There is growing pressure globally for organisations to reduce their carbon footprint. The three main features of blockchain technology (transparency, immutability and decentralisation) offer many benefits when it comes to environmental and sustainable development. Through transparency, all parties can see and check the information that they have access to, thus building trust. When data is added to a blockchain is one issue – is the data being added deemed to have been perfect integrity because VERA / South Pole or others say so? Digital Instruments enabled by recent legal moves can use blockchain/DLT or not – there are other immutable technologies – the key ingredients in creating the relevant Digital Instrument = hash of certificate of authenticity + meta data e.g. geolocation/source + Time stamp. Energy Attribute Certificates that are verified and evidencing clean energy already created is different from Carbon Credits that are based on something in the future not yet realised today.

when data is added to a blockchain, it cannot be changed, so it is important that the data that is recorded on a blockchain is accurate and correct. This essentially protects the data's security therefore enabling organisations from multiple jurisdictions to work together more directly and more efficiently, hence removing the need for intermediaries and allowing data to be shared more efficiently. One of the most impactful uses of blockchain technology in climate change mitigation lies in carbon credit trading. Carbon credits are tradable certificates representing the right to emit one metric ton of carbon dioxide or an equivalent greenhouse gas. However, whilst these credits play a crucial role in reducing emissions, the existing system is often criticised for its opacity and inefficiency.

Blockchain technology can address these challenges by creating a transparent and tamper-proof ledger for carbon credit transactions. For instance, projects such as ClimateTrade and IBM’s blockchain-based carbon credit marketplace enable direct transactions between carbon offset providers and buyers. Such platforms ensure accurate tracking of emissions reductions and prevent double counting, thereby enhancing the credibility and efficiency of carbon markets, including:

· renewable energy adoption - the renewable energy sector faces challenges related to energy distribution and grid inefficiencies. Blockchains can facilitate peer-to-peer (P2P) energy trading where households with surplus solar energy could sell it directly to neighbours. Projects such as Power Ledger and Brooklyn Microgrid exemplify how blockchain can decentralise energy markets, so empowering consumers and incentivising renewable energy adoption. Furthermore, blockchain-powered platforms can enhance the traceability of renewable energy certificates (RECs), ensuring that the energy claimed as “green” is genuinely sourced from renewable facilities. By providing a transparent system for tracking energy production and consumption, blockchain technology fosters greater accountability in renewable energy initiatives.

· supply chain transparency - global supply chains contribute significantly to greenhouse gas emissions. Ensuring transparency in supply chain operations is critical for reducing environmental impacts. Blockchain technology can provide a digital ledger to track products from origin to end-consumer, offering verifiable information about their carbon footprint. For example, IBM’s Food Trust leverages blockchain to enhance supply chain transparency in the food industry whereby reducing waste and inefficiencies. Similar initiatives can be extended to other sectors, such as fashion and electronics, to promote sustainable practices and inform consumers about the environmental impact of their purchases.

· climate finance - in the process of financing climate projects, various parties, ranging from governments to private investors, are frequently involved but this can occasionally result in inefficiency and a lack of accountability. Through the facilitation of direct transactions and the provision of transparent records of money distribution and utilisation, blockchain technology has the potential to simplify climate funding. One example of how blockchain technology may be used to promote climate funding is the United Nations Climate Chain Coalition. By establishing a system that is both decentralised and transparent, blockchain technology ensures that money is allocated to the projects and goals for which they were intended, hence lowering the likelihood of mismanagement or corruption.

In addition, applications of sustainable development include:

· promoting circular economy - the circular economy aims to minimise waste and make the most of resources. Blockchains can facilitate this by creating digital records of product life cycles, enabling effective recycling and reuse. For instance, companies like Circularise use blockchain to enhance transparency in the plastics industry, ensuring that materials are responsibly sourced and recycled. Blockchain also supports tokenization, where recyclable materials are assigned digital tokens that can be traded or redeemed.

Source: Plastic Bank

Plastic Bank, which was founded in 2013, uses blockchain technology to create tokens to incentivise recycling and waste management efforts, fostering a more sustainable economic model. To date it has encouraged communities globally to collect and recycle over 7 billion plastic bottles.

· empowering communities - blockchain technology can empower marginalised communities by providing them with access to financial services, secure land records and sustainable livelihoods. For instance, in regions where land ownership is disputed or undocumented, blockchain can offer a transparent and tamper-proof registry of land titles. This reduces conflicts and ensures that communities have legal rights to their land, enabling them to access resources and opportunities. Similarly, blockchain-based platforms such as BanQu connect small-scale farmers with global supply chains, ensuring fair compensation and promoting sustainable agricultural practices.

· monitoring and reporting SDG progress - achieving the United Nations Sustainable Development Goals (SDGs) requires robust monitoring and reporting mechanisms. Blockchain can streamline this process by providing a transparent and immutable record of progress. For example, blockchains can track metrics such as renewable energy production, water usage and waste reduction in real time. By integrating these metrics into a decentralised system, stakeholders can assess progress towards SDG targets with greater accuracy and accountability.

However, despite its potential, blockchain technology faces challenges that must be addressed in order to realise its full impact on climate change and sustainable development. Blockchain networks, particularly those using proof-of-work (PoW) consensus mechanisms, are energy-intensive, therefore transitioning to more sustainable consensus algorithms, such as proof-of-stake (PoS), is critical to mitigating blockchain’s environmental footprint. As blockchain adoption grows, ensuring scalability whilst maintaining performance and security is essential, and clear regulatory frameworks are needed to promote innovation whilst addressing potential risks, such as fraud and misuse. Finally, educating stakeholders about blockchain’s benefits and building user-friendly platforms are crucial for widespread adoption. Essentially, can blockchain truly drive sustainability, or is it merely another tech mirage? Certainly, the technology is being hailed as a revolutionary force in climate change mitigation and sustainable development - from carbon credit trading and peer-to-peer energy markets to transparent supply chains and climate finance, its potential seems limitless. But is it truly a sustainable solution, or simply another layer of digital complexity? Whilst blockchain’s decentralisation promises greater transparency and efficiency, its own environmental cost - particularly in proof-of-work (PoW) systems - undoubtedly raises a paradox. Therefore, can we really fight climate change with a technology that itself consumes massive energy, or will innovations such as proof-of-stake (PoS) and carbon-neutral blockchain projects tip the scales toward sustainability?

Furthermore, and beyond any concerns regarding energy, blockchain’s promise of democratising access to sustainable finance and empowering communities faces another challenge: adoption. Will industries and governments embrace it for genuine impact, or will regulatory roadblocks and corporate interests dilute its potential? Moreover, corporations are increasingly leveraging blockchain for ESG goals, and this a step toward true sustainability, but it could equally just be greenwashing in digital disguise. Blockchain could disrupt entrenched power structures or reinforce them by handing control of sustainability metrics to a handful of tech giants. Ultimately, is blockchain the missing piece in the sustainability puzzle, or are we placing too much faith in a technology that still has its own existential contradictions? Hence, the answer may lie not just in how it is used, but in who controls it…

Digital Finance is the intersection of the Law, Finance and Technology, and perhaps the answer requires a wider view beyond just technology: Dr Robert Barnes, Chartered FCSI(Hon), Co-CEO BPX an advisor to C:Pesa on Trading & Digital Finance in a recent paper ‘ The voice of global digital finance at Parliament’ said: “UK’s Digital Finance capabilities are ripe to address ESG and Sustainability challenges highlighting the potential for a new global market for Digital Energy Attribute Certificates, e.g. C:Pesa DIGIRECS®, real time 3rd party certification to achieve Net Zero on Electricity. Recent UK legal moves make it possible for Finance Professionals to embrace truly digital-first market architectures and enable adoption of Digital Assets by Firms & Fund Managers using new UK products and marketplaces that can serve them.” Clearly this is topic that we need to address in another article….

This article first appeared in Digital Bytes (1st of April, 2025), a weekly newsletter by Jonny Fry of Team Blockchain.