February 2023
by Anusha Ali Kazani
The next chapter of the internet is here and is rapidly evolving. The internet's future is being predicted to be in Web3. The future of this new blockchain-based web includes decentralized autonomous organizations [DAO's] [1], NFTs, cryptocurrencies and other functionalities.
The emergence of new tools and techniques in the areas of finance, economics, governance, and innovation has been facilitated by advancements in Web3 over the past several years. There are many opportunities to use Web3's characteristics to make an impact globally.
There has been a significant cultural shift in recent decades regarding the place of corporations in society. In the past decade, businesses have emerged as a result to rising conflicts related to globalization, the environment, generational equity, and income inequality with the constant business evolution, digital transformation, and rise of technology, the world is set to revolutionize and create a path for new possibilities.
The application of blockchain technology, a crucial component of Web3, has the potential to have a massive effect on the environment. A single bitcoin is thought to require between 86,000 and 286,000 kWh of energy to mine[2]. A 1,000-watt appliance uses one kWh of energy in more than an hour. To put it into perspective, the average American home uses that much energy in 59 days. Between 240,000 and 300,000 bitcoin transactions are transmitted via the network on an average day.
The amount of energy needed to operate and protect blockchain networks leads to massive electricity consumption. A huge amount of processing power is needed for mining activities, which is the act of validating transactions, which in turn uses a lot of energy. This is especially true for proof-of-work (PoW) blockchain networks like Bitcoin, where miners compete to solve complex mathematical puzzles in order to validate transactions and earn rewards. The use of cryptocurrencies and other digital assets, which can result in a rise in demand for mining equipment and other technology with potentially harmful environmental effects, is another potential environmental risk related with Web3.
For instance, the manufacturing of mining equipment uses a lot of energy, and the disposal of used equipment can pollute the environment, this demonstrates a major sustainability issue associated with the end-to-end functioning of Web3. Furthermore, supply chains and logistics may employ more transportation and shipping as a result of using blockchain technology and smart contracts, which might raise the emission of greenhouse gases and other pollutants. This has led to conscious investors coming to the forefront to seek more sustainable options such as the rise in demand for "greener" cryptocurrencies, which is a result of the increasing pressure on bitcoin miners throughout the world to use more renewable energy.
In addition to greener currencies, many corporates are seen to have taken a proactive approach by investing in the creation of more energy-efficient consensus algorithms and the utilization of renewable energy sources for mining. Today, sustainable growth is considered as the foundation of any business structure, irrespective of the industry and thereby complimenting digital transformation, Web3 is deemed to be a game-changer that has the potential to be a catalyst for accomplishing the United Nations Sustainable Development Goals (UN SDGs), particularly in the context of conscious growth and development.
Web3 has tremendous potential to transform the way that people and organizations work toward achieving the SDGs, whether that effort is focused on eradicating poverty, combating the climate crisis, creating more and better infrastructure, defending human rights, or advancing good governance.
There are numerous instances of Web3 being utilized for climate action, including projects supporting carbon-backed currencies like Klima, that are able to offer financial incentive mechanisms required to significantly reduce greenhouse gas emissions through carbon positive business practices.
When talking about blockchain ecosystems, one may observe 5ire, which is a wellacclaimed decentralized, sustainable open source blockchain with smart contracts and ESG grading services. Its blockchain ecosystem is designed to support the UN 2030 Agenda for Sustainable Development. Or perhaps the Regen Network, which is investigating several ecological asset classes and how they might aid the growth of regenerative finance. These are all illustrations are a few of the many initiatives undertaken across the globe in an attempt to enhance Web3 services that are aligned with the commitment to achieving SDG's.
Web3 is a suite of technologies and trends that open new possibilities for how we can achieve the global goals. Through "openness" and decentralization, Web3 aims to transform financial, economic, governance, and innovation systems. It offers a read/write/own version of the web where people have a financial stake in it and greater control over the online communities that they are a part of. Blockchain networks add a layer of governance to the existing Internet and have the ability to alter social and market dynamics. Web3 can be used for the benefit of the environment.
In order to trace the flow of commodities and resources in supply chains, blockchain technology can be utilized to produce transparent and unchangeable records of transactions. This can assist in reducing waste, promoting sustainability, and identifying potential areas of improvement. There are many ways where the technology can be used to spread awareness in sustainability. For example, Carbon footprints, which are used to offset the emissions of carbon dioxide and other pollutants by our actions, can be created and reduced digitally using blockchain technology. Blockchain technology can be used to build networks and platforms that connect producers of renewable energy with consumers, promoting the usage of clean energy while reducing the use of fossil fuels.
Sustainable Development Objectives (SDGs) have been a popular subject of debate in company reporting[3]; 72% of global corporations now include the goals in their yearly corporate or sustainability reports, and 50% of companies have designated priority SDGs. Today sustainability has become the talk of the town, from governments to regulators to corporations to society at large, there are commitments being made across industries and geographies that are focused on addressing the climate crisis, sustainability issues, and protection of human rights. While sustainability is added as a mandatory agenda for the large corporation, it is an alarm for the rest of us to take urgent action and encourage business growth based on the foundation of SDGs.
It’s time that society at large strives to create environmental and social value through inclusive employment practices, restorative operating methods, products and services that help people contribute to the SDGs, and other virtuous endeavours. Some of the steeping stones to begin with include having the right set of policies in place that are created keeping in mind fundamental aspects of SDGs, due diligence conducted considering various ESG parameters to promote SDG and with technological advancement of Web3 it is a goal that can soon be accomplished!
[1] For more information on DAO’s, you can refer to my previous article [http://alpha.cmiandco.com/blogs/decentralizedautonomous- organization/]
[2] https://minerdaily.com/2021/how-much-power-does-it-take-to-mine-a-bitcoin/
[3] https://www.pwc.com/sdgreportingchallenge
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