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December 13, 2021
Climate change is the issue of our time. From policymakers to the individual, every one of us has a responsibility to do our part to ensure that sustainability and green practices are implemented throughout society.
Indeed, governments across the world, from the U.S. to China, are increasingly taking a proactive stance on climate change, with COP26, the recent 2021 United Nations Climate Change Conference, serving as a driving impetus toward the goals of the Paris Agreement in inspiring climate action.
Corporations are also stepping forward to take greater responsibility, with many investors no longer considering financial performance alone a sufficient measure of success — ESG measures, i.e., negative externalities, are increasingly taken into account to determine the true value of business activity for society.
In this context, the process of revitalizing our financial infrastructure is increasingly under the spotlight. How well do Bitcoin and other digital assets meet ESG criteria? This question has become ever more important as crypto adoption reaches wider audiences. Multiple Bitcoin futures ETFs have now been approved and are trading in the U.S., while institutional adoption is also reaching new highs, with many of the world’s largest financial institutions, including Standard Chartered, State Street and Citibank quietly building capabilities in the space.
Growing regulatory clarity is also enabling a broader range of participants globally to accelerate their strategies for digital assets. The EU’s comprehensive Market in Crypto-assets (MiCA) framework continues to move through the legislative process in the European Parliament. While in the U.S., Gary Gensler’s Securities and Exchange Commission has also signaled its intent to clarify a framework for stablecoins and decentralized finance (DeFi).
For digital assets to truly cement their place in the mainstream and the portfolios of investors across the globe, they must be subject to the same rigorous ESG standards that every government and corporation should now address. Significantly, the industry has gradually come to terms with this need and has ramped up a process of environmental self-regulation in response to rising adoption.
Organizations such as the Bitcoin Mining Council are working to increase transparency in the industry through higher reporting standards. Many crypto-native organizations are also joining the Crypto Climate Accord, committing to achieve net-zero emissions from electricity consumption associated with crypto-related operations by 2030.