Dr Jane Thomason of Fintech Worldwide explains how advances in digital technology can be harnessed to meet the Sustainable Development Goals
There is no doubt of the potential of technology to be harnessed for social benefit. However, there needs to be a global collaboration to make this a reality. We need to catalyse the partnerships between disparate groups that will result in scalable digital impact. To address this gap, Fintech Worldwide held the first Digital Impact Summit in London on 11 November, 2019. This brought together people from technology, government, industry, NGOs, startups, investors, academics and students to learn, network and be inspired about the opportunity for digital transformation and social impact. It was a powerful way to catalyse new learning, networks and future action.
Blockchain was highlighted as one of the technologies that will accelerate progress towards the SDGs. Despite some negative sentiment stemming from speculative cryptocurrencies, the dark web and initial coin offerings, blockchain has a lot to offer.
Here are just a few of examples of how blockchain is already being used for social and environmental impact:
Blockchain-based digital identity can unlock many barriers faced by the poor, as well as facilitate greater economic growth through ease of transactions. Once a person has an identity, they can potentially have access to a range of services. Humanitarian organisations, like the World Food Programme, are deploying blockchain in refugee camps to address a multitude of issues beyond digital identity: cash transfers and remittances, integrity of donor fund flows, property registry, employment rights, human trafficking, education and asylum-processing.
In agriculture supply chains, AgriDigital has used blockchain-enabled technology to create globally frictionless systems for the grains and cotton industry. AgriDigital ensures farmers continue to own their commodity right up until the moment they are paid, solving the problem of matching delivery to payment and opening up flexible financing options.
With blockchain, someone from a village can buy small solar panels and plug them to an off-grid network to produce electricity for their community
Poor-quality medicines are a major public health threat, and blockchain advances in medical supply chain management, such as FarmaTrust, leverage both digital and data analytics to improve the tracking and authenticity of medicines and consistency of availability and quality.
Blockchain is also being used to unlock capital to meet the Paris Agreement. At the UN General Assembly this year, the Sustainable Digital Finance Alliance and the HSBC Centre of Sustainable Finance launched Blockchain Gateway for Sustainability Linked Bonds, which outlines how emerging technology can enable the green bond market to scale dramatically from 2% of the current trillion-dollar bond market. The report points to a future where the current reporting burden is alleviated to make the bond market far more efficient and accurate so that it is better able to lead the transformation.
The other climate opportunity is at the community level, facilitating the installation of small-scale distributed energy systems. The price of solar panels has dropped more than 80% over the last decade. With blockchain, someone from a village can buy small solar panels and plug them to an off-grid network of cables in order to produce electricity for their local community. Smart contracts allow individuals to buy and sell solar energy using digital tokens that can be redeemed for a local cryptocurrency. For example, startup Azuri produces low-cost solar panel solutions for off-grid areas in rural Africa, bringing clean energy to markets where the only option is highly polluting kerosene. Blockchain can aid financial exclusion and poverty, with digital currencies able to provide widespread access to financial services, providing traceability and efficiency in disbursement to connect with the large segments of rural populations that are unbanked. Among the financially excluded are migrant workers and their families in their home countries. Current remittance processes are slow and expensive, penalising the most vulnerable. For example, the Philippines receives about $30bn in remittances a year. Coins.ph provides Filipino users a mobile, blockchain-based platform to allow them to send money at a more affordable and faster rate.
These are great examples that show the potential of blockchain to accelerate the achievement of the SDGs, the most important social and environmental changes for the planet by 2030. But how do we get there?
There are technological and regulatory challenges to be addressed. We are seeing a trade-off between the security benefit of fully decentralised blockchains and the efficiency and scalability of private blockchains, with industry pivoting to a growing interest in the latter. Regulators continue to struggle with the decentralisation of the financial system and the ability to manage economic stability and protect consumer interests in the event of this occurrence. But problems such as the big issue of legal language, cross-border jurisdiction and territoriality for smart contracts, and the fact that no party is ultimately responsible for the ledger are being solved as the technology develops.
There is room to be optimistic. People count and money talks. Millennial investors are demanding change
However, there is room to be optimistic. People count and money talks. Millennial investors are demanding change, 67% of millennials believe investments “are a way to express social, political and environmental value”, and 90% of millennials want to direct their allocations to responsible investments. When investors demand profit and purpose and intentionally invest their money into things that generate social and environmental returns, we have a chance.
We need to lean in, get engaged, and make sure we do not squander this one in a millennium opportunity to effect rapid and transformational social change.
Dr Jane Thomason is CEO of Fintech Worldwide, the world's leading network for fintech, blockchain and digital impact, and was recognised in Forbes Magazine (2018) as blockchain’s leading social development evangelist.
This article is part of our in-depth Decade of Delivery commentary from sustainability leaders. To view all articles, please see our January 2020 digital magazine.