Governance and Sustainability

David Crowther,Shahla Seifi

• Éditeur: Emerald Publishing Limited
• Année: 2020
• ISBN:
  9781800431539
• Sujet: Business
• Sous-sujet: Business General

Both firms and governments are increasingly taking steps to address sustainability, and at the same time the issue of governance has become more prominent due to the numerous problems in public and business life which have manifest failures in governance. As initiatives for sustainability increase in importance and prominence, so has the need for governance of sustainability plans and actions.This volume of Developments in Corporate Governance and Responsibility responds to that need and focuses on the relations between governance and sustainability. The book looks at what has been happening in various locations around the world, identifying varying approaches and examining whether and how a best practice could be developed. Gathering contributions that are varied in scope and produced by authors from around the world, it provides a rich picture of the progress (or lack of progress) being made in a wide array of contexts.For its depth and broad scope, Governance and Sustainability is a must-read for researchers, students, and practitioners interested in sustainability and corporate social responsibility.

PART I

ADDRESSING SUSTAINABILITY

Does Blockchain Technology Drive Sustainability? An Exploratory Review

Asanga Jayawardhana and Sisira Colombage

Abstract

Blockchain technology is an extension of distributed ledger technology and it is used in cryptocurrencies. Many studies describe blockchain technology and cryptocurrency is an application of it in a very broad sense. Blockchain technology has several applications. Some of these applications could have direct or indirect relevance to either or both pillars of sustainability advocated by Crowther, Seifi, and Wond (2019). Extending to cryptocurrencies like bitcoin, one possible connection to sustainability may be the reduction of the use of paper for printing currency notes, which can save forests. Furthermore, the growing cryptocurrency market attracted the investors to focus on the price fluctuations but making them forget about the terrifying carbon problem associated with cryptocurrencies. However, this possibility has not been demonstrated anywhere so far. The issue examined here is how blockchain technology can be used for solving sustainability problems. We initiate a qualitative study of the blockchain technology/cryptocurrency and sustainability using the twin pillars of sustainability: (1) responsibility, (2) governance. An exploratory review linking blockchain technology/cryptocurrency and sustainability and its two pillars revealed many actual and trial applications by corporates as CSR initiatives and other novel programs by various agencies in various countries. In governance, corporates use the CSR route to address sustainability issues. However, no definition is an available linking cryptocurrency, blockchain technology, and sustainability and we developed a definition to fill the gap. This paper stresses that the sustainability perspective has not been used to develop the cryptocurrency definition, but rather technological and legal perspectives have employed.

Keywords: Blockchain technology; cryptocurrency; sustainability; governance; responsibility; Corporate social responsibility

Introduction

One of the Brexit statements of United Kingdom came in August 2017. The position paper proposed that to manage its border with Ireland, technology-based solutions like blockchain could be implemented to make it easier to comply with customs procedures. Blockchain technology has not so far been implemented successfully in supply chains, although it has been strongly suggested by many scientists. It is much harder for customs offices to adopt it. Coding of a seamless and frictionless border to comply with basic custom procedures is not easy. Capacity and time factors make technological solutions almost impossible. Regulatory response to blockchain technology had so far been less satisfactory and, sometimes, even negative. Lack of research has stood in the way of building standards for the technology and cryptocurrencies by regulatory frameworks of countries. Many firms do not want a very high level of transparency offered by the technology, as they may not want to expose their weaknesses and may lose a competitive edge if all information is available to anyone.

The UNDP Sustainability Development Goals (SDG) recognizes environmental, social, and economic types of sustainability. In this paper, environmental, social security, and economic empowerment of poor communities are considered for sustainability discussions. Thus, the topic narrows down to how blockchain technology can be linked to these three aspects of sustainability. On the other hand, there are other problems of increased energy consumption and waste generation leading to CHG emissions, as was discussed by Giungato, Rana, Tarabella, and Tricase (2017). Also, cryptocurrencies can be used as Eco-coins to finance environmental sustainability projects, as some works suggest.

One of the many fields of responsibility and accountability for sustainability is corporate social responsibility or CSR. The possibility of using cryptocurrency for CSR (CSR Cryptocurrency) was demonstrated in Australia, as per a report by Danigelis (2018). An Australian startup, NaturesCoin, was reported to be developing a new blockchain cryptocurrency, which can be used for converting CSR expenses into liquid assets, which can be used for reporting to the market. The company, NaturesCoin, was established in Brisbane in November 2018. Its cryptocurrency was scheduled to be launched in late 2018. Projects meeting standards the UN Sustainable Development programs could be supported by the NaturesCoin cryptocurrency. Corporations and communities within this group can then join and launch programs of their choice financed by cryptocurrencies. In this manner, water, land, forest, etc., are tokenized by the blockchain. Security tokens can be exchanged in regular security exchanges. These tokens trigger regular utility tokens for buying and selling products and services related to sustainability. A similar attempt in Hull, the UK, for socially good deeds has attracted national and international attention (Bird, 2017).

The above discussions point to the distinct possibility of using blockchain technology (cryptocurrencies) in many ways related to sustainability. However, there had not been any review specifically aimed at examining the progress and status of linking blockchain technology/cryptocurrency with sustainability. This chapter aims to fill this knowledge gap using an exploratory literature review, especially focusing on the two pillars of sustainability, namely responsibility and governance.

Blockchain Technology to Cryptocurrencies

What is Blockchain Technology?

Historically, blockchain technology is related to computer science. The term is related to cryptography and data structures. The early form was a hash tree, called Merkle tree after it's so that nothing was altered or changed during transfer. Also, no false data were sent. Thus, it was used to maintain and prove the integrity of the data being shared. A diagram of this is reproduced from Lafaille (2018) in Fig. 1. In 1991, a secured chain of blocks was created from Merkle's tree. This consists of a series of records, in which each is connected with the one before it serially. The newest will contain the complete history of the chain. This was the blockchain technology. A distributed blockchain was conceptualized by Satoshi Nakamoto in 2008. The system was highly secure and consisted of a history of data exchanges utilized a peer-to-peer network to time stamp and verify each exchange and was capable of autonomous management without the intervention of a central authority. This was the beginning of the first cryptocurrency, Bitcoin later followed by several others.

Fig. 1. Blockchain Technology Tree. Source: Adapted from Merkle (1979) for this study.

What is Cryptocurrency – Connect the Two

Cryptocurrencies use blockchain technology, one of the several applications of digital ledger technology. This removes the third-party requirement. A blockchain is a database of every transaction that has ever happened using a particular cryptocurrency creates a new database of a blockchain. Blocks or groups of information are added to the database one by one. This forms a very long list. Thus, a blockchain becomes a linear chain of blocks. The information added to the blockchain cannot be deleted or changed at any time. It is visible to all on the blockchain forever. The whole database is stored on a network of thousands of computers called nodes that are used to store the whole database as a distributed system. New information can be added to the blockchain only if more than half of the nodes agree by consensus to its correctness and validity. The consensus concept differentiates cryptocurrency from normal banking. In banks, the verification process of the staff is used to ensure the correctness and validity of the transaction (King, 2019).

In actual operation, the following processes (King, 2019) take place:

• A owes B 10 Bitcoin (BTC). A announces sending 10 bitcoins to the ecosystem.
• Miners encrypt the information once the public key is available (hash). Information on other transactions are added to this information and hashed the new data. When the system received more information, the hash function operates to generate a block.
• The miners need to guess the encrypted code or the newly generated hash in the next phase and compete with others. This entire operation should perform, prior to the creation of a new block in the existing blockchain system. The rightful miner, who guessed the hash code properly, gets the opportunity to the new block addition.
• At this stage, rest of the nodes will verify the validity of the new block to check the accuracy of the cryptography. Simultaneously, nodes crosscheck the entire blockchain to ensure the perfect match.
• Thus confirmed, the transaction is validated, and B gets 10 BTC from A.
• Miners use much computer power. They get the rewards for their work. Moreover, Miner who confirmed the Bitcoin initially will be rewarded from Bitcoin. This is the reason for the term, mining. Instead of mining real assets like gold, miners are digging for new Bitcoin.

Sustainability

What is Sustainability?

Sustainability means the ability to continue uninterrupted over the long term. There are many types of sustainability: environmental, economic, social, etc. We talk of a sustainable environment, sustainable business, sustainable technology, sustainable society, etc. Sustainability is often linked to stability. However, stability denotes a more stationary condition. However, the more common application of the term is in relation to the environment. The environment includes biodiversity, the earth, climate, energy, and everything around us. The item 10 of the resolutions of the 2005 World Summit on Social Development stressed on environmental, economic, and social aspects of sustainability (UNGeneralAssembly, 2005). These three constitute the three types of sustainability.

As this chapter hopes to explore the subject at hand by focusing on two pillars of sustainability, i.e., responsibility and governance, a grid was created onto which the real-world examples of sustainability can be mapped out, in order to further understanding of these cases as well as how sustainability is built and furthered in these cases. The grid emphasizes clearly that the application of blockchain enables to find the best ways to utilize resources effectively, without compromising the future ability to meet their need; to meet sustainability. Moreover, the grid enables to identify the capacity and the application ability in the economy and this grid has been outlined in Fig. 2.

Fig. 2. Sustainability Grid. Source: Authors' own.

According to Crowther et al. (2019), sustainability landscape incessantly evolves and the role of the government, sectors, organizations, and citizens is changing accordingly. This idea is central to develop the Grid and we identified the changes using the blockchain technology leads to meet the sustainable and governance goals of an economy. By using the three types of blockchain access; public, hybrid, and private sector can ensure the responsibility and governance (Haldenby, Mahadevan, Lee, Chan, & Del Vecchio, 2017).

The blockchain can be used in three different ways: public, private, and hybrid (Jayachandran, 2017; Mougayar, 2016). The classification is based on the access, characteristics, and the centralized or decentralized nature of the blockchain system. In a public blockchain network, all the public and private parties can participate in the network due to the decentralized nature. Inherently it is a transparent network, which is completely open for anyone and encourages more participant to join (Jayachandran, 2017). A private blockchain is permissioned and a centralized network, which required an invitation to join. These networks are comparably speeding than the public blockchain network and secret and trusted data can be maintained through this network (Haldenby et al., 2017; Jayachandran, 2017). Hybrid blockchain attempts to use the best parts of both public and private blockchain networks (Mougayar, 2016). It is consortium by nature and partly decentralized (Mougayar, 2016). Due to the customization, the members of the hybrid blockchain network can decide who can participate in their network. This enables most companies to treat their stakeholders in the best way while minimizing the inherent disadvantages of public and private blockchain networks.

This grid can be used as a tool to more carefully analyze and understand some of the cases that will be explored through this research. The main industries of the global economy have been plotted...

Table des matières

• Cover
• Series Editor
• Title
• Copyright
• Contents
• List of Contributors
• The Development of Sustainability Initiatives
• Part I Addressing Sustainability
• Part II The Governance of Sustainability
• Index