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November 27, 2023

GBBC Releases Global Standards Mapping Initiative 4.0

GBBC Releases Global Standards Mapping Initiative 4.0
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The new Global Standards Mapping Initiative (GSMI) 4.0 of the Global Blockchain Business Council has been released! This release follows previous releases since 2020 to provide a holistic view of the industry’s global activity–by mapping, cataloging, and analyzing data to provide a holistic view of the industry’s global activity.

In particular, Hyphen is featured as a digital MRV solution in the GSMI 4.0’s Sustainability Report. Exploring the intersection of blockchain technology and digital assets, the Sustainability Report addresses global sustainability challenges. It expands on prior work that focused on reducing upstream value chain emissions within the digital asset sector, now incorporating the measurement and financing of downstream emissions for mitigation. Having initially assessed blockchain's environmental drawbacks, the working group shifts to its potential positive impacts on sustainability.

GSMI 4.0 Sustainability Report

Demonstrating blockchain's effectiveness, the report showcases its use in gathering climate data through sensors, tracking emissions, pollution, and weather patterns, and evaluating the effectiveness of climate mitigation. It also highlights real-world examples of blockchain and digital assets in sustainable solutions, providing guidance to companies and organizations in meeting regulatory sustainability requirements and in refining their transition strategies.

Moreover, the report underscores the disproportionate impact of climate change on marginalized communities, particularly in the Global South, linking environmental and social issues in ESG (Environmental, Social, and Governance) criteria. With six out of nine critical planetary boundaries already breached, including climate change and biodiversity loss, the need for decisive action is clear. Financing for sustainability is on the rise, evidenced by significant investments in climate finance and the issuance of green bonds, despite the need for more standardized impact measurements and objectives.

It finds that the core issue with our current economic model lies in how we value natural capital. Natural capital is typically only valued through extraction, with its inherent benefits often overlooked. Voluntary carbon markets (VCM) emerged to fund conservation and recognize the value of natural capital, but they face credibility issues due to challenges in demonstrating real impact and ensuring proper fund allocation.

Existing economic growth models emphasize the value of extracted resources, neglecting the worth of natural capital. As climate change and nature loss become global concerns, there's a push to reassess these inputs. However, failure to account for associated costs, such as valuing natural capital assets, compensating for loss and damage, and addressing social and developmental costs, creates transparency and traceability barriers. Early VCM implementations faltered due to underestimating natural assets' value and complexity, and lack of transparency.

The extractive model creates a disconnect between the stock and flow of resources, particularly undervaluing natural capital stocks concentrated in the Global South. Monetary value is assigned predominantly to extracted resources, driving extraction due to economic necessity.

Despite 50% of global GDP relying on natural capital, these assets are often undervalued or ignored, perpetuating financial disparities, particularly in the Global South. This undervaluation can jeopardize future financial resources for these regions, especially as climate risks materialize.

The "resource curse" phenomenon is observed in resource-rich countries, which often experience slower economic growth, less democratic governance, and poorer development outcomes compared to less resource-rich nations. This dynamic hinders domestic economic growth and exacerbates reliance on exporting natural resources. Even initiatives like VCM, designed to support natural capital and assist the Global South, suffer from credibility issues and lack of trust, contributing to the volatility and crises associated with natural capital assets in the current model. Consequently, countries rich in natural resources struggle to diversify their economies beyond feeding into the extractive commercial model and its repercussions.

Blockchain technology emerges as a promising solution for advancing solutions to these problems. Its transparency and trust-building capabilities offer new models for governance and collective action. By enabling more accurate data on emissions and promoting a regenerative economy focused on ecosystem conservation, blockchain can drive effective climate action. At Hyphen, we are proud of providing a pivotal piece of the puzzle through Atmospheric-based dMRV. This technology not only addresses mitigation and adaptation challenges but also intertwines with efforts to enhance global equality and restore environmental, social, and financial stability.

You can discover resources from the Global Standards Mapping Initiative and read the reports here: https://gbbcouncil.org/gsmi/

All GSMI reports and resources are open access and intended to serve as a trusted source of information about the blockchain and digital assets landscape, so we encourage you to share it far and wide and on social media using #GSMI.