Could blockchain be an enabler for climate action?

Blockchain is being considered as a solution for managing transactions in carbon markets. What is the impact for businesses and CPAs? We hosted a panel to learn more.

Blockchain could begin an economic revolution, experts say. It initially caught attention as the technology supporting the digital currency Bitcoin. Now it’s being applied in the environmental space, most recently gaining recognition from the United Nations Framework Convention on Climate Change for its potential to boost climate action.

As countries continue their work on implementing the Paris Climate Change Agreement, the question remains: could this decentralized, peer-to-peer ledger technology transform carbon markets by providing a transparent and reliable way to track carbon emissions and credits?

Chartered Professional Accountants of Canada, in collaboration with the University of Toronto’s Environmental Finance Advisory Committee (EFAC), hosted an expert panel session for students and members of the business and finance communities to find out.

Blockchain is gaining momentum

Today’s blockchain projects are widespread and involve an estimated $1.5 billion in venture capital investment to date. “Eighty per cent of the world’s banks have invested in a project in blockchain technology. This used to be an estimated number for the year 2020,” stated Illiana Oris Valiente, managing director and global blockchain innovation lead at Accenture.

Valiente is a CPA, the founder of ColliderX Blockchain R&D Hub, and one of Canada's leading blockchain experts. She defines blockchain as a distributed database system that maintains and records data in a way that allows multiple stakeholders to share access to the same information. It offers reduced transaction time and fees over traditional systems.

Valiente believes that due to its substantial intellectual capital, Canada is well positioned to be a leader in blockchain implementation.

Illiana Oris Valiente, CPA of Global Blockchain presenting blockchain technology

Should businesses pay attention and how should they begin?

Valiente suggests that businesses evaluate existing technological processes that use older technology and decide what is and isn’t adding value. This is how companies can make this global conversation relevant for them.

Carbon markets: Now and next steps

Jessica Butts, director, Delphi Consulting, talked about carbon pricing efforts globally. “With China preparing to launch the world’s biggest carbon market, we will now have upwards of 80 per cent of the world’s GDP covered by some form of a carbon price in the next two years.”

Crediting the Paris Agreement for driving much of the international political consensus around the need to address climate change, Butts believes the agreement will continue to serve as catalyst for broadening of existing carbon markets.

Canada is already fairly active in this area. Over 80 per cent of Canada’s economy has a carbon price.

Jessica Butts, Director, Delphi Consulting  presenting on Canadian carbon markets

How will carbon markets integrate with one another at international, federal and sub-national levels?

Some carbon markets, such as California, Quebec and, soon, Ontario (under the Western Climate Initiative), are connected through bilateral programs. However, questions remain about the interoperability of different carbon markets — blockchain could be a solution.

Could blockchain boost business response to the global climate crisis?

“Being able to move quickly to transform our global system is imperative to survive. Blockchain and other digital solutions provide a strong basis to achieve that goal. They offer huge potential; not just in changing our economy, but in changing how we work together,” says Tom Baumann, co-founder of ClimateCHECK, Collaborase and Xpansiv.

Blockchain will continue to evolve, but its applicability as a solution for climate action rests largely on the complexity, scale and urgency of climate actions that require transformative solutions.

Its potential use expands beyond mitigation (which includes carbon markets) and into enabling adaptation efforts as well. Blockchain could play a role in improved carbon emissions trading, other emissions trading and tracking, and supply chain transparency, among other issues, he noted.

Tom Baumann, Co-Founder of ClimateCHECK, Collaborase and Xpansiv presenting about blockchain on climate action

CPA Canada continues to generate dialogue in emerging areas relevant to the accounting profession

CPA Canada has identified sustainability as a strategic priority, and recognizes that climate change impacts strategy, competitiveness, risk management, stakeholder relations and business resilience.

In addition, evolving technology significantly impacts our members and businesses — as it relates to gathering, processing, management and assurance of information.

This event was the latest in a series of information sessions hosted by CPA Canada to bring members and stakeholders together to discuss emerging trends and issues in the business world and the related challenges and opportunities.