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CV VC
May 31, 2024
5
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Industry Updates

CV VC Explores Blockchain: A Catalyst for Mitigating Climate Risks

Humanity, governments, and businesses are key stakeholders in global climate sustainability. As a business stakeholder, CV VC leverages our blockchain expertise to demonstrate how this technology is mitigating climate risks. Our experience investing in blockchain pioneers across multiple geographies has shown us how these innovators work steadfastly to address climate challenges.

To mitigate climate risks, we must transition to a net zero-carbon world.

Climate science is clear: to halt climate change, carbon emissions must stop. To meet the 1.5°C global warming target in the Paris Agreement, global carbon emissions should reach net zero around mid-century. This ‘Net zero’ means that any emissions are balanced by absorbing an equivalent amount from the atmosphere. 

The costs of inaction are much higher

Over the next 25 years, the world will need to invest $275 trillion, or $9.2 trillion per year on average, to reach net-zero carbon emissions, according to McKinsey (page VI). The costs of not acting are much higher. SwissRe calculated that the global economy could be 10% smaller in 2050 than now due to the cost of climate impacts, compared to a world that meets the Paris goals. That is a level of economic damage greater than both the covid pandemic and the 1920s Great Depression.

Addressing immediate challenges

Against a backdrop of the recent global pandemic and current geopolitical wars, the world is enduring deep challenges such as economic hardship, energy shortages, food insecurity, inflation an overall cost of living crisis, and more. The biggest risk facing the world, however, is climate and the lack of climate mitigation.


Forecast for The Future

Ten years out, it is forecast that extreme weather events and critical changes to Earth systems as the greatest concerns facing the world. The risks associated with this include biodiversity loss, ecosystem collapse, food shortages, geoeconomic confrontation, civil unrest, and instability, cybercrime & cyber insecurity, and large-scale involuntary migration. This is not fiction. This is a fact. By 2030, an estimated 700 million people will be at risk of displacement by drought alone.

The confluence of direct loss and damage from the physical impacts of climate change—rising sea levels, extreme weather events such as recent flooding experienced in Brazil's Rio Grande do Sul, heatwaves, and wildfires, with indirect consequences such as crop failures and struggle to access basic resources, continue to threaten lives and the livelihoods of many, particularly in the developing world.

More than ever, in the history of our existence we have needed to create environmental impact, we need a more sustainable world that develops and evolves in harmony. And yet, ignoring today’s crises and short-term risks in favor of the raging threat of climate can sometimes seem impossible. Often, it feels that there is no way forward on the investments for climate action if millions face the risk of hunger and war, if families have to choose between eating or heating, or if governments face trade-offs between avoiding default and financial calamity today versus investing in the education, health, and infrastructure necessary to sustain the planet for the next generation. 

At CV VC and our co-investment partners, we believe the global “new normal” is about impacting the basics - mitigating climate risk which in turn will safeguard food, energy, security, and humanity itself.


Two ways blockchain is mitigating climate risk

The mitigation of climate risk requires a transition to a low-carbon world. This involves a rehaul of infrastructure systems and services. Blockchain technology, with its core competencies of transparency, data auditability, privacy, value transfer, process efficiency, and automation, is being leveraged to drive the systemic changes needed for sustainable infrastructure.

Monitoring, tracking and financing platforms 

Blockchain technology is mobilizing carbon reduction through establishing new monitoring and financing platforms.

Global regulations are increasingly demanding accountability for sustainability performance, and blockchain technology is proving essential in providing the necessary proof. In the European Union alone, the EU’s Sustainable Finance Disclosure Regulation (SFDR) requires private market investors to disclose their ESG performance publicly. The regulations are designed to increase market transparency and direct capital towards more sustainable businesses. The broader opportunity for investors is to showcase how to extend beyond SFDR compliance and into performance. Monitoring platforms such as Proof.io help clients automate SFDR reporting, enabling deep analysis of ESG across over 30 industries. Such monitoring gives investors a clear snapshot of a company's ESG impact performance, streamlining capital raising. Pyrpose climate-purposed investing, allowing individuals to shape a more sustainable world regardless of their financial capacity.

Nuvlio is at the forefront of risk intelligence technology for the agricultural and forestry sectors. It provides in-depth and accurate risk analyses related to farmers, agricultural and forest properties, crop monitoring, and credit scoring. Thus, empowering financial players with clear insights into the 'who, where, when, what, and why' of their global portfolios

In collaboration with HBAR Foundation and Swirlds Labs, Envision Blockchain has announced a new open-source Managed Guardian Service platform. This platform focuses on a digitized and digital measurement, reporting, and verification (dMRV) system for carbon markets. Developed with the UN Climate Change Global Innovation Hub (GIH), the platform uses decentralized blockchain technology to transform carbon markets. Hedera Guardian provides auditable, traceable, and reproducible records that reduce fraud in sustainability markets.

Mitigating Risk & Protecting Natural Resources

Aside from tracking carbon, many blockchain entities are impacting its reduction across multiple industries, such as Powerledger which works in the energy sector and develops blockchain solutions for tracking, tracing, and trading of renewable energy.

Shamba Records leverages blockchain technology to ensure regenerative capacity and greater crop yield in African agriculture. Shamba offers farmers the latest technology, including weather forecasting tools, soil moisture sensors, and mobile apps that provide real-time data and analytics to optimize farming practices and mitigate risks

EarthBanc is a decentralized finance (DeFi) platform that focuses on funding climate-positive projects. It uses blockchain to facilitate investments in reforestation and other sustainability initiatives.

Plastic Bank incentivizes recycling, making plastic too valuable to be left in the environment. It has created a system for plastic exchange similar to any other currency exchange. It uses blockchain technology to securely execute plastic transactions, using plastic as a global resource to end poverty and pollution and mitigate associated climate risks.

CV VC is supporting blockchain climate-mitigating solutions, will you?

For all stakeholders and investors, blockchain's impact on mitigating climate risk is an opportunity too large to ignore. At CV VC AG, we are committed to supporting blockchain solutions that drive climate mitigation. To learn more about how blockchain is ramping up the stakes for effective climate mitigation, join us at CV Summit 2024 and meet the climate pioneers building solutions on blockchain technology. Together, we can create a sustainable future.

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