and creates almost as organizations and corporations signed to use blockchain as part of anti-
many greenhouse gas emissions as the New York Declaration on Forests, deforestation efforts. These relate
global road travel, and yet it continues committing to eliminate all primarily to improving the tracking of
at an alarming rate, with an area deforestation driven by agricultural carbon credits, enabling peer-to-peer
equivalent to the size of South Africa commodities by 2020. The US carbon trading, and boosting
lost between 1990 and 2015.56 government and Consumer Goods transparency and auditability of
Forum established a new platform commodity supply chains linked to
In addition to the environmental dedicated to helping organizations deforestation. Blockchain could also
degradation, it poses a risk to many achieve their deforestation-free support efforts to certify the
global supply chains, particularly commitments – the Tropical Forest sustainability of smallholder farmers,
those related to consumer products. Alliance 2020 (TFA 2020). potentially enhancing the value of their
Research by CDP found that in 2017 products. For example, the
up to $941 billion of turnover in Now funded by the governments of Programme for the Endorsement of
publicly listed companies was Norway, the United Kingdom and the Forestry Certification is exploring
dependent on commodities linked to Netherlands, the TFA 2020 has blockchain for tracing wood
deforestation.57 The production of soft identified ten priorities for stopping products60 and IBM has partnered
commodities, in particular beef, soy deforestation from commodity supply with Veridium Labs to turn Borneo
and palm oil, has the largest impact chains.59 Of the ten, blockchain could rainforest carbon credits into a crypto
on tropical forests, accounting for potentially support progress in six of token that can be traded on a
36% of tropical deforestation.58 them: eliminating illegality from supply decentralized exchange. Analysts
chains; developing and strengthening estimate that around $4.8 billion was
In response, a movement has palm oil certification; addressing land spent in the past ten years on private-
emerged to halt, by 2020, the conflicts, tenure security and land market carbon credits and the
deforestation embedded in global rights; mobilizing demand for initiative could make it easier and
agricultural supply chains. For deforestation-free commodities in cheaper for companies to acquire and
example, the Consumer Goods Forum emerging markets; redirecting finance trade carbon credits and to account
(CGF) pledged to achieve zero-net towards deforestation-free supply for their environmental footprint.61
deforestation by 2020 from beef, soy, chains; and improving the quality and
palm oil, pulp and paper supply availability of deforestation and supply
chains, while more than 190 chain data.
4. Incentivizing circular economies plastic containers in exchange for a token from automated
machines in Europe and around the world.55
Today, 90 billion tonnes of resources are extracted every
year to meet consumption demands and that number is Similar mechanisms can be deployed or created for
expected to more than double by 2050. Estimates also re-incentivizing markets for food, water, forests and
predict that by 2050 there will be more plastic waste in the conservation activities, even if investors have lower
oceans than fish. If harnessed in the right way, blockchain expectations of a financial return. Gainforest is an example
could fundamentally change the way that materials and of “crypto-conservation”, using smart contracts to
natural resources are valued, incentivizing individuals, incentivize farmers in the Amazon to preserve the rainforest
companies and governments to unlock financial value in return for internationally crowdfunded financial rewards.
from things that are currently wasted, discarded or treated Remote sensing using satellites verifies the preservation of
as economically invaluable. This could drive widespread a patch of forest, which then triggers a smart contract using
behaviour change and help to realize a truly circular blockchain technology to transfer payment.
economy.
The potential extends beyond merely changing behaviour
Early-stage blockchain applications are being developed to and could also incentivize companies to design and
reward individuals or companies with cryptocurrency credits manufacture products in ways that make it easier to manage
the product lifecycle and to reharvest materials and unlock
that represent value, in return for sustainable actions (e.g.
their embedded value.
collection of ocean plastic, recycling or water conservation).
For example, Plastic Bank has created a social enterprise Another potential application of blockchain in incentivizing
that issues a financial reward in the form of a cryptographic the move towards a circular economy involves its use
token in exchange for depositing collected ocean in more traditional systems of waste management. For
recyclables such as plastic containers, cans or bottles.54 example, extended producer responsibility (EPR) systems
Tokens can be exchanged for goods including food, water, incentivize the recycling of waste by transferring a fee paid
etc. RecycleToCoin is another blockchain application in at the point of purchase to recyclers in order to subsidize
development that will enable people to return their used the cost of recycling non-profitable or even toxic materials

found in products such as electronic waste. Smart contracts Since the inception of carbon trading, there has been
based on blockchain technology could dramatically increase scepticism over its lack of transaction visibility and
the transparency, scalability and efficiency of this process traceability, differing standards and regulations across
allowing for uptake in markets where the costs of setting up jurisdictions, and the potential for double counting.62
EPR systems have been prohibitively high and trust in the Managing carbon markets on the blockchain has the
system is low. Coalitions of companies, governments and potential to create efficiency in platforms, and remove many
international organizations are exploring this use-case. of the carbon transaction constraints. An early pilot example
is China’s “Carbon Credit Management Platform”, developed
An important challenge in scaling these applications will be by Energy-Blockchain Labs and IBM. The intent is that,
the level of public understanding of blockchain technology, with the introduction of smart contracts, the transparency,
and the willingness to use it. Poor usability for retail-level auditability and credibility of the Chinese carbon market
users is often cited as a weakness of existing blockchain can be increased. If successful, the approach could be
platforms and, until this is addressed, it is difficult to see broadened to other carbon markets around the world.
widespread adoption and use of these initiatives.
In jurisdictions that prefer a “cap and trade” carbon-trading
5. Transforming carbon (and other system, a blockchain application could potentially be used
to automatically align licence creation, thus avoiding an
environmental) markets over- or undersupply of certificates, and thereby keeping
market prices in a policy-agreed predefined range without
While many economists argue that market-based the need for emergency or reactive interventions.
approaches are an efficient and effective way to manage
environmental challenges which stem from current market Currently, the trade in verifiable carbon-credit transactions
externalities and failures (e.g. climate change, ozone- is constrained by economies of scale. While verified carbon
depleting HFCs, chemical pollution and water misallocation offsets are typically traded and verified in bulk amounts on
and scarcity), many of these market-based approaches (e.g. the voluntary carbon market, the introduction of blockchain
carbon markets) are still in their early stages of evolution, solutions enables carbon offsets to be attached at a
with differing standards and regulations. Blockchain microscale to individual products. Ben & Jerry’s is piloting
platforms could be harnessed to use cryptographic tokens a blockchain platform to assign a carbon-credit price to
with a tradable value to optimize existing credit management each tub of ice cream sold, allowing consumers to offset
platforms for carbon (or other substances) and create new their carbon footprint.63 Poseidon is another company
opportunities for carbon credit transactions. that has developed a platform which enables consumers
Spotlight on inefficiencies in the water sector

For seven consecutive years, water While complicated political realities Blockchain technology could also
has ranked among the top five global and a lack of investment have inhibited support peer-to-peer trading of water
risks in the World Economic Forum’s progress, they have typically been rights in a given basin, allowing water
annual Global Risks Report. Over this underpinned by an asymmetry of users who have enough or are willing
period of time, as other risks have information leading to inefficiencies in to share their excess water resources
emerged and disappeared – including the allocation of water resources. with others in the area to do so
the financial crisis and chronic Blockchain technologies could help without relying on an intermediary or
diseases – water has stubbornly address these challenges. centralized authority.
remained. While the core challenges
are well known, and much progress For example, blockchain applications A new collaborative platform, Water
has indeed been made, solving the could enable households, industry Security Rewired, is supporting a
water challenge has continued to consumers, water managers and range of stakeholders including the
elude the best and brightest decision- policy-makers to access the same World Bank’s Water Global Practice,
makers in the world. data on water quality and quantity and governments, development agencies,
make more informed decisions. Such NGOs and other existing initiatives,
Today, 60% of the world’s population, transparency could help inform technology companies and
or about 4 billion people, live in areas consumer decisions around when to innovators, and global companies
of near-permanent water stress. conserve or use water. It would also from the ICT, infrastructure, consumer,
Climate change is forecast to make ensure authorities determining water beverage and agricultural industries. It
water supply more erratic and allocations are able to be more seeks to harness the potential of
unpredictable, costing regions such data-driven, while also mitigating blockchain and other technologies of
as the Middle East and Africa up to corrupt behaviour in situations where the Fourth Industrial Revolution to
6% of their GDP by 2050 due to there may be an incentive for local overcome the current asymmetry of
water-related impacts on agriculture, authorities to tamper with or withhold information and allocative
health and incomes, while also water-quality data. inefficiencies, along with other
disrupting continuity across global challenges facing the water sector.
economic value chains.66

to offset their carbon.64 Payment will go directly to one of on transparent and trustworthy GHG emissions data.
Ecosphere+’s forest conservation projects – the retailer’s An important challenge here will be the willingness of
POS system shows the carbon impact of a product (KG) organizations to report and store often sensitive data on
and adds the price for the required carbon offset to the a decentralized network. Though deemed secure when
customer’s bill.65 data is stored via a private key, hacking could expose this
information to sources across the network.
Looking further ahead, it is possible that regional or global
carbon markets could be created where individuals or
households could trade carbon allocations. Individuals who
7. Automatic disaster preparedness
wanted to consume more carbon-intensive products or and humanitarian relief
services would pay for the privilege by buying scarce credits
from others, or by purchasing offsets, so that the overall As the frequency and scale of natural catastrophes
impact on the planet would stay constant and within agreed increases, in part due to a changing climate, there is an
global parameters. increasing need both to prepare for when foreseeable
natural disasters strike and to manage better real-time
relief responses, e.g. coordinating and financing rapid
6. Next-gen sustainability support and supplies to people and areas where the need is
monitoring, reporting and greatest. Blockchain solutions could be transformational in
terms of their ability to improve disaster preparedness and
verification relief effectiveness.
Corporations face increasing pressure from investors,
Blockchain solutions are starting to be developed to realize
consumers, governments and regulators to demonstrate
Fourth Industrial Revolution-enabled disaster preparedness.
sustainable business models and, in parallel, to prove their
IBM, for example, is spearheading a new initiative called
environmental credentials. Their sustainability reporting
“Call for Code”, working with the American Red Cross, to
and external assurance of their environmental performance
invite developers to create new applications to help people
is, therefore, an increasingly important aspect of good
and communities better prepare for natural disasters.69
corporate management. Blockchain has the potential to
Concept-stage blockchain solutions are being proposed
transform both sustainability reporting and assurance,
to mobilize public and private organizations to coordinate
helping companies manage, demonstrate and improve their
real-time disaster relief, matching community needs with
performance, while enabling consumers and investors to
least-cost suppliers. For example, connecting suppliers of
make better-informed decisions.
clean drinking water with the helicopter pilots delivering that
water could help ensure that deliveries are scheduled at
Blockchain has the power to enhance corporate reporting
specific locations within certain time frames.70 To enable this
by enabling the independent sourcing and verification
solution, smart-contract technology can determine which
of company performance beyond the self-reported data
contract offer is the best one available based on the delivery
often currently reported. This broader assessment would
needs of the community, including quantity, price, timing
provide shareholders and other stakeholders with a more and location. The smart contract can trigger acceptance of
realistic view of companies’ performance and impact.67 In the offer, and set in motion the delivery as well as confirming
turn, stakeholders can then be rewarded – coupled with the delivery has taken place. SAP is involved in working
cryptocurrency incentives – for providing and verifying on, and promoting, these types of “pooling and sharing”
that data: for example, organic farmers in a company’s solutions, which could fundamentally shift how public and
supply chain verifying their interactions with a company. private organizations can be mobilized in the event of a
These methods could act to incentivize governments and natural disaster.71
corporations to deliver on reporting and other environmental
strategic objectives. Furthermore, if combined with third- An important challenge here will be to integrate disaster
party measurement and verification tools (e.g. advanced preparedness and relief platforms into existing early-
satellites and sensors), this would provide independent and warning and mobilization systems, across both public
accurate information to support an entity’s management and private entities. Ensuring adequate trust and resolving
and investor decisions, improving market efficiency and intellectual property (IP) and data privacy issues will be
providing incentives to drive change. particularly important. Further challenges might arise in
developing countries where IT systems might not yet be
Blockchain applications are also being developed to support Fourth Industrial Revolution-compatible without significant
third-party assurance of sustainability reporting.68 There is investment and upgrades.
ongoing research and piloting of applications that collate
data from certification bodies in a single ledger in order to
increase transparency and data authenticity. Automatic 8. Earth-management platforms
data collection and management (e.g. of GHG emissions)
Many of our Earth’s natural systems are under
could be realized through smart contracts in order to access
unprecedented stress with planetary boundary conditions
real-time, trustworthy data and minimize fraud. Improved surpassed,72 or close to be being breached, in several
GHG accounting via the blockchain could increase the areas. Blockchain may be able to facilitate the collation,
effectiveness of carbon taxation as performance is contingent monitoring and management of vast quantities of Earth-
system data in a geospatial digital ledger. Once scalability
has been achieved, using current capabilities, it could mechanisms.
enable secure and trusted transactions that create On land, the security of property rights is an important
value across geographies and environmental domains. issue and has implications for both human welfare and
New blockchain-enabled geospatial platforms are in the conservation. Land, therefore, appears to be a fruitful area
early stages of exploration and could monitor, manage in which to deploy blockchain. For example, in Brazil, fraud
and enable market mechanisms that protect the global in the country’s antiquated land-titling system has enabled
environmental commons – from life on land to ocean health. swathes of Amazon rainforest to be cut down for soy and
Such applications are further away in terms of technical and beef farming. Here, blockchain is being touted as a possible
logistical feasibility, but they remain exciting to contemplate. route to strengthen property rights.
Early efforts are under way to collect, manage and transact Blockchain platforms are also being trialled for the
data for managing environmental habitats, including observation of environmental conditions, including pollution
cataloguing the genetic biodiversity of species and habitats levels and weather conditions. Coupled with data collection
to inform conservation efforts (for both marine and land from decentralized data sources (e.g. home sensors or
habitats). For instance, the Amazon Third Way initiative wearable technologies), these projects aim to increase the
is developing the Earth Bank of Codes (EBC).73 This is accuracy and granularity of monitoring and, in combination
a project to create an open, global, public-good digital with other technologies, can improve the performance of
platform that registers nature’s assets, recording their spatial forecasting and risk mitigation.
and temporal provenance74 (see break-out box: Spotlight on
the bio-economy). Given the scale and complexity of the platforms envisaged,
new forms of public-private collaboration will be required to
In terms of the ocean, a global ocean data platform is being ensure trust, governance and accuracy. Navigating cross-
developed to simplify free data access, enabling unbiased jurisdictional regulations will also be important given the
research and facilitating a data-driven debate. This open transboundary nature of many of these “global commons”
platform will allow any stakeholder to prioritize future efforts. Projects operating in this space will also need to be
roadmaps and strategies based on ocean health, providing clear about when a blockchain-based database is needed
comprehensive monitoring of ocean resources. Integrating and when a standard digital database will suffice. Such
blockchain technology with such a platform could further digital databases still tend to be cheaper and more energy
secure and enforce fishing rights and ease broader efficient to operate.
transactions, enabling better monitoring and response
Spotlight on the bio-economy

Earth’s biological assets are under which can also support the livelihoods the custodians of nature and for its
unprecedented threat, with one in five of local communities that depend on protection.
species on Earth now facing Earth’s natural resources. Early efforts
extinction.75 One particularly are under way to collect, manage The implications for governments,
vulnerable area is the Amazon Basin, and transact data for managing companies, research institutes
which is home to around half of the environmental (both marine and land) and communities are far-reaching:
world’s remaining tropical forests and habitats. for example, to support scientific
a significant proportion of land discovery, bolster efforts to seek
ecosystems and biodiversity. Due to a By combining distributed ledger new solutions to incurable diseases,
combination of deforestation, forest technologies, AI, advanced sensors encourage bio-inspired innovations
fires and climate change, up to 60% of and the Internet of Things, for and improve conservation outcomes.
the Amazon forest could be example, the Amazon Third Way Countries with valuable natural assets
transformed to degraded savannah by initiative is developing the Earth Bank would also have an additional source
2050.76 Already, the Amazon Basin of Codes (EBC).78 This is a project to of income to help protect these
has experienced megadroughts in create an open, global, public-good, resources, supporting indigenous
2005 and 2010 and megafloods in digital platform that registers nature’s and traditional communities. More
2009 and 2012. These contrasting assets, recording their spatial and broadly, the ability to unlock the
extreme-weather events and temporal provenance. By registering value of these assets would provide a
disruptions are already having a biological and biomimetic IP assets new (economic) incentive to protect,
significant social and economic – while the expected volume of rather than destroy, natural habitats.
impact. For example, the GDP of the data amassed is not appropriate for Overall, the EBC has the potential
Amazon Basin is currently estimated blockchain technology in its current to drive a new, more inclusive bio-
at a sizeable $250 billion per year.77 state – this code bank could record economy, creating new markets for
the provenance, rights and obligations sustainably sourced innovation and
Emerging technologies have the associated with nature’s assets. helping to implement the Convention
potential to create a new funding When value is created from accessing of Biodiversity’s Nagoya Protocol on
stream for conservation and these assets, smart contracts could Access and Benefit Sharing.79
sustainable development efforts, facilitate the fair sharing of benefits to

Blockchain blockers and the unintended
consequences
Blockchain risks and challenges to scale up effectively, gaining widespread industry and user
adoption.
widespread deployment
The usability of the technology is currently a crucial barrier to
While blockchain offers exciting potential in terms of building entry – many existing interfaces for blockchain ledgers are
a sustainable future, as with many emerging technologies, too complex for mainstream adoption today. Specific areas
there are a number of risks to manage and challenges to improve include the user experience, system speed and
to overcome in order to harness its full capabilities in the lack of formalized blockchain protocols.
addressing environmental challenges.
The degree to which users trust and understand the
Broadly speaking, these challenges relate to blockchain’s technology could also prove a barrier to adoption. For
maturity as a technology, stakeholders’ trust in the instance, investors interested in blockchain-based
technology and the blockchain network, and their approaches to finance face significant barriers to
willingness to invest in applications.80 For example, doubts participation as such investment applications require a
exist about blockchain’s reliability, speed, security and certain degree of blockchain literacy.
scalability. Managing and overcoming the following risks
and challenges will require stakeholders to work together Example: Blockchain enables aggregation of microfinancing
to develop solutions that are effective, holistic, relevant and by individuals to collectively fund larger-scale projects
deployable. that address environmental challenges and increase
renewable energy deployment. However, unless these
Adoption challenges adoption challenges are overcome, such platforms will not
grow sufficiently to raise capital at the scale needed to be
In order to be transformative in tackling global environmental effective.
issues, blockchain applications will need to be able to
Figure 6 – High-level summary of blockchain risks and challenges
1 2 3 4 5 6
Adoption Technology Security risks Legal and regulatory Interoperability Energy consumption
challenges barriers challenges risks challenge
• Security risks
• User experience • Lack of • Unclear legal • Lack of blockchain • Energy-intensive
production-ready • Cybersecurity jurisdictions standards cryptocurrency
• Technology networks risks validation process
useability • Identifying • Developing (PoW)
• Limited • Shared data responsible actors suitable data
• System speed transaction among multiple models • Scaling other
capacity peers • Legal framework proofs e.g. “proof
• Broad public trust
around contracts • Fit-for-purpose of stake” and
• Scaling due to • Data leaks
• Lack of authentication and “proof of authority”
processing • Regulatory communication
knowledge requirements • Limited
cryptographic key barriers associated protocols • Improving energy
protection with data protection efficiency
Source: PwC

Technology barriers By design, blockchain ledgers generally share more data
with other participants than do traditional centralized
While blockchain infrastructure and use-cases are databases, as data needs to be shared, often equally,
maturing, and the start-up ecosystem is growing rapidly, among multiple peers. Enterprises cannot afford, however,
the deployment of production-ready networks is still to expose private data publicly for either legal or competitive
relatively sparse. There are a number of technical challenges reasons. To overcome this contradiction, access to most
with blockchain, and the ability to overcome these may blockchain ledgers requires both a public and a private
determine the extent of its deployment over the coming key. Since it is essentially impossible to access data within
years. a blockchain without the right combination of public and
private keys, this represents the strength of the system.
The decentralized architecture of the blockchain network, for This is also a weakness, however, as all a hacker needs are
instance, necessitates that for all PoW applications, every the right keys to access the data. Protecting these keys
participant in the network must process every transaction. relies on the individual user storing and processing them
The result is that PoW applications are constrained by the securely, which can be daunting to users unfamiliar with the
time taken to process each transaction.81 technology.
In addition, as the size of the blockchain network grows, Example: Blockchain could revolutionize corporate and
there will be more competition for the limited transaction government reporting and assurance, along with carbon-
capacity. Currently, this means transaction confirmations market transactions. However, the often sensitive nature of
take longer and higher fees are often charged per the data being reported means that organizations may be
transaction as users seek to outbid each other to ensure reluctant to fully support the move to blockchain platforms.
their transactions are processed first. Today, public
blockchains such as Bitcoin and Ethereum can handle Legal and regulatory challenges
only between three and 30 transactions per second. To be
able to underpin the complete energy grid, for example, As technologists focus over the next few years on fixing the
a blockchain platform would need to be able to handle technical limitations of blockchain and building networks
millions of transactions per second. For comparison, Visa that form the infrastructure layer of the crypto stack, a fit-for
circuits about 60,000.82 purpose legal and regulatory environment for blockchain
must also be established and operable across jurisdictions
These characteristics create a scalability challenge, whereby globally. Current vital regulatory and legal challenges for
the size of the network is constrained. In order to scale, blockchain scaling include:
blockchain protocols will likely need to develop mechanisms
to limit the number of participating nodes (a device on the “Distributed” jurisdiction and “networks” of laws:
blockchain) needed to validate each transaction, without Legislative frameworks are currently defined by each
losing the network’s trust that each transaction is valid. jurisdiction. Blockchain ledgers do not have a specific or
clearly identified location for each transaction, with each
Example: An inability to cope with a large number of users node potentially being located in a different part of the world.
and rapidly process large numbers of transactions could, This means it is not clear which jurisdiction a blockchain will
for instance, limit the adoption of blockchain in global fall under, with the potential to create complex, duplicative
decentralized energy systems. and, at worst, conflicting regulatory and compliance
demands for entities implementing blockchain solutions.
Security risks In the case of legal disputes, deciding which law(s) should
be applied and which courts have the right to decide on
One of the essential attributes of blockchain is that it is said matters will be complex.
to be virtually unhackable due to the complex cryptography
and the distributed nature of the ledger. All IT systems, Legal framework for legal validity: If blockchain
however, are subject to cybersecurity risks, and blockchain technology is to be successfully deployed in “smart
is no exception. contracts” or transactions, the legal framework surrounding
contract formation and recognition will need to evolve to
reflect technological developments. First, blockchain will

need to be recognized by law as immutable. Secondly, the
current legal basis for contract formation will need to evolve
The energy consumption challenge
so that there can be no doubt when a “smart” agreement is First-generation blockchain platforms with PoW verification
deemed to be valid and enforceable. (such as Bitcoin) are by design energy intensive. If such early
solutions were to be scaled up without modification, they
Responsibility and accountability: Responsibility for could have a significant negative impact on environmental
blockchain technology is difficult to attribute; knowing who challenge areas.
should be held accountable is often unclear and will depend
on the nature of the blockchain’s use, who is running it and Developers recognize and are starting to address this
how it functions (this is particularly the case for decentralized important issue. Second-generation solutions, including
autonomous organizations, or DAOs ).83 Legal systems and Ethereum, for example, use different verification protocols
regulatory frameworks will need to clarify accountability, and are far less energy intensive. It is expected, therefore,
including how to treat DAOs and attribute responsibility for that as blockchain matures, its energy intensity will reduce
their actions in a sensible manner. and the opportunities for blockchain to help the planet may
well far outweigh its energy-use limitations. (The energy
Data privacy: Blockchain ledgers are immutable, meaning dilemma surrounding blockchain solutions, including
that once data is stored it cannot be altered. This has system-wide perspectives, is covered more thoroughly in
implications for data privacy, particularly where the the box: Can the Earth afford blockchain?.)
relevant data is personal data. Public blockchain systems,
in particular, present challenges in terms of balancing
individuals’ right to privacy with the concept of an open
network.
The nature of blockchain systems (public and private)

as an immutable record inherently contradicts the “right
to be forgotten”, which applies as a legal right in some
jurisdictions. Where organizations are subject to these
types of privacy laws, their use of blockchain to handle
personal data should be carefully considered. For example,
organizations storing personal data via blockchain will need
to carefully consider how to comply with rules relating to
their handling of that data. The current blockchain network
– at least where the network is a public one – means it may
be virtually impossible for organizations to control where
data is transferred to and who has access to it.
Example: Cross-border blockchain platforms, such as

blockchain platforms for energy or water grids, stand to
face significant regulatory barriers associated with data
protection. This is a particular issue for public blockchain
networks that will be handling personal data.
Interoperability risks
The integration of blockchains with each other and with
other IT systems will be fundamental to its success.84 Given
the early stages of blockchain development, it is only natural
that there are no concrete blockchain standards. While the
standards are being developed within each platform, the
interoperability between platforms and with other IT systems
is currently extremely limited and often non-existent.85
This potentially raises a costly operational challenge

as users will need to set up suitable data models and
blockchain-enabled business processes to incorporate new
authentication and communication protocols.
Example: The complexity of global supply chains means

that integrating blockchain-based traceability applications
with existing management systems could prove costly and
complex.

Can the Earth afford blockchain?
An important challenge for blockchain computational speed and power at a
applications is its energy use. Currently,
as the most widely used application
of blockchain, cryptocurrencies are
lower energy usage.
There are many ways to construct

Bitcoin
the focus of critique. Particularly in
the public eye, the focus has been on
the significant energy use of the most
and operate blockchain networks,
and the mining process is not always
necessary for private key networks.
energy
popular cryptocurrency: bitcoin.
By design, cryptocurrencies are very

Consensus can be achieved in a
much more energy-lean way. “Proof of
authority” (PoA) networks, for example,
usage
energy intensive because they are only allow authorized authorities to
mined using a “proof of work” (PoW) validate networks. When authorities
protocol. PoW increases in difficulty as don’t have to “compete” for access, as The upper estimate of bitcoin’s
more miners enter the network seeking in crypto-mining, there is less energy energy consumption in July 2018 was
to profit from bitcoin’s strong year-on- consumption throughout the network 70 terawatt hours per year86 – the
year price growth. The difficulty also as a whole. For example, the Energy same amount of energy as Austria
consumed in 2014 and around 0.35%
increases by design every four years Web Foundation, in partnership with
of total global energy consumption
and there is a hard cap on the total various energy companies including
that year.
number of bitcoins that can be mined, Shell and Duke Energy, is currently
further driving up competition between building an energy-lean blockchain
miners. This increasing difficulty and framework operating on a PoA A single bitcoin transaction could
competition means that miners require protocol.92 power 1.5 American homes for a
increasingly powerful – and energy- day.87
hungry – computers and data centres Understanding blockchain’s broader
in order to compete. This equation impact on the energy system overall,
could significantly limit the potential of however, is more complicated, and it A Visa transaction requires 0.01 kWh
mainstream cryptocurrencies. is important to adopt a system-wide of power, whereas a bitcoin
transaction requires an estimated 200
perspective that takes into account the
kWh per transaction.88
There are many other emerging relative energy impact of blockchain
applications of blockchain beyond solutions versus existing methods. For
cryptocurrencies, with use-cases instance, energy management is an A new bitcoin chain is formed
discussed in previous sections of this area where the relative energy-saving approximately every ten minutes.89
report. Blockchains such as Ethereum, benefits of blockchain could outweigh
NEO, Cardana and WAVES operate on system-energy usage. Blockchain
a less energy-intensive “proof of stake” solutions are also being developed to
(PoS) protocol. For example, Ethereum incentivize the uptake of renewable
transactions consume approximately energy and energy efficiency (see
12–14 times less energy than bitcoin sections: “The blockchain opportunity
transactions.90 Others are developing for our environment” and “Blockchain
“proof of importance” (PoI) protocols, game changers for the Earth”).
which are expected to be less energy
intensive thanks to its simplified and The scaling up of such solutions,
more accessible validation process. if supported by the right “enabling
environment”, could support and
Other more energy-efficient validation potentially accelerate the overall
processes for crypto-alternatives decarburization of the energy
include, for example, the Chia Network, system and global efforts to reduce
which is an ecological alternative greenhouse gas emissions. Examples
to bitcoin that runs on a “proof of here might include initiatives to provide
space” process. Due to its increased proof of origin for renewable energy
energy efficiency, the Chia Network generated or purchased by companies,
enables miners to validate processes governments and individuals;
from their home computers.91 renewable energy coins that reward
Energy efficiencies will additionally bitcoin miners for generating or
be seen across blockchain solutions sourcing renewable energy; and
as next-generation computers, efforts to crowdsource investments in
including projects such as HPE’s “The renewable energy projects, opening
Machine”, aim to significantly increase them up to a new class of investor.

Conclusions and recommendations
Blockchain for the Earth principles a centralized system? What other advantageous
decentralization characteristics does the new
Today’s excitement surrounding blockchain can lead to system need that blockchain may support,
a temptation to try to use blockchain to solve everything. including, for example, peer-to-peer transactions,
A reasoned and structured approach is needed to demand-supply balancing, transaction efficiency
help practitioners assess whether and how to deploy a and speed, enabling participation of wider market
blockchain-based solution for a defined environmental participants (consumers and devices)?
problem and to guide investors in considering if a – Are you looking to access new sources
prospective blockchain application is actually needed or not. of finance for sustainability outcomes?
Below are three principles to guide such an assessment: Blockchain is an enabler for accessing project
finance from wider investor types (including the
1. Will blockchain solve your actual environmental wider public), or creating financial value and
or natural resource security problems? Consider trade from non-traditional asset classes (e.g.
whether blockchain is actually needed to solve the natural capital, water). Is this a requirement of
problem by asking what the problem is and how might the application? What are the distinct advantages
distributed ledger technology realize your envisaged relative to crowd-financing or other established
solution. financing solutions?
– Is blockchain the most suitable tool to address 2. Can you acceptably manage the downside risks or
the challenge? Is blockchain the only solution to unintended consequences? Consider the risks and
the problem, or are there other simpler or more challenges posed by a blockchain-enabled solution to
appropriate tools? And in parallel, which aspect of the biological and institutional systems that underpin
the technology is most needed for this particular the environment or natural-resource issue in question,
solution? the technical and commercial feasibility of being able to
– Is transparency and traceability an important mitigate these, and the likely time frames to be realized.
part of your challenge/proposed solution?
Blockchain facilitates transparent and traceable – Have you considered the implications of data
transactions. Is data on provenance, movement privacy regulations and the wider data security
and ownership something that would be valuable risks? Environmental and natural resource issues
for the solution? are rightly emotive and often viewed as public
– Is decentralization vital to your solution? Can goods or common property resources. If the
a blockchain-enabled decentralized solution solution requires an open network and a public
improve environmental performance relative to blockchain system – for example, a blockchain
Figure 7 – Blockchain for the Planet principles

Will blockchain solve your actual problem? Can you acceptably manage downside Have you built the right ecosystem
risks or unintended consequences? of stakeholders?
Is blockchain the most suitable tool to Have you considered the implications of Have you identified the ecosystem of actors
address the challenge? data security regulations and risks? vital to your solution and important areas
for cooperation?
Is transparency and traceability an Have you considered the implementation
important part of your challenge? risks related to data quality or wider Have you engaged both users and wider

constraints of the real-world interface? stakeholders to help define responsible use?
Is decentralization vital to your solution?
Is the relative energy consumption of the How can you ensure that stakeholders
Are you looking to access new sources of new solution justifiable? understand and trust how blockchain
finance and enable transactions? is being used?
Are you using an energy-optimal platform?
Are there any scalability challenges to using

blockchain and can these be overcome?

3. Have you built the right ecosystem of stakeholders?
platform solution for utilities – what are the legal
Blockchain’s value as a solution multiplies when
and reputational data privacy implications?
more players participate and when stakeholders
Will personal data be stored and what are
come together to cooperate on matters of industry-
the jurisdiction-relevant regulations relevant
wide or system-level importance. New partnership
to the platform’s location that might present a
and opportunities are more likely to emerge from
challenge, including “the right to be forgotten”
multidisciplinary ecosystems.
and the handling of personal data? What wider
data security measures can be taken, including
– Have you identified the ecosystem of actors
data encryption of personal data within smart
vital to participating in your solution and
contracts?
important areas for cooperation? For example,
– Have you considered the implementation risks participants should come together to agree a
related to data quality or wider constraints common set of rules for governance, create
of the real-world interface? A thorough and implement a risk-and-control framework
understanding of the weaknesses of the real- (including social and environmental impacts), and
world system is a prerequisite for developing determine how to share costs and benefits across
more effective solutions. What is the quality of the community (e.g. in a blockchain solution that
the underlying data, and how serious are any benefits the underserved and poorest members of
constraints to the validity of your solution (e.g. the community).
the impact of unmonitored large-scale illicit water
– Have you engaged both users and wider
use on peer-to-peer water-trading permits)? Do
stakeholders to help define responsible use?
systems, technologies or incentives exist to ensure
Have you brought together participants and
the data entered into the blockchain is accurate
stakeholders that will be directly and indirectly
and verifiable. If not, how can you create these?
impacted by the solution to understand their needs
– Is the relative energy consumption of the new and concerns?
solution justifiable? What are the relative net
– How can you ensure that stakeholders
greenhouse gas savings of the new/proposed
understand how the technology is being used
blockchain-enabled solution using today’s
– along with the environmental, economic and
blockchain technology versus the current (non-
social implications – to develop trust in its
blockchain) system?
deployment? Have you engaged with industry
– Are you using an energy optimal platform? Is groups, regulators, governments, NGOs and civil-
the blockchain platform you are planning to society community groups to raise awareness of,
use the most energy-efficient option currently and build trust in, your solution?
available while still meeting your use-case
requirements? Does it allow for continuous
improvement in energy use – for example, does
it incentivize developers to reduce its energy use
over time and as you scale up?
– Are there any scalability challenges to using a
blockchain platform and how might these be
overcome? For example, is a data standardization
effort required to enable scaling? At what scale
might the platform reach transaction capacity and
are there any technology platform workarounds
that address the scalability challenge (e.g. a
slimmed-down “light client” version or separate off-
chain layers to the platform)?

Recommendations Capturing this opportunity could also help to drive the
next stage of sustainable growth and value creation.
The opportunity for blockchain-enabled innovation to
benefit humankind and our environment is substantial, but For international organizations and multilateral
development banks, there is a clear need to
the technology itself is still at a relatively early stage, with
create the governance, transparency and other
many hurdles to overcome. Far from being an obstacle,
conditions needed for blockchain applications to be
this presents an important opportunity for stakeholders
successful in transforming the management of the
to collectively ensure that the future development of
global environmental commons. Cross-institutional
blockchain technology – both technology protocols and its
collaborations could help create global frameworks
applications – constitute “responsible blockchain”. If this is
while also establishing regulatory sandboxes to trial
achieved, blockchain can be expected to play an important
innovative approaches with particular governments,
role in enabling new technological solutions to pressing users and developers. There would be enormous
environmental challenges, including climate change, benefit in establishing a new multi-agency blockchain
biodiversity, ocean health, water management, air pollution, initiative. It could, for instance, enable sustainable
resilience and waste reduction. In broader terms, there is resource management across important value chains
also the potential for blockchain to enable a system shift such as fish, soft commodities, plastics and electronics;
from shareholder to stakeholder value, and from traditional support better management of vital resources such
financial capital to accounting for social, environmental as watersheds and forests; improve coordination in
and financial capital. This is particularly important for the response to natural disasters; and overcome current
environment, where the “tragedy of the commons” and political and logistical blockages, for instance, land
inadequate or non-existent valuing of financial costs present rights and localized corruption. Such an interconnected
major challenges. approach will be essential if the international community
is to successfully harness the potential of blockchain to
Harnessing blockchain technologies to drive sustainable accelerate global environmental action and the delivery
and resilient growth and a new wave of value creation will of the global environmental goals.
require decisive action. The opportunities that blockchain
offers need to be developed and governed wisely, with For angel investors, venture capitalists, accelerators
upfront and continual management of the unintended and impact investors, there are still relatively few
consequences and downside risks. This is a responsibility blockchain applications or platforms actually in
shared by all stakeholders – from the technology community production that aim to address sustainability challenges.
(entrepreneurs, researchers, open-source developers and Yet the need and the potential are substantial. This
big tech) and industrial sector through to governments means there is a relatively untapped investment space
(policy-makers and regulators), international organizations, that could be explored. In addition, existing portfolio
investors and community organizations. Establishing new companies could be encouraged to evaluate whether
global platforms to accelerate the creation of a “responsible blockchain could create both business value and
blockchain ecosystem”, rather than just to incubate specific positive social and environmental performance.
projects, would be a valuable and much-needed next step.
It could support the development of effective blockchain 2. Combine blockchain with other Fourth Industrial
solutions for environmental challenges, help ensure Revolution technologies: Blockchain is often not a
blockchain technology is sustainable (i.e. good for people complete solution in itself – the greatest benefits will be
and the planet) and play a crucial role in formulating the realized when distributed ledgers and smart contracts
necessary governance arrangements. are used in collaboration with other Fourth Industrial
Revolution technologies, including AI and IoT. There is
The following set of recommendations is therefore grouped therefore a need to recognize how blockchain can best
be integrated with other solutions to address global
under these three overarching themes and could provide a
environmental challenges.
roadmap (or at least the starting point) for such collaborative
platforms. Where applicable, this section also calls out
3. Collaborate for interdisciplinary solutions:
stakeholder-specific recommendations in recognition of
Blockchain’s decentralized architecture means there
the fact that different stakeholder groups will often have
will be a need to ensure that the views of stakeholders
specific roles to play within the collective effort to speed up
are accounted for in the design and deployment of
innovation, minimize risks and maximize environmental and
platforms. There will also be a need for significantly
societal benefits from the application of blockchain. more interaction among developers, users, policy-
makers, regulators, lawyers and domain specialists to
Developing effective blockchain solutions optimize the design and deployment of blockchain,
in addition to developing the surrounding legal and
1. Harness blockchain for environmental value: While regulatory architecture.
blockchain is a ledger of any transaction that involves
value, the main focus is currently on financial value. For companies, this means that realizing the
However, tokenized systems create an opportunity to potential of some of the most transformative systems-
harness non-financial value, including realizing natural level blockchain-enabled applications will require
capital and/or incentivizing sustainability outcomes. collaboration and co-innovation across different sectors,

between industry and the blockchain community, and experimentation and deployment will be best placed to
between the public and private sectors and the third capture the benefits of this emerging market.
sector, such as NGOs and non-profits. This could mean
co-investment in an open-source foundational, pre- The developer community in particular has a vital
competitive and shared blockchain platform for a sector. role to play in improving the energy performance of
Current efforts by the Energy Web Foundation and their protocols for consensus validation, thereby addressing
partners in industry and finance to build a new openly one of the biggest challenges to blockchain scaling: its
accessible digital infrastructure to help decentralize, power use. Further improvements are required for many
democratize and decarbonize the energy system are existing platforms – and incentive structures could be
demonstrating how such an approach could work. built into these and future blockchain platforms – to
encourage developers on open-source platforms to
Research institutions experienced in multidisciplinary contribute improvements to energy performance while
research will have an important role in bringing together also helping to tackle wider challenges to blockchain
environmental and technology/data scientists and scalability and performance (e.g. data encryption, light
industry practitioners, to develop knowledge on the versions of the technology for distributed devices). Such
use, impact, ethics and risks of blockchain for the open-source approaches could also accelerate and
environment. broaden the range of innovative solutions developed
on blockchain platforms (e.g. provenance and tracking
Ensuring blockchain technology is sustainable apps or transactive grid operations).
4. Anticipate wider political economy challenges Mainstream institutional investors and asset
and unintended consequences: Given the potential managers should consider embedding sustainability
for blockchain to upend current well-established and considerations into their investment criteria for
centralized systems, it is important for all stakeholders blockchain-related (and other Fourth Industrial
to consider how changes might feed through to the Revolution) investments. This would be consistent
economy and society, in addition to wider trust issues with the methodology now being adopted by investors
regarding data privacy and security. Multistakeholder across other parts of their portfolio and will be crucial for
dialogue will be crucial to navigate high levels of managing future risk to the value of those investments.
expected change, build trust and identify and manage It would also encourage developers to ensure
unintended and unforeseen consequences. environmental considerations (such as energy efficiency)
do not prevent real-world scalability of promising
5. Deliver “responsible blockchain”: Put in place “smart” blockchain applications.
design, deployment and governance measures for
blockchain solutions to ensure responsible use for Formulating the necessary governance arrangements
society and the environment. This includes a range of
measures, from ensuring compliance with privacy rights 6. Develop an agile approach to governance and
and clarification of accountability in case things go regulation: Given the infancy of the use of blockchain
wrong through to minimizing energy consumption and technology and the speed of its evolution, governments
incentivizing developers to contribute improvements. and regulators should expect to take an agile approach.
Currently, regulators in many jurisdictions have been
It will be important for companies and developers playing an active role in monitoring developments
to actively inform the regulatory landscape and help and reacting as and when they see potential harm.
to shape standards (see “Governance” below): this However, this is on a jurisdiction-by-jurisdiction basis
includes working together via industry bodies such and firms operating blockchain-based companies (e.g.
as Global Digital Finance, which is working towards crypto-trading exchanges) can, with relative ease,
a harmonized set of standards (the global code) and move their offices, key officers and primary servers
practices for the cryptocurrency space and/or engaging to different jurisdictions. Likewise, differences across
directly with governments and regulators at the national jurisdictions, including at worst conflicting requirements,
level on needs in regards to blockchain governance and are challenging given the distributed and transboundary
public-private partnerships. Crypto-relevant industry nature of the technology.
bodies such as Global Digital Finance should also look
to embed sustainability considerations into the emerging 7. Build a more global solution to governance, or at
industry code of conduct and principles. least a globally coordinated solution: The distributed
nature of blockchain technology accentuates the
Internally, companies should establish board leadership importance, in the longer term, of developing a more
of, and accountability for, blockchain and its impact on globally coordinated governance architecture. There
the business to ensure that their technology strategies are three main potential options for how blockchain
build in and optimize the effect blockchain will have on could be regulated and governed more widely with
sustainability outcomes, both to capture new business recommendations presented as they apply to each:
opportunities and to manage potential risks. Companies
that develop an understanding at the leadership level a. Employing industry self-regulation. Industry
of the barriers, safety, ethics, values, governance and cooperation to achieve a set of common
regulatory considerations associated with responsible principles can be an important mechanism to

raise standards.93 In the cryptocurrency space, a requirements for certain types of firms using
number of national regulators are paying attention blockchain, this could help achieve harmonization
to the standards (the global code), practices and across jurisdictions, including in relation to
taxonomy being developed by the industry body environmental performance. While this would
Global Digital Finance. In practice, consumers and send strong governance signals to governments
the industrial sector looking to use or rely on a firm and companies, as the G20 derivatives reform
using blockchain would be able to see standards showed, there is still a risk that implementation
have been adhered to, thereby supporting decision- on a jurisdiction-by-jurisdiction basis will differ as
making and building trust. A global code has countries look to build on existing regulations and
the benefit of being jurisdiction-agnostic so that principles, and not all jurisdictions may choose to
firms can layer compliance with other jurisdiction- implement the recommendations.
specific obligations. Regulators should play an
important role in shaping such a global code,
representing wider interest groups, including the
general public, to ensure particular groups do not
dominate and that standards are not too watered
down. Regulators or enforcement agencies
can also subsequently hold firms (operating in
their jurisdiction) to account according to these
principles, especially if they peg regulation to such
standards. However, self-made regulation will
always be a compromise and central regulators still
have an important role to play in assessing where to
develop a more rigid set of requirements, including
in relation to environmental performance. This will
be important to avoid the blockchain equivalent
of the “market failures” that have contributed to
current environmental challenges.
b. Country-specific regulation and government
policies. Currently this appears to be the
most prevalent way of governing blockchain
(at least in the crypto-asset space), with local
regulators asserting jurisdiction in order to
combat any perceived harm. However, when
countries do this in isolation, there is a risk of
creating conflicting requirements. Country-led
standards in regards to the energy efficiency of
protocols, for instance, could play an important
role in accelerating blockchain communities to
adopt greener protocols. Likewise, government
funding commitments could be directed towards
blockchain research (e.g. ethics, social and
environmental impact, and technology innovation)
and development that seeks to scale public-private
“blockchain for society and environment” projects
and platforms.
c. Globally coherent regulation. Global regulators
and international governance mechanisms such as
the Financial Stability Board (FSB) and G20 have
important yet challenging roles to play in achieving
more coherent regulation in regards to blockchain
at an international level. Regulation in response to
the financial crisis that stemmed from G20 initiatives
and commitments could serve as a blueprint for this
(e.g. the G20 Pittsburgh Summit that led to w
ide-scale G20 derivatives legislation). To date, the
FSB has developed a framework for the G20 to
monitor crypto-asset risks to the financial system,94
but it has not yet taken a broader look at cross-
industry blockchain and DLT standards and codes.
If international industry bodies such as the BCBS-
IOSCO or FSB can come up with relatively detailed

Acknowledgements
The World Economic Forum would like to acknowledge Contact

the valuable contributions of the following people in the For questions about the Fourth Industrial Revolution for the
development of this document: Earth series of publications, contact:
Jahda Swanborough, Lead, Environmental Initiatives, World
Lead authors Economic Forum: [email protected] (series
Celine Herweijer (PwC UK), Benjamin Combes (PwC UK), lead)
Jahda Swanborough (World Economic Forum), Mary Davies
(PwC UK) For questions about the Fourth Industrial Revolution for the
Earth initiative, contact:
Contributing authors
Jennifer Hanania (PwC US), Kurt Fields (PwC US), Jennifer Emily Farnworth, Head of Climate Initiatives, World
Zhu Scott (Radian Partners), Lisa Sexton, Giulia Volla (PwC Economic Forum: [email protected] (Geneva)
UK)
Victoria Lee, Project Lead, Environmental Initiatives – Fourth
Other contributors Industrial Revolution for the Earth, World Economic Forum:
Victoria Huff (PwC US), Sheila Warren (World Economic [email protected] (San Francisco)
Forum), Leanne Kemp (Everledger), Santiago Siri
(Democracy Earth Foundation), Veronica García (Bitlumens),
Heather Clancy (GreenBiz), Jessica Wrigley (PwC UK) About the Fourth Industrial Revolution for the Earth
Initiative
Fourth Industrial Revolution for the Earth Initiative:
The World Economic Forum is collaborating with PwC as
Advisory Group official project adviser and the Stanford Woods Institute for
Celine Herweijer (PwC UK), Dominic Waughray (World the Environment on a major global initiative on the Fourth
Economic Forum), Steve Howard (We Mean Business Industrial Revolution for the Earth. Working closely with
Coalition), Jim Leape (Stanford University), Usha Rao-Monari leading issue experts and industry innovators convened
(Global Water Development Partners) through the World Economic Forum’s Global Future Council
on the Environment and Natural Resource Security, and
Project Team with support from the MAVA Foundation, this initiative
Benjamin Combes (PwC UK), Sarah Franklin (PwC US), combines the platforms, networks and convening power
Jerica Lee (World Economic Forum), Victoria Lee (World of the World Economic Forum and its new Centre for the
Economic Forum), Jahda Swanborough (World Economic Fourth Industrial Revolution in San Francisco. It also brings
Forum) Stanford University’s Woods Institute for the Environment’s
researchers and their networks in the technology community
together with the global insight and strategic analysis on
business, investment and public-sector issues that PwC
offers. Together with other interested stakeholders, this
partnership is exploring how Fourth Industrial Revolution
innovations could help drive a systems transformation
across the environment and natural resource security
agenda.

Annex I
Glossary of blockchain terms
Blockchain consists of a number of areas, including but not Proof of authority

limited to those below: An algorithm that validates transactions through a
consensus mechanism that relies on identity as a form of
Distributed ledger stake.
An electronic ledger in which data is stored across a series
of decentralized nodes as opposed to one centralized Proof of Importance
system. Distributed ledgers are inspired by blockchain A mechanism used to determine which nodes are eligible
technology. However, unlike blockchain, distributed ledgers to add a block to the blockchain, a process known as
are not tied to bitcoin or any specific cryptocurrency and “harvesting”.
may be private and permissioned.
Proof of history
Permissioned ledger An algorithm used to create a historical record that proves
Participants in this ledger system are universally known to that an event has occurred at a specific moment in time.
all other participants. Permissioned ledgers can be both
public or private ledgers. Read or write ability is granted to Public distributed ledger
selected parties. Distributed ledger system that is open to all interested
participants and can be appended by all participants. The
Permissionless ledger Bitcoin blockchain is an example of a public distributed
Participants in this ledger system may remain completely ledger.
anonymous. Although most permissionless ledgers are
public ledgers, they could also be private. Anyone in the Private distributed ledger
network has read and write ability. Distributed ledger system in which all participants are known
and access to the ledger can be limited to approved parties.
Consensus mechanism
Process by which all of the validators within a distributed Smart contract
ledger system reach an agreement on the state of that Computer protocols that facilitate, verify or enforce the
ledger. execution of a contract. At a fundamental level, smart
contracts are analogous to a series of if-then statements
Cryptography applied to the details of a transaction.
Science of taking information and transforming it in a
manner in which it can be deciphered only by the intended Tokens/ tokenization
recipient. Cryptography is a process used primarily to Digital representation of a real-world asset/the concept
protect sensitive information. of tying information about an asset to a blockchain. From
there, participants can interact with the asset by selling or
trading it, for instance.
Annex II
The Fourth Industrial Revolution for the
Earth initiative
The Fourth Industrial Revolution for the Earth initiative is Working from these thematic areas, the World Economic
designed to raise awareness and accelerate progress Forum, supported by Stanford University and PwC (as
across this agenda for the benefit of society. In the first project adviser) and advised by the members of the Global
phase of the project, specific environmental focus areas will Future Councils on the Future of Environment and Natural
be considered in depth, exploring in detail how to harness Resource Security and specific Fourth Industrial Revolution
Fourth Industrial Revolution innovations to better manage technology clusters, will seek to leverage their various
the world’s most pressing environmental challenges. Initial networks and platforms to:
focus areas will include: – Develop a set of insight papers, taking a deep dive
– Air pollution into the possibilities of the Fourth Industrial Revolution
– Biodiversity and each of these issues.
– Cities – Build new networks of practitioners and support
them to co-design and innovate for action on the
– Climate change and greenhouse gas monitoring
environment in each of these issue areas, leveraging
– Food systems the latest technologies and research that the Fourth
– Oceans Industrial Revolution offers
– Water resources and sanitation – Design a public-private accelerator for action,
enabling government, foundational, research
organization and commercial funds to be pooled and
deployed into scaling innovative Fourth Industrial
Revolution solutions for the environment.
– Help government stakeholders to develop and trial
the requisite policy protocols that will enable Fourth
Industrial Revolution solutions for the environment to
take hold and develop.
The Fourth Industrial Revolution for the Earth initiative will be

driven jointly out of the World Economic Forum Centre for
the Fourth Industrial Revolution in San Francisco and other
Forum offices in New York, Geneva and Beijing.

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29. Plansky, J., O’Donnell, T., Richards, K., A Strategist’s Guide 50. RE100 http://re100.org/ (link as of 03/09/18).
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Blockchain?gko=0d586 (link as of 03/09/18). 13 July 2017, United Nations Development Fund: http://undp.org/
content/undp/en/home/blog/2017/7/13/What-kind-of-blender-
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31. A hash is a function that converts an input of letters and numbers 52. Clean Water Coin: http://cleanwatercoin.org (link as of 03/09/18).
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53. Ibrahim, A. A. and Joshi, M., How Fintech Can Lead to Sustain-
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41. Ibid. 60. Verhagen, J., Forests … And Blockchains?, Ecosphere Plus, July
2017: https://ecosphere.plus/blog/forests-and-blockchains/ (link
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03/09/18).
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ping Illegal Tuna from Coming to Market: https://www.weforum. 62. Walker, L., This New Carbon Currency Could Make Us More Cli-
org/agenda/2017/06/tuna-2020-traceability-declaration-stopping- mate Friendly, World Economic Forum Agenda blog, 19 Septem-
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currency-blockchain-poseidon-ecosphere/ (link as of 03/09/18).
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64. Carbon on Blockchain, Poseidon Foundation: https://poseidon. to the Convention on Biological Diversity has been ratified by 100
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by Up to 6 Percent in Some Regions, World Bank press 81. Kasireddy, P., Blockchains Don’t Scale. Not Today, at Least. But
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Revolution”, The Guardian, December 2016; Castilla-Rubio,
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79. The Nagoya Protocol on Access to Genetic Resources and the

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Fourth Industrial Revolution for the Earth Series

About “The Fourth Industrial Revolution for the Earth”

About the World Economic Forum

World Economic Forum

World Economic Forum®

© 2018 – All rights reserved.

If we get it right, it could create a sustainability revolution.

Building Block(chain)s for a Better Planet 3

4 Building Block(chain)s for a Better Planet

Background Principal findings

6 Building Block(chain)s for a Better Planet

Building Block(chain)s for a Better Planet 7

Figure 1 – Global challenge areas

Climate change Biodiversity and conservation Healthy oceans

Water security Clean air Weather and disaster resilience

8 Building Block(chain)s for a Better Planet

Building Block(chain)s for a Better Planet 9

The requested Verification

Once verified, the

Key current features Benefits Challenges

Cryptocurrency Smart contracts • Enables decentralized systems incl. • Adoption challenges

2013 – Emergence of numerous new Blockchain scaling –

1990s 2008-2015 2015-2018 Future developments

Building Block(chain)s for a Better Planet 11

The challenge for innovators, investors and governments is to

12 Building Block(chain)s for a Better Planet

• Blockchain- Climate change • Ledger for • Timber and • Recording of

Healthy oceans Water security

• Real-time • Decentralized • Precipitation Water security • Blockchain-

ocean monitoring and

temperature and ledger of ocean forecasting trading of excess

pH data • Automated crop water resources

• Asset-backed token system for clean, accessible

Clean air Weather and disaster

Clean air • Enhanced disaster • Automatic

disaster response power to

Financial disaster resilience

• Cryptocurrency payments • Automated air-quality instruments

Building Block(chain)s for a Better Planet 13

14 Building Block(chain)s for a Better Planet

Building Block(chain)s for a Better Planet 15

Spotlight on new energy management platforms

16 Building Block(chain)s for a Better Planet

Building Block(chain)s for a Better Planet 17

18 Building Block(chain)s for a Better Planet

Spotlight on inefficiencies in the water sector

Building Block(chain)s for a Better Planet 19

Spotlight on the bio-economy

Building Block(chain)s for a Better Planet 21

Figure 6 – High-level summary of blockchain risks and challenges

22 Building Block(chain)s for a Better Planet

Building Block(chain)s for a Better Planet 23

The nature of blockchain systems (public and private)

Example: Cross-border blockchain platforms, such as

This potentially raises a costly operational challenge

Example: The complexity of global supply chains means

24 Building Block(chain)s for a Better Planet

There are many ways to construct

By design, cryptocurrencies are very

Building Block(chain)s for a Better Planet 25