Future Ready Solutions for Carbon Emission Reporting

Today’s businesses are finding the need to capture and report their emissions data on required disclosures is increasing. Dragonchain offers technology capable of full-scope capturing, reporting, and accounting of carbon emissions to facilitate an efficient and provable workflow process along any value chain.

Recording of Emissions

Businesses that choose to follow the guidance provided under the greenhouse gas (GHG) protocol must report multiple levels of relevant emission data. Direct emissions (Scope 1) are the businesses own direct emissions. Scope 2 includes any emissions that have been produced as a result of the products or services the company provides. Perhaps the most difficult emissions to capture and record are Scope 3 emissions which include the emissions of the businesses’ products as well as other companies and consumers both upstream and downstream along the value chain.

Scope 4 Emission Reporting

Recently a new category has emerged deemed Scope 4. Although not an official category of the GHG protocol and not counted towards a company’s overall Scopes 1, 2 and 3 emissions reductions, Scope 4 captures emissions that have been avoided through innovation of company products and services. Scope 4 represents forward thinking about how to create new and sustainable products for the future.

Why should businesses report Scope 4 avoided emissions?

To put it simply, to capture innovation. Where Scopes 1,2, and 3 tell the negative story of a company’s emissions footprint, Scope 4 tells a positive story of innovation and the active reduction in carbon emissions.

For example, let's say a company manufactures lamps. They record their Scope 1 and Scope 2 emissions as well as the emissions from each lamp, the materials the lamp is made of, and the usage of the lamp by customers (Scope 3). In order to reduce these emissions, the company has decided to make a more efficient lamp. To do that, the company has to invest resources into research and development (R&D) to improve the efficiency and sustainability of their lamp. This additional investment of R&D results in an increase in the business’s overall emissions. However, the successful development of a more efficient and sustainable lamp may result in decreased emissions over the life of the lamp thereby avoiding the emission output of the inefficient lamp. Scope 4 captures these avoided emissions.

Circular Economy for Carbon Reduction

The emphasis on carbon reduction amongst businesses lends itself to a circular economy.

What is the circular economy?

In a linear economy, the manufacturing and consumption process is one way. In what is referred to as the take-make-use-dispose model, businesses take raw materials and convert them into a product. The product is consumed, and then disposed of. This process tends to be more wasteful and leaves valuable resources on the table that could be used in other production processes.

In a circular economy, manufacturers preserve the value generated from materials, energy, and labor by keeping products and materials circulating within the value chain so that they can be reused and recycled. An effective circular economy is much more efficient and enables businesses to make products quickly and in a cost-effective way.

Blockchain’s Role in Emission Reporting

Blockchain is the perfect tool to record a product's lifecycle. Blockchain provides a provable verification system and better supply chain transparency. Processes such as reverse logistics can include immutable proof of the repair and recycling of products as well as the sale and management of products and their emissions with blockchain.

Smart contracts can automate a workflow process between businesses and between businesses and consumers. In fact, blockchain can help incentivize sustainable activities that can be automatically awarded through the use of smart contracts.

Blockchain can also eliminate middlemen and unnecessary third-parties to reduce costs and inefficiencies for businesses.

Challenges of a Blockchain Technology in Emissions Reporting

The vast majority of blockchain solutions in use today are still in the early stages of development and have yet to gain much traction. Reasons for this are many but a myopic focus on financial applications, a lack of education on the true capabilities of the technology, and lack of interoperability and scalability are significant roadblocks in capturing and reporting emission data with blockchain technology.

Currently, businesses implementing a reporting solution must choose either a permissionless (public) blockchain platform or a permissioned (private) blockchain platform and neither offer an ideal solution.

Although permissionless blockchains are fully decentralized, transparent, and allow anyone to participate, these systems present security concerns that are particularly limiting for businesses.

Using a public blockchain is the equivalent of placing a businesses entire operational system, including proprietary data and smart contracts, in the public domain risking the exposure of sensitive data and business logic. Additionally, public blockchains do not allow businesses to adhere to CCPA, GDPR, or HIPAA regulations.

Permissioned blockchains address security concerns as they are private and are only available to ecosystem participants that have been permitted to join the network. Unfortunately, private closed systems do not offer transparency and a lack of interoperability makes it hard to share data across networks

Another roadblock to implementation is the energy consumption of the solutions tasked with capturing and recording emission data. Businesses must ensure the tools they use for capturing and reporting emissions data are energy efficient.

Additionally, the threat of inaccurate data entry known as the oracle problem creates a lack of thrust between physical assets and the digital system. It is important to establish provenance of products data from the physical world (e.g., from a human or sensor) to ensure that no malicious or incorrect data from the physical world are submitted to the blockchain.

Given all these challenges and a high development cost to implementation businesses have been understandably reluctant to use blockchain to document emissions.

Dragonchain Solutions for Reporting Carbon Emissions

Currently, the vast majority of emissions tracking and reporting products on the market are limited to Scopes 1 and 2. Businesses that report Scope 3 emissions rely on third-party estimations with no accountability. Scope 4 is so new that businesses don’t even know where to start.

Dragonchain’s technology provides the tools necessary for a robust platform to capture authentic Scope 3 emissions, in near real time, with auditable reports that can be analyzed and proven to interested parties.

As the climate conscious community becomes more aware of Scope 4 emissions, Dragonchain is well positioned to help businesses leverage blockchain technology to track, record, and report avoided emissions through automation with smart contracts and blockchains that are interoperable with artificial technology (AI) technology and Internet of Things (IoT) devices or sensors.

Hybrid Blockchain Platform

The Dragonchain hybrid platform provides the right balance of private and public blockchain protocols to at once secure data and improve the transparency, accountability and traceability of emissions without exposure of sensitive data. All private and proprietary data remains under the control of the business and only the proof of said data goes for decentralized verification by multiple public blockchains (Bitcoin, Ethereum, Binance Smartchain). Dragonchain is the only platform to offer an ESG scoring system measurable security of approximately $4 Billion USD every year for each transaction.

The separation of sensitive data and proof allow businesses to comply with CCPA, GDPR, and HIPAA regulations.

Interoperable and Scalable

Dragonchain’s line-of-sight supply chain management tools leverage our patented interoperability technology to easily integrate blockchain with any existing business system to capture copious amounts of data coming in from disparate systems all along the value chain.

There are no limits to the amount of data that can be captured and stored for current or future analytics. Businesses can retroactively analyze data that was previously deemed not needed but now presents a new element in their emissions recording process. This system offers businesses infinite scalability so that businesses can ensure their ESG scoring system is applicable as technology advances.

Secure

Our architecturally quantum-resistant platform offers unmatched security not seen with any other blockchain platform. Additionally, available quantum-safe encryption technology integrated at the core of the platform can secure data at rest and in motion.

Smart Contracts

Smart contracts can better calculate, track and report on the reduction of the carbon footprint across the entire value chain. Use of smart contracts will provide instant authentication, verification of real-time data and clear data records. Dragonchain offers bi-directional smart contracts that can fully automate any workflow process. Our patented Smart Contract Orchestration makes it easier for businesses to change, add or delete any step along a supply chain.

Human Behavior and Incentivization System

Dragonchain’s Behavior System offers businesses a competitive advantage that incentivizes suppliers and others along the supply chain to not only report data but to accurately report data. Our behavior system technology uses market-based incentives to reward individuals who reduce their carbon emissions. Additionally, public facing consumer forums can reward consumers behavior by incentivizing sustainability activities.

Energy efficient

Businesses concernes that the use of blockchain presents additional emissions output are addressed with our energy efficient platform. The platform infrastructure (including managed nodes), by default, is hosted in carbon-neutral facilities and the verification platform operates at just 43.77 kW/day on 2057 verification nodes, including Bitcoin and Ethereum combined. According to the latest report Dragonchain is operating at just ~0.05% network utilization. This means Dragonchain can verify approximately 34 million more blocks a day and operate at the same 43.77 kW/day.

For the first time businesses do not need to choose between sustainability protocols and profit objectives.

New Value Stream

Opening up data streams amongst all stakeholders will allow for more accurate corporate-level reporting and informed decision making for businesses and consumers.

Dragonchain incorporates complexity science with human intelligence, artificial intelligence, and proprietary algorithms for proof and quantum security. The cloud-base solution offers true transparency and connectivity with inventory management tools for consistent and accurate predictive analytics.

The system identifies hidden cost saving opportunities as well as provides optimization recommendations and billing organization.

Businesses can reduce inefficiencies, such as double counting or information asymmetries. This next evolution in the analytics continuum can reduce supply chain costs by up to 30% while businesses maintain compliance in emission reporting.

Dragonchain offers a comprehensive platform for businesses to simultaneously remain energy efficient while capturing and reporting emission data. Our enhanced blockchain technology allows businesses to integrate solutions today that are ready for the future.