In recent times, Environmental, Social, and Governance (ESG) responsibility has grown exponentially. The World Economic Forum (WEF) in Davos this year put sustainability at the forefront of the agenda, with topics like “How to save the world” and “Better business.”, a clear indication that it is currently being discussed at the highest levels.

ESG is viewed by corporations in a variety of ways — some see it as a sound business strategy, others as a self-regulatory effort, and still others think of it as a fresh spin on marketing.  Notwithstanding the driving forces, it is obvious that successful ESG business outcomes will have a profoundly positive influence on society. Making sure businesses can monitor progress effectively, correctly, and securely is essential to achieving this since it will enable them to demonstrate that they have accomplished their goals and hold them accountable for doing so.

Greenwashing, or the act of creating unfounded claims about sustainability and environmental policies to enhance corporate image and minimize ESG-related criticism, has become a frequent practice in a world where economic performance is so strongly tied to reputation and trust. In response, reporting of ESG measures is coming under increased scrutiny and enforcement from regulatory organizations around the world.

However, ESG norms and laws remain hazy—benchmarks encompass a wide spectrum of factors, with no generally accepted standardization. Companies struggle to establish a means to track pertinent data points in an effective and trustworthy manner, as they are unsure of what to measure or where the data is kept. 

In the end, progress is incredibly hard to define, uphold, and measure, and many companies simply do it wrong accidentally or because there isn’t yet agreement on what getting it right actually entails. Companies require quantitative measurements that validate their claims and evaluate their progress when highlighting ESG accomplishments. Just setting targets is insufficient in light of the fact that authorities and customers who are more socially and ecologically sensitive are scrutinizing company ESG behavior. 

This entails choosing KPIs, assessing where they are right now, setting goals, and then creating and putting into practice a plan to achieve those goals.

Blockchain provides a clear remedy. Blockchain offers immutable certification and automatic reporting of any number of data points. For instance, several businesses have pledged to considerably reduce or completely eliminate their carbon impact. A blockchain can be used to track and compare data about an organization’s carbon emissions (such as flight miles or freight shipments) and credits (such as genuine, confirmed offsets).

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Repsol, a global energy company for example, has already begun digitizing parts of its downstream supply chain, which refers to any resource that originates in a refinery or industrial complex before being transformed into a product in subsequent supply chains. Blockchain is utilized to generate a digital asset that replicates the physical resource that will flow along a supply chain. This asset will register all of the details that characterize the quality and regulatory compliance of its physical counterpart.

In the broader petrochemicals business, there are many further prospects for blockchain and sustainability, with sustainable fashion being one example. The garment sector uses a lot of chemical dyes and polymers (petrochemical goods), and by using blockchain, we can measure their carbon impact or how much recycled material is used during production.

Blockchain can exhibit trust in an environment that urgently needs it. Organizations may be held accountable for their actions with a clear and verified record of ESG measures, and those who are making progress can be recognized appropriately. The ESG era is here, is India ready?

This article was written by a guest contributor. The views and opinions expressed in this piece are those of the author and do not necessarily reflect the official position of Crypto India Magazine.