The European Union has implemented a new, much more stringent set of regulations around mandatory corporate reporting, and companies could turn to an unexpected place to help them meet the new requirements.
According to Quality Digest, the EU has implemented the Corporate Sustainability Reporting Directive, or CSRD. It requires companies to provide in-depth reporting on information about their company beyond just their financial status. Things like respect for human rights, dealing with corruption and bribery, diversity, social responsibility, and treatment of employees will all now be monitored, tracked, and reported.
It also requires companies to report financial information on risks created by climate-related events like flooding, hurricanes, and droughts, and on their effects on the environment through things like carbon emissions, pollution, deforestation, and human rights violations.
In other words, it should make it harder for companies to hide their misdeeds, especially with regard to the environment, because it also requires that all sustainability reports be audited by third parties. The information found in those reports is also to be fed into a central system, where it can be more easily accessed.
This will allow investors (and the general public) to find out how ethically sourced goods actually are, and make more informed decisions.
Faced with this increased scrutiny, companies are turning to blockchain for potential help. In this case, per Duke University, blockchain is defined as "a database that is shared across a network, thereby allowing users who do not necessarily trust each other to share the responsibility of database management without recourse to a central validation authority."
In other words, once something is in the database, it cannot be removed or altered.
This could theoretically allow regulators, auditors, and even competing businesses to review and add things to the database, allowing it to be tracked, monitored, and updated without interference from the company it's regarding.
It's not without risks; like most things associated with higher-level computing, blockchain requires a significant amount of power, and that is likely to increase substantially if fully implemented here, but the energy impact could be offset by the fact that it will force companies to be more mindful of their own carbon footprints.
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This level of transparency could go a long way toward forcing less ethical companies toward maintaining honest climate goals, and keeping them from trying to greenwash their unethical practices. It will also make it easier to support more eco-conscious brands both in Europe and abroad.
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