Unleashing the Green Economy: Blockchain Transforms Climate-Friendly Investment Opportunities[Column]| coindesk JAPAN | Coindesk Japan

As the need to combat climate change becomes more urgent, the search for innovative solutions that enhance sustainable growth and resilience has never been more important.

Blockchain technology is emerging as a pioneering force driving a transformative shift in the green economy and driving climate-friendly investment and innovation across multiple sectors.

Blockchain essentially functions as a distributed digital ledger, recording transactions in detail across a wide network of computers with unparalleled security and transparency. This revolutionary technology has the potential to redefine how governments, private companies, multinationals and communities adapt to and mitigate the multifaceted risks posed by climate change.

Blockchain is a revolutionary and valuable tool, but it is just one of many complex and intertwined solutions. Addressing climate change will require governments, businesses and individuals to work together, each harnessing the power of diverse innovations, robust information-sharing networks and sustainable infrastructure.

There are three main reasons why blockchain technology has special potential in fighting climate change:

1. Strengthen the voluntary carbon credit market and channel billions of dollars into green investment.
2. Facilitate widespread adoption of parametric insurance against climate events
3. Accelerate the development of the open data infrastructure needed to coordinate international actors

parametric insurance:Insurance that pays a predetermined amount of insurance money when an indicator that has a causal relationship with damage, such as an earthquake exceeding a certain scale or a hurricane reaching a specific wind speed, meets the conditions set at the time of contract.

By unlocking the enormous potential of blockchain, we are now at a crossroads that could transform the global movement towards a greener economy.

open data infrastructure

A major challenge in tackling climate change is the lack of access to high-quality, reliable data. Accurate climate data is essential for decision makers, from policy makers to investors, to make thoughtful choices that promote sustainability. Blockchain technology is the foundation of an open data infrastructure, enabling the secure and transparent sharing of climate data.

A number of decentralized climate information ecosystems have emerged that leverage blockchain technology to provide a highly transparent and trusted platform for sharing and monetizing climate data. Using smart contracts and token incentives, data providers can be fairly rewarded for their contributions while ensuring data integrity and accessibility.

An open data infrastructure will give businesses access to trusted climate data to identify new climate-friendly investment opportunities and assess risks associated with climate change.

Businesses and organizations can leverage an open data infrastructure to enable transparent and accurate climate risk assessments and disclosures. Additionally, as regulators and investors demand better reporting and disclosures related to climate change, businesses are leveraging blockchain-based platforms to demonstrate their commitment to sustainability and responsible risk management. can be shown.

By providing a secure, transparent, and accessible data ecosystem, blockchain technology bridges the information divide that has long hindered action on climate change, meeting the challenges and opportunities of a rapidly changing world. Empowering companies to respond effectively.

Scaling the Voluntary Carbon Credit Market

Voluntary carbon credit markets (VCMs) have emerged as an important financing mechanism for carbon reduction and removal projects. But current marketplace constraints, such as unclear pricing and validation processes, hamper the growth and potential of the industry as a whole. Blockchain technology can streamline and scale carbon credit markets by increasing transparency and efficiency, making them more attractive to businesses and investors.

A blockchain-based platform automates the tracking and management of carbon credits, reduces the risk of double counting, and makes credits verifiable and unique. Greater transparency can lead to more accurate pricing, driving capital to the highest impact projects and creating more climate-friendly investment opportunities.

Blockchain technology can also make carbon offset purchases and transactions faster and more transparent, eliminating the need for brokers and intermediaries. In addition, smart contracts connect buyers and sellers directly, helping reduce transaction costs and improve market efficiency.

Tokenized carbon credits underpin the monitoring, reporting and verification systems that are essential to keeping markets fair. Additionally, tokens will automatically update when there are changes, and their value will accurately reflect the performance of the underlying project, overcoming the previously difficult challenge.

This level of transparency and automation is essential to building corporate confidence in the carbon offset market as a valid tool to achieve sustainable investment goals. Leveraging blockchain technology will make voluntary carbon credit markets more efficient and trustworthy, enabling companies to take meaningful action on climate change and embed carbon offsets into broader ESG strategies. .

parametric insurance

The frequency and severity of extreme weather events, such as floods and hurricanes, have exposed the limitations of traditional insurance models. Parametric insurance is untraditional, but perhaps more efficient, more transparent and scalable than other forms of insurance. Blockchain technology can play an important role in the popularization and expansion of parametric insurance, bringing benefits to both insurers and policyholders.

Blockchain-based platforms can automate parametric insurance processing and payments using smart contracts, reducing the need for time-consuming claims review and speeding up claims payments.

By providing a transparent and secure system for managing and verifying data, blockchain technology will enable the development and pricing of safer risk models and facilitate the widespread adoption of parametric insurance.

Decentralized oracle networks such as Chainlink play a key role in this process by providing smart contracts with immutable data to accurately trigger pre-determined insurance payouts. Be based on reliable information.

With access to accurate real-time data, companies can better understand how exposed they are to climate change across their operations, balance sheets and supply chains. This may be essential for companies to make sound decisions about risk management strategies and climate change planning.

Built on a foundation of trusted real-world data secured by a distributed oracle network, parametric insurance will be a valuable tool for building financial resilience and mitigating the negative impacts of extreme weather. . Parametric insurance will help companies survive uncertain climate conditions and be well prepared for success.

Beyond blockchain

Blockchain technology has great potential to drive sustainable growth and innovation in various industries in an increasingly warming planet. By providing the foundation for an open data infrastructure, streamlining the voluntary carbon credit market, and supporting the adoption of parametric insurance, blockchain can be a transformative force in the transition to a green economy.

At the same time, however, it is important to recognize that blockchain is just one of many tools needed to accelerate action on climate change. Robust information-sharing networks, green infrastructure, and collaboration among stakeholders are essential to creating lasting change.

Along with blockchain technology, working with many other innovative solutions will be crucial as we seek effective ways to address the pressing issue of climate change. By unlocking the power of these technologies, we can foster a more sustainable, resilient and prosperous future for all.

Companies that harness the potential of blockchain technology and other cutting-edge solutions will be at the forefront of a new era of sustainable growth.

Mr. Osho Jha: Co-founder and CEO of dClimate, a decentralized network of climate data.

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
| Image: Daniel Kuhn/CoinDesk
｜Original: Unleashing the Green Economy: How Blockchain Can Transform Climate-Friendly Investment Opportunities