The Benefaction Of Blockchain In Sustainability Accounting

Blockchain technology is, without a second thought, the most talked-about topic of this decade and is even more lionized in the landscape of accounting and financial services. Decentralized by nature, it can democratize the overall assessment and reporting beyond the self-heed of the company-paid consultants and management officials to encompass holistic masses directly linked to the corporation through an unmeasured value chain. However, even with all of the investment, excitement, and analysis, a major portion of the hyped conversation has tended to revolve around how blockchain technology can eventually replace the core functionalities of finance and accounting. Without lurking away from these conversations, inculcating the ramifications of regulations such as GDPR on blockchain execution as well as the disruption of financial services, there are several other precincts where blockchain can indubitably have a greater impact and one such are that I am covering in this article is- sustainability accounting.

An Introduction To The Scope Of Blockchain Technology In Sustainability Accounting

Sustainability has traditionally been a grueling area specifically for accounting practitioners and management professionals seeking to devise clearer insights and add value for the clients. A bucketful of regulatory frameworks, differences & variations in the way data is reported and revealed across multiple industries and the shortfall of transparency with regards to how the pieces of information are compiled and analyzed shell out to the difficulties associated with it.

Having said that, a number of exchange-traded funds (ETFs) positioned around environmental, social & governance (ESG) issues and sustainability affairs now counting to hundreds and with billions of US dollars invested toward sustainability activities, this is most assuredly not a theoretical conversation but a deeper concern to ponder over.

In spite of this swelling market and investor interest, still and all, sustainability accounting remains somewhat like a task in progress.

On top of this, Blockchain technology is already having a dramatic effect on the overall functionalities of traditional accounting but the interdependence between the blockchain, sustainability, and accounting still remains luminary of additional analysis.

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Transparency Will Lead To Better Reporting

One of the most frequently cited and biggest issues associated with sustainability accounting is that the enterprises do not necessarily distribute the nonfinancial data with the similar efficacy as the financial information.

Blockchain can virtually and by default demands each and every member of the network to communicate in a transparent and near continuous manner.

Essentially, this would mean that the data linked to any financial orientation, sustainability initiatives, as well as those enclosing operational angles can be unveiled, thereby decreasing some of the inscrutability often connected with sustainability accounting.  

Standards Can Be Constructed On The Blockchain

There exists a handful of frameworks in the marketplace today that can go all out with a vision to bridge between financial results and sustainability projects. The major concern here is not the lack of standards, but rather the unavailability of the legal agreements as to what should inculcate the standards.

Smart contracts, on the other hand, in and of itself, are capable of representing a terrific initial step toward formulating executable and standard protocols for the businesses to thrive-- and sustainability accounting is no exception.

Sustainability Accounting Has A Direct Revenue Opportunity

In the face of an expanding technological integration, the financial services firms and specifically the accounting firms are leveraging the power of automation, blockchain, and artificial intelligence to grow further and are continuously watching out for new revenue lines.

Also Read Leveraging the power of Blockchain with Data Science

The growing curiosity of blockchain in the field of sustainability accounting, in addition to illustrating the reporting changes, is also a chance and a great opportunity for the forward-looking firms.

Summing up to this, blockchain technology is already driving visible changes in the accounting and sales sector and has opened new doors for the enterprises willing to embrace them. What do you think about the contribution of blockchain in sustainability account? Let us know! We’ll be happy to hear your thoughts as well.