Industry group plans blockchain tool to track firms' sustainability commitments

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(Reuters) – A responsible investment non-profit organisation said on Wednesday it aims to develop a blockchain tool to track companies’ sustainable commitments, to help identify those not keeping up with their ethical credentials.

Industry group plans blockchain tool to track firms' sustainability commitments

Solar panels to produce renewable energy are seen at the Urbasolar photovoltaic park in Gardanne, France, June 25, 2018. REUTERS/Jean-Paul Pelissier

The plan comes as the ethical investment industry expands beyond its core centres of Europe and North America, with governments such as Indonesia issuing green bonds for the first time this year.

The London-based Responsible Finance & Investment (RFI) Foundation will work with a group of 23 other signatories to develop the tool over the coming year, Chief Executive Blake Goud told Reuters.

“The platform is designed to be revenue-generating as a social enterprise, funded by users in a way that will keep the data open and accessible as a public good.”

Using blockchain, a high-tech ledger technology that underpins cryptocurrencies, would help identify in real-time which practices are taking root in responsible finance and guide new entrants into the field, Goud said.

This would provide a way to track what the financial industry has committed to and how much of these commitments is translated into action, he added.

The system would also help curb so-called greenwashing, a practice whereby companies claim to be more ethical or environmentally friendly than they really are.

“Most financial institutions want to make a positive impact, are taking steps to do so but see their efforts undermined by a few institutions who are taking advantage of the opacity of commitments and actions,” said Goud.

The lack of commonly agreed labels and standards for green financial products has hampered market development, according to a report by an expert group from the European Union.

Other firms behind the system include Brussels-based European Partners for the Environment and Minneapolis-based Magni Global Asset Management.

Reporting by Bernardo Vizcaino; Editing by Christopher Cushing