Bai Bo While the world celebrates the progress that a global commitment can enable with Earth Day, the United Nations’ Intergovernmental Panel on Climate Change (IPCC)’s recent report gives pause to any pat on the back. Instead of reversing environmental degradation and reviving the planet, extreme weather has accelerated — Singapore, while shielded from natural disasters, is increasingly exposed to intensifying temperatures, rainfall, and floods. Put simply, climate change is worse than expected, disproportionately affecting the most vulnerable populations.

Adding fuel to the fire, ongoing economic pressures from surging inflation, steep oil prices and geopolitical conflicts have effectively put sustainability and green initiatives on the backburner. This is in spite of the fact that soaring investments into the ESG sector reached US$120 billion last year and Southeast Asia’s green economy has been earmarked as a US$1 trillion opportunity. However, the industry is already behind in the race to reach net-zero and we desperately need to catch up. With the world still far off its sustainability goals, how did we go wrong in our fight against climate change?

Outdated solutions to combat rising emissions

For years, sustainability initiatives were largely driven by the public sector, resulting in a lack of progress in the digitalisation of processes when compared to sustainability efforts across the private sector. Unsurprisingly, one of the main impediments to accurate carbon reporting is the inability to precisely determine carbon assets and liabilities. This is because sustainability efforts are largely stuck in the past, relying on traditional analogue methods of carbon reporting, therefore increasing the chances of human error and double counting – where multiple parties lay claim to the same carbon emission reduction.

It is worrying that the majority of the data we rely on today is starkly inaccurate — billions of tonnes in carbon emissions are underreported each year — suggesting that we could be even further from our sustainability targets than we think. Faced with the even greater ambiguity of how much more is needed to reverse the effects of global warming, it’s urgent to source better ways to accelerate green initiatives.

While last year’s United Nations Climate Change Conference (COP26) agreed to offer tools to countries to improve environmental data integrity and avoid double counting, change is only possible if there is greater clarity on what resources can make reporting more transparent and accurate. Since accurate data is the cornerstone of achieving global sustainability targets, the sector can take a page from the emerging tech industry when it comes to digitising and standardising processes.

Solutions from the digital assets industry

As a digital enabler, blockchain’s immutability and traceability provides real-time data updates and a record of carbon performance, minimising inaccuracies and eliminating double counting. This can alleviate the most challenging aspect of the Paris Agreement (COP21) on properly accounting for and tracking carbon credits, allowing the sector to better facilitate and fast-track efforts towards its sustainability goals by managing the carbon assets and liabilities properly.

Although digital technologies are often mistaken as a climate killer, this is not always the case. Blockchain, for example, is often misassociated with energy-intensive proof-of-work cryptocurrencies like Bitcoin, taking blame for its excessive energy waste even when crypto and blockchain are not one and the same. The European Union is even rallying behind the power that blockchain holds in improving accuracy in greenhouse gas reporting and enabling reliability of data. Now introduced to imbue greater integrity and trustworthiness through each step of carbon reporting, increasing access to such technologies can ensure a standardised rigour in the calculation and verification of carbon neutrality.

Encouraging equitability

Furthermore, leveraging the power and potential of blockchain can provide more clarity on carbon emissions derived from international trade; this is often overlooked as climate action efforts are often only examined at a national level. For example, international trade-related freight transport — across land, air, and sea — currently accounts for 30 per cent of all transport-related CO2 emissions from fuel combustion across public and private means. In aggregate, the emissions of international trade-related freight transport amount to over 7 per cent of total global CO2 emissions. Against the vastness of global supply chains, and given that these numbers pertain only to freight transportation, what do our emissions truly look like given all the other activities in international trade?

With the ambiguity of global carbon emissions from international trade, blockchain is even more paramount to properly inform carbon allocation and limit carbon leakage by pushing carbon-intensive production to other regions. As developing economies often face the brunt of carbon leakage, more precise data enabled by blockchain can encourage greater equitability and accountability in carbon emissions tracking, ensuring each country, company, and organisation alike has a responsibility to play in achieving a greener planet.

Green initiatives alone will not meaningfully move the needle unless we have the tools and structures to ensure they’re implemented accurately. Beyond results and targets, the industry needs to first confront its structural limitations — only then can we ensure that our sustainability efforts aren’t going to waste.

The writer is executive chairman and co-founder of MVGX