Can blockchain deliver on global ESG goals?

Explore how blockchain technology can restore trust and transparency to support environmental, social, and governance (ESG) goals, and where it is already proving its worth.

Digital assets and blockchain technology are becoming ever more mainstream, just as companies face growing pressure from consumers, stakeholders, and regulatory authorities to meet—and prove that they meet—environmental, social, and governance (ESG) standards. As the irresistible forces of environmental and social change meet the immutable object of blockchain technology, can public and private sector entities find in the latter the hero they need to progress their ESG goals?

ESG is a set of standards used to measure an organization’s environmental impact and sustainability, its social responsibility, such as how it treats its workers and clients, and how transparent, accountable, and well-run it is.

The concept emerged in the early 2000s as a framework for comparing companies, with ideas around ethics in business increasingly influencing policy in the public and private sectors. It gained further prominence after a 2004 United Nations report, titled “Who Cares Wins,” which encouraged integrating ESG factors into investment decisions.

“In a more globalized, interconnected and competitive world the way that environmental, social and corporate governance issues are managed is part of companies’ overall management quality needed to compete successfully,” said the report. “Companies that perform better with regard to these issues can increase stakeholder value by, for example, properly managing risks, anticipating regulatory action or accessing new markets, while at the same time contributing to the sustainable development of the societies in which they operate.”

The report was the result of a joint initiative from twenty of the world’s leading multinational finance and banking companies, with total assets under management of over $6 trillion. This high-level endorsement set a persuasive standard for organizations and corporates across industries.

Since then, ESG has become a core field in and of itself, crucial to any business seeking to operate across any jurisdiction that acknowledges and upholds the importance of ethical and environmental standards in business. It also serves as an investment-attracting PR win for companies that can prove they uphold such standards. Unfortunately, this is often easier said than done.

Demonstrating transparency, data recording, and sustainability across supply chains remains challenging. At the same time, with the growing climate crisis increasingly on everyone’s minds, many entities are under ever-mounting pressure to double down on ESG standards.

One possible solution to this dilemma is blockchain technology, which has the potential to be a game-changer in the ESG landscape.

This promise was summed up by Synesgy, a global alliance of leading companies and organizations aimed at improving sustainability, in a January 2025 report on blockchain and ESG: “Blockchain technology, with its decentralized and tamper-proof architecture, has emerged as an innovative solution to these persistent issues, transforming the way ESG data is tracked, validated, and shared.”

For example, where conventional data reporting has struggled to persuade stakeholders, auditors and regulators of the reliability of ESG data, blockchain’s immutable ledgers could provide enhanced transparency and traceability; it could transform the recording and reporting of carbon emissions and credits; it could facilitate the better tracing of products and labor conditions across complex supply chain; and smart contracts could offer the possibility of automating ESG reporting, further minimizing administrative burdens.

“Blockchain technology has the potential to revolutionize ESG transparency by providing secure, tamper-proof, and efficient data management,” concluded Synesgy. “As the demand for transparent and reliable ESG data grows, blockchain will offer a path forward, positioning businesses as leaders in sustainable and accountable practices.”

And the benefits of blockchain are not purely theoretical; a number of projects and organizations are already implementing the technology for ESG purposes.

With this in mind, let’s delve into exactly what blockchain offers to the challenge of meeting ESG goals, how it is already realizing some of its potential, and finally, if there remain any roadblocks to its mass adoption.

Blockchain for climate reporting

Arguably, blockchain technology’s principal value to ESG reporting and compliance lies in its ability to improve transparency, traceability and trust.

This comes down to how each piece of data added to the blockchain is time-stamped and linked to the previous entry, creating a secure chain of records that is visible to all stakeholders involved. In other words, every transaction on a blockchain is documented and can be traced back to its origin, safeguarding the authenticity of records.

As explained by Synesgy: “Blockchain creates a secure and permanent digital trail. This makes it an invaluable tool for addressing critical ESG challenges such as verifying sustainable sourcing in supply chains, preventing double-counting in carbon credit markets, and providing stakeholders with timely, accurate reporting and auditing.”

When it comes to the ‘E’ of ESG, companies around the world are increasingly alert to the climate emergency, facing ever-louder calls to take responsibility for the environmental impact of their activities.

According to the New Climate Institute, “most large companies now have public climate strategies and targets, many of which include pledges that, on the face of it, appear to significantly reduce, or even eliminate, their contributions to global warming.”

However, in its ‘Corporate Climate Responsibility Monitor’ report, published in 2022, the Institute evaluated 25 major global companies on transparency and integrity, finding that “the rapid acceleration of corporate climate pledges, combined with the fragmentation of approaches, means that it is more difficult than ever to distinguish between real climate leadership and unsubstantiated.”

Blockchain technology has the ability to combat this fudging or misrepresentation of data—often done for the purposes of greenwashing activities and pacifying climate-conscious stakeholders—because, unlike traditional systems where data can be altered or lost, blockchain creates a secure and permanent digital trail.

This was emphasized by research, analytics, and technology firm Acuity, in a November 2024 report on the topic, in which it argued that blockchain allows entities to “monitor carbon emissions instantaneously and ensure they follow sustainable sourcing practices along the supply chain.”

This can be achieved through putting every transaction across a company’s supply chain on an easily accessible public ledger, or a private ledger where appropriate access is given for the purposes of compliance. All energy use, transport activity, and material sources, by every company at every point of the supply chain, can be logged on the same blockchain. This data is immutable—barring a rare and controversial procedure to alter it—and easily accessible by auditors or stakeholders.

“By demystifying the process, this ledger enhances trust among investors, consumers, and regulators,” said Acuity. “The distributed ledger helps companies measure the impact of their business on the environment, down to the source of energy powering a plant, and know their records are immutable and true.”

Another feature of blockchain is the ability to automate data collection, which can streamline ESG compliance, reducing human intervention and subsequently reducing error and fraud. By ensuring that ESG reports are accurate and auditable, blockchain can thus strengthen governance and risk management efforts.

Blockchain technology can also provide a secure and transparent platform for trading carbon credits and green bonds; the former allows companies to offset emissions by funding projects that reduce CO2 elsewhere, while the latter are loans investors give to fund environmentally friendly projects, like renewable energy or clean transport.

For Acuity, “being a transparent platform, blockchain ensures that these instruments are used for the environment-related cause they are intended for.” It added that, “blockchain could in the future be the technology supporting the trade of sustainable financial products such as green bonds and renewable energy credits.”

While environmental concerns are at the forefront of many companies’, stakeholders’ and regulators’ thoughts, blockchain also has the potential to transform how social and governance goals are met.

The same transparency, trust, and accountability that blockchain offers to environmental data management can enhance the social aspects of ESG, enabling verifiable tracking of labor practices, fair-trade sourcing, and human rights compliance across supply chains. For example, fashion companies could more easily verify that their raw materials are sustainably sourced, addressing both environmental and social concerns.

For governance, blockchain could provide tamper-proof records of corporate actions, votes, and disclosures, reducing fraud, corruption, and greenwashing. Meanwhile, smart contracts can automate compliance and reporting, ensuring consistent adherence to ESG standards.

This is all good and exciting in theory, but blockchain has been around for over two decades at this point, plenty of time for people to have put this into practice. So, where is this untapped potential of blockchain already being explored?

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Improving stakeholder knowledge

The proof of the pudding is out there, as evidenced by a 2024 study published in the ‘Journal of Sustainable Finance & Investment,’ which examined the impact of blockchain and green innovation technologies on ESG decision-making across 148 ‘Belt and Road’ countries, comprising 76 advanced and 72 emerging economies.

The Belt and Road Initiative (BRI) was proposed by China in 2013 as a novel model of regional cooperation. It aims to connect the “Silk Road Economic Belt” with the “21st Century Maritime Silk Road.” In essence, the project seeks to establish links among China, the Middle East, Africa, South and Southeast Asia, and Europe.

In the study, titled “the moderating role of global financial integration,” researchers from Huazhong University of Science and Technology (HUST) found that blockchain technology, in combination with green innovation technology, such as renewable energy, improved sustainability in the Belt and Road countries from 2013 to 2021.

“Blockchain technology and green innovation technology significantly positively influence sustainability, emphasizing their potential to boost ecologically responsible practices and contribute to economic development,” concluded the study.

This demonstrates blockchain’s growing ESG impact on a macro level. For the micro, we can look at how individual projects and businesses are already implementing blockchain for their ESG goals.

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Climate Warehouse

ITMOs function similarly to carbon credits but are specifically designed for government-to-government transfers to help countries meet their national climate targets, with strict accounting rules to avoid double-counting. For example, if country ‘A’ implements a renewable-energy project that reduces one million tons of CO2, it could transfer some or all of those tons as ITMOs to country ‘B’ so that country ‘B’ can count them toward its national climate contribution.

The Climate Warehouse aims to use blockchain’s immutable ledger to track and record this process.

According to Chia, its open-source metadata system “uses blockchain technology to create a decentralized record of carbon market activity with the goals of avoiding double-counting, increasing trust in carbon credit data, and building confidence in carbon markets through improved transparency.”

It added that these features “empower partners to trade digital assets (in this case, carbon credits) in a trust-less ecosystem, strengthening markets through an inherently cross-border and cross-market blockchain.”

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Vakt vessel blockchain

Another equally promising example, this time from the private sector, was launched recently by Vakt, a consortium of leading energy companies, banks, and commodities traders, that implements blockchain for managing the logistics of energy commodities trades.

In January 2025, Vakt announced the imminent integration of “global vessels” onto its blockchain-based logistics platform.

“The complexities of vessel trades often result in mismatched trade data between counterparties, especially when multiple parties, jurisdictions, and layers of customization are involved,” explained the consortium.

To meet this challenge, Vakt claimed that its system “leverages blockchain as a foundational technology to transform vessel trade operations” into a secure and standardized system that “empowers customers to handle vessel trade complexities with confidence.”

In particular, the consortium highlighted blockchain’s ability to provide transparency and trust, immutable records, and decentralized communication.

“The decentralized blockchain ensures all participants have access to a single source of truth, reducing disputes and enhancing collaboration,” said the Vakt. “Blockchain’s immutability guarantees trade data cannot be altered retroactively, addressing compliance and audit concerns.”

This system could help numerous companies involved in shipping meet their social and governance requirements by improving compliance with regulations, conducting accurate audits, and providing stakeholders with trust and transparency.

But Vakt was far from the first company to the blockchain party.

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China Carbon asset and IBM projects

Another private sector example is Beijing company Energy Blockchain Lab and technology conglomerate IBM (NASDAQ: IBM), which together created a blockchain platform to trade carbon assets in Mainland China, allowing high-emission organizations to monitor their carbon footprints and meet quotas by buying carbon credits from low emitters.

The platform, launched in 2017, is for use in the carbon asset market in China and allows enterprises to generate carbon assets more efficiently, with the aim of building a green, low-carbon, and environmentally friendly China.

“It is estimated that the platform will significantly shorten the carbon assets development cycle and reduce the cost of carbon assets development by 20 to 30 percent, enabling cost-effective development of a large number of carbon assets,” said Cao Yin, Chief Strategy Officer of Energy-Blockchain Labs. “Blockchain technology is expected to become an important means for effective control of carbon emissions, which is of great significance to China, the world’s largest source of carbon emissions.”

There have been no clear updates on the success or otherwise of the project, but it is ongoing.

This wasn’t IBM’s only early foray into blockchain innovation for ESG purposes. Also in 2017, the tech giant partnered with a number of global food companies, including the likes of Nestle (NASDAQ: NSRGF), Unilever (NASDAQ: UL), and Walmart (NASDAQ: WMT), on a blockchain network to trace the source of contaminated produce.

“The whole opportunity that we share is to provide transparency across the ecosystem today,” IBM’s vice president for blockchain business development, Brigid McDermott, told CNBC at the time.

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Adoption spreading

These various examples of blockchain being applied to improve systems and boost ESG credentials are just the tip of the iceberg.

Famed lists and rankings maker Forbes has been producing an annual ‘blockchain 50’ list for the last seven years, highlighting major global companies engaging in serious work with blockchain technology.

By 2021, the publication was already reporting that “hundreds of sizable companies are now using Bitcoin and its underlying technology to make their operations more efficient.”

‘Efficiency’ is a cornerstone of ESG, as optimizing resources, energy, and other processes supports environmental sustainability, social responsibility, and good governance.

This increasing adoption represents good news for blockchain enthusiasts. Unfortunately, while more and more companies appear to be exploring how blockchain can boost their operations and reduce their waste, there remains an elephant in the room. An elephant that makes substantial carbon footprints.

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A flawed hero

Blockchain and the digital asset sector more broadly have a bad rep when it comes to carbon footprint.

Blockchains are mined by networks of powerful computers that compete to solve complex mathematical puzzles. This process, known as proof-of-work, secures the network and verifies transactions. However, it requires vast amounts of computational power and electricity, leading to significant energy consumption and environmental concerns, especially when powered by non-renewable energy sources.

Taking BTC—which still dominates the digital asset sector in terms of value, market cap, and influence—according to the Cambridge Bitcoin Electricity Consumption Index (CBECI), the BTC network alone consumes around 228.41TWh per year. This is more than the yearly consumption of a lot of countries, including Finland, Belgium, Denmark, and Sri Lanka.

It is also almost double the energy consumption of gold mining, which consumes 131 TWh per year. BTC’s market cap is just over $2.2 trillion—the asset alone, not the total value of the industry that has built up around it—in contrast, gold has a total market cap of just over $27 trillion. So, it appears that BTC uses twice the annual energy to power a sector that is a tenth of the value.

Of course, while BTC has been referred to in some quarters as digital gold, this is probably not a fair comparison. Not least because the long-established gold industry has been around for centuries, gradually building its value, while BTC has only been around since 2008.

For this reason, CBECI also caveated its data by noting that “there is nothing quite like bitcoin that can be readily used for an apples-to-apples comparison.” It added that “comparisons tend to be subjective – one can make a number appear small or large depending on what it is compared to.”

Ironically, it also pointed out that “it is surprisingly challenging to find reliable electricity figures about the energy footprint of many industrial and residential activities,” an ESG problem which, as we’ve seen, blockchain may be able to help solve.

In terms of what BTC’s large energy use means in real terms, CBECI’s “best guess” for Greenhouse gas emissions related to bitcoin mining, assuming bitcoin miners rely on a variety of different energy sources, was 86.01 million tons of carbon dioxide equivalent (MtCO2e).

Based on the U.S. Environmental Protection Agency’s ‘Greenhouse Gas Equivalencies Calculator,’ this is the equivalent of the emissions produced by powering over 11.5 million homes per year or 20 million gasoline-powered cars for a year.

This again comes with the caveat that we are not comparing like-for-like, and blockchain advocates would, and have argued, that the data can be deceptive because a certain amount of the energy used comes from renewables.

Nevertheless, the stats undoubtedly look bad and almost certainly contribute to BTC’s—and the digital assets sector’s more broadly—image problem, which in turn acts as a roadblock to its mass application for solving ESG issues.

Because of this, when considering the potential benefits blockchain offers to ESG goals, the technology’s own environmental impact must be taken into account.

And yet, such data arguably makes it all the more relevant that blockchain technology, which underpins BTC and other digital assets, can be applied to help governments and businesses around the world meet their ESG goals.

In this way, with the right application, the technology’s contribution could one day offset, or even exceed, its high energy consumption. In other words, you could say that in our flawed and wasteful world, when it comes to progressing ESG goals, blockchain is not the hero we deserve, but the hero we need right now.

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Watch | Spotlight On: A new blockchain sustainability index with WEB3CO2.NET

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