EY’s OpsChain ESG offers the trust enterprises need to unite on sustainability

Moving the needle on sustainability demands transparency, measurability, and traceability across global ecosystems. By applying blockchain-supported tokenization to the emissions associated with individual products, EY believes it can offer enterprises a single and verifiable view of their carbon footprint. This could prove a key step in building the trust that ecosystem partners need to work together, proving they are delivering on shared goals.

To enable this, EY developed the technology on the Ethereum public blockchain, applying the standards of the InterWork Alliance for Carbon Emissions Tokens. It is working with the Task Force on Climate-Related Financial Disclosures, the World Resources Institute, the Global Blockchain Business Council, the Greenhouse Gas Protocol, the World Business Council for Sustainable Business, and others to ensure widely agreed, authentic, and accurate impact measurements.

Tokenization enables widely agreed, authentic, and verifiable impact

EY’s OpsChain ESG supports emissions tracking right down to the product level. It applies the semi-fungible ERC-3525 token standard to tokenize emissions and offsets. Semi-fungible tokens combine the liquidity of fungible tokens with the identity-describing attributes of non-fungible tokens. The combination makes them better suited to combining, dividing, and transferring traceable value.

The EY solution mints tokens to represent emission-generating products and tokenizes the emissions allocated to each product. It also tokenizes carbon credit to allocate against emissions (for carbon offsetting), and when that carbon credit is used, the value of that token reaches zero. (If some of these terms are unfamiliar, The A-Z (nearly) of Web3 offers guidance).

The result is an ability to measure total carbon emissions and offsets across production and continue tracking those emissions and offsets generated as a product moves through the supply chain.

Contractual obligations drive rising demand for sustainability services

OpsChain ESG is now available in beta on EY’s blockchain and SaaS platform. It will provide consumers, ecosystem business partners, and regulators with transparency, providing immutable and independently verifiable reporting through the EY platform.

With ESG a key factor in many procurement decisions and business partnerships, proof of outcomes related to targeting and meeting shared sustainability goals will likely become more valuable (see Exhibit 1).

Exhibit 1: The market for sustainability services approaches $200 billion, and the need for transparency to meet procurement standards among partners will drive more growth

Sample: 2022 HFS market analysis of the 18 leading firms across the consulting, technology, business, and engineering services firms
Source: HFS Research, 2023

Blockchain-backed, the EY solution comes with trust baked in. EY is convinced blockchains provide the glue to link business processes across global ecosystems – in line with HFS OneEcosystem ambitions. For more on this aspiration, see our report, EY extends the blockchain-fueled infrastructure for ecosystems.

The Bottom Line:Enterprises must work together to deliver shared sustainability goals. Carbon emissions’ transparency is a step toward building the trust ecosystem partners will need.

EY’s OpsChain ESG is one of a range of tools emerging to help drive collaboration and alignment between enterprises to help us find our way out of the sustainability emergency. That it is only in beta tells us much about the journey ahead of us, but it shows the potential for the kind of ecosystem-wide power HFS seeks to encourage in our OneEcosystem approach. Every enterprise leader should get themselves up to speed—your stakeholders and shareholders are unlikely to be forgiving if you don’t.