Blockchain technology, particularly distributed ledger technology (DLT), can be used as a key means of raising levels of transparency and accountability in the banking and financial sector, with the goal of tackling fraudulent risk, inaccurate data, exploitation and environmental crime – and as a tool to make progress on some of the United Nations Sustainable Development Goals (SDGs) by enhancing sustainability in overall business practices, according to a recent research paper.
SDGs also present a huge private sector participation potential, notes the Deepening Sustainability with DLT paper, which was published by Standard Chartered and the Singapore FinTech Association (SFA) and studied the applicability of different DLT solutions to overcome the key barriers to visibility, transparency and sustainability validation of payments in supply chains. However, at the current trajectory, the paper notes, most SDGs are not expected to be met by the 2030 target.
Nevertheless, sustainable supply chains and financial flows present an important opportunity to help boost progress. By ensuring transactions in a supply chain are environmentally and socially positive, the paper argues, grassroot impacts can be made in combating environmental issues and creating inclusive economic growth. Despite this potential, traditional barriers to sustainability related to payments supporting supply chains continue to limit progress.
The main barriers – a lack of transparency, inefficiencies of physical cash, fragmentation, underutilisation of data, and cost – usually affect corporates in many markets and end-of-chain suppliers the most. And these barriers will feel highest for suppliers in emerging and developing markets.
Technology – and in this paper particularly focusing on DLT – could prove the solution to greater sustainability in supply chains and innovations can help tackle some of the underlying causes that hinder the SDGs.
The current DLT solutions available are not a one size fits all, with different supply chain stakeholders drawing differing benefits than others, the paper shares. These solutions will therefore only make the necessary sustainability impact and offer the most promising returns if embraced by all supply-chain parties.
Moreover, partnerships and co-creation between these groups will help ensure that the finance and banking sector get back on track to reaching the SDGs – specifically 9 (industry, innovation and infrastructure), 12 (responsible consumption and production), 16 (peace, justice and strong institutions) and 17 (partnerships for the goals) – thanks to more unified, inclusive and sustainable supply chains,” the report points out.
“Many of the markets we operate in rely on supply-chain-intensive industries for their continued economic growth,” says Philip Panaino, global head of cash, transaction banking, at Standard Chartered. “Yet these are the same markets where the impact of opaqueness, fragmentation and inefficiencies in global value chains are often most difficult to unravel.”
Shadab Taiyabi, SFA president adds: “With companies around the world placing more emphasis on sustainability, the focus on strengthening the resilience of supply chains will not only be an integral part of protecting companies’ growth, but also ensures that they are leaving a positive impact on the environment and society. We see huge potential in green fintech and technologies like DLT to break down barriers to sustainable supply chains by enabling greater traceability and visibility.”