Blockchain is full of promise and has the potential to disrupt economic activities ranging from simple payments to the structure of a corporation as it currently exists.
Beyond the volatile crypto market, blockchain has several features that lend well to commercial applications. Blockchain can help improve the transparency, speed and efficiency of data transfers and monetary transactions. Businesses in multiple industries are using blockchain tools to enhance payment platforms and secure supply chain management systems. In mining, there are firms using blockchain to improve carbon emission tracking. In food retail, blockchain is used to reduce food recalls and food fraud.
Blockchain is a breakthrough technology that will play an increasingly important role in how companies can work to achieve ESG-related objectives.
Morningstar Sustainalytics looks at the risks and opportunities of blockchain integration in a report titled An ESG Lens on Blockchain
The report has three main parts.
- The first section provides a primer on blockchain, crypto and related ESG issues.
- The second section focuses on a sample of 10 blockchain themed exchange traded funds (ETFs).
- The third section assesses companies on relevant ESG criteria and compares a selection of industry peers developing blockchain tools.
At the stock level, the comprehensive report explores 10 applications in 10 businesses, highlighting improvements in operational efficiency, supply chain resilience and product governance that can reduce ESG risks and improve cost savings. Stock investors should explore these technologies in more depth in the report to understand how they could be changing entire industries.
This study presents a framework for identifying firms that are well positioned to leverage blockchain, seize ESG opportunities and mitigate risks.
