Compliance and ESG- Blockchain as a solution

blockchain como solução

Do you see blockchain as a solution for compliance?

If you’ve ever tried to raise funds for your company, you’ve certainly heard of the acronym ESG. Or Environmental, Social, and Governance. This is because the topic is increasingly present at the table of large investors.

First, it is not new that one of the challenges today is dealing with these three aspects. Governments around the world often meet to discuss how to tackle these problems on a global basis.

Therefore, the major project financiers around the world demand more effort from companies in this regard. Thus, care for the environment, social responsibility, and ethical commitment can be observed. Finally, with these concepts expressed in the values ​​of companies, we have what is conventionally called corporate governance.

Blockchain as a Compliance Solution

A company committed to these precepts will be aligned with the latest investor and consumer demands.

However, the words behind the acronym ESG alone represent pretty abstract references.

Therefore, a structured and transparent compliance program is necessary. So consumers and investors can be sure they are directing their money to the cause they want. In other words, it is a way of proving that the company complies with the values ​​it claims to believe in.

Understanding Blockchain

For this, there is no technology as appropriate as Blockchain. In it, there are numerous computers connected to a network and submitted to a common protocol. And they create and allocate blocks of data, one by one, in a timing chain.

Thus, each block contains information about a limited amount of transactions. Furthermore, the computers on the network validate them, one by one, and close that block of data. Then, they allow the creation of the next block by reaching a consensus on the veracity of each transaction.

A closed block becomes immutable and fundamental for the validation of the next link in the blockchain. Then, a record of all transactions up to that block is distributed to each computer on the network. In this way, everyone has the entire history of operations carried out on that blockchain.

Therefore, the network guarantees that the next operations temporally organized in the next block are verifiable by all. And all computers on that network need to reach a consensus so that the block can be closed and validated.

Blockchain as a practical solution

Blockchain Creation

Initially, blockchain as a solution was used for creating digital currencies. The most popular was Bitcoin. In short, the network provided the owners of the computers that made it up with remuneration. It is used for these computers to provide the service of validating the data blocks. Thus, each time a block is closed, the Bitcoin network algorithm makes a new amount of Bitcoin available. And then, these coins are distributed to the digital addresses (wallets) of each computer.

From then on, these Bitcoins can be transferred to the wallet of any other computer that joins the network.

Use of bitcoins

Foto profissional grátis de alerta, alteração, alternância

Let’s imagine what happens in the next block after the first Bitcoins are generated. Let’s say that the owner of computer A wants to send 1 BTC to the owner of computer B. In this way, he sends a transfer command signed by his password to the Bitcoin network. The data includes the amount of BTC to be transferred (1), the address of the sending wallet, and the destination wallet. Then the network processes the transaction. It then sends a report with the history of all transactions up to that point to all computers on the network. Finally, close the block.

With this, in the next block, all the participants of the network become aware of the transactions. That is, they know that address A has 1 BTC less, and address B has 1 BTC more.

Of course, there may be an attempt to defraud the system. However, the computers on the network must agree to any new transaction for it to take place. Thus, the block once closed is immutable and distributed in a decentralized way to an infinity of computers. Therefore, it is practically impossible for any user to be able to defraud the system and carry out false transactions.

Examples of blockchain as a solution


Usage examples for Compliance

You can apply the same logic to any type of validation system. That is, a company may want to certify that its products are environmentally friendly. And for that, use blockchain to track your entire supply chain.

Organic product certification

For example, imagine that a supermarket buys organic vegetables from a distributor. And this, in turn, buys from producers with organic certification. With blockchain, it is possible to generate a digital code (token) that represents each organic unit sold. Thus, the customer may require this code marked on the packaging. With this, the customer, the supermarket, or the distributor could verify the origin of the product. The certification of organic products would be registered on the public blockchain network. As well as important information about that product such as origin, harvest date, etc.

Certification of products that undergo transformation

The same is possible with products that transform.

In the same way, the industry can receive from ecological, organic, or certain social origin producers.

Then, a verifiable code accompanies the products. Stakeholders publish software (smart contracts) on the blockchain in an immutable and auditable manner. With this, the system issues a new token if the token from the original product is transferred to the smart contract.

Thus, a product can be traced with a high degree of confidence as to whether it is of ecological origin. Such as analyzing if there is an origin in a certain community that the client or investor would like to support.

Company records – Compliance

Furthermore, it is possible to certify internal documents of an organization or government regarding integrity and date. All this through the combined use of cryptography and blockchain techniques.

In other words, corporate governance also gains a powerful ally. Because it is possible to archive the company’s records, whether they are accounting books, minutes, photos, any forms, or scannable documents. And codes guarantee its integrity and authenticity. As well as the date they were stored, making it difficult to fraud documents and procedures.

Would you like to take your company to a new level of governance and access more demanding and qualified clients and investors? We SOLVE it for you!

To learn more about our services, call 11 3135-6457. We are located at R. Fidêncio Ramos, 100, Vila Olímpia, São Paulo – SP.

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