The rapid growth of environmentally conscious investing has placed blockchain technology under the spotlight. With a predicted $33.9 trillion in global environmental, social, and governance (ESG) assets under management (AUM) by 2026, according to a late-2022 report from PricewaterhouseCoopers, blockchain companies must adopt ESG-friendly policies to attract institutional investments.
In an attempt to steer the crypto industry towards a more sustainable future, experts engaged in a roundtable discussion at the recent Consensus conference. While some critics argue that ESG compliance is too difficult to achieve in the crypto sector, the general consensus was to embrace the movement rather than avoiding it.
There was a strong belief among participants that promoting the adoption of Proof-of-Stake (PoS) consensus mechanisms would be an effective solution. PoS allows users to pledge their assets as transaction validators, reducing the environmental impact typically associated with Proof-of-Work (PoW) systems. Interestingly, more than half of the 165 attendees surveyed at the conference believed that PoS was the superior option to address climate change.
However, for this transition to happen, the blockchain industry must first become more meaningful to critical stakeholders in Washington D.C. One participant, with prior experience in the U.S. capitol, suggested that the discussion about PoW vs PoS would not necessarily resonate with everyone in the political sphere. Instead, the blockchain sector should focus on practical applications that solve real-world problems, bridging the gap between technology and politics.
Although conference attendees shared differing opinions on mining versus transaction validation, they generally agreed on the communication gap between the crypto industry and regulators. To see progress in the adoption of ESG standards within the crypto sector, it’s vital to establish a mutual understanding with those on Capitol Hill. Without a common language and shared objectives, it may be challenging for the industry to agree on ESG mandates.
In conclusion, considering the growing importance of ESG in the investment world, blockchain companies that prioritize and adopt environmentally sustainable policies might stand a better chance of securing institutional investments. Increasing the adoption of PoS consensus mechanisms is just one way to address climate change concerns among stakeholders. However, to accomplish this, the crypto industry must find common ground with regulators and political decision-makers to pave the way for a sustainable future.
Source: Coindesk
