 Good morning everyone. Welcome to the Hyperledger booth at Consensus 2023. Let's let's explore a little bit of how ESG which is and blockchain and trustier supplier come together. So I do want to acknowledge a few of the organizations here. Our own company, trustier supplier, chain yard and IT people. In addition to that, I do want to acknowledge and request people to join the Hyperledger Foundation climate special interest group where we discuss a lot of topics on ESG. We do discuss a lot of topics on standards for ESG, carbon emissions, carbon measurement and reporting. So please join the Hyperledger Foundation climate special interest group. A little bit about chain yard. Chain yard is a blockchain consulting and advisory firm. We were founded in North Carolina back in 1999. We're a 21 year old company, 22 years old company and chain yard is a brand of IT people under which we offer blockchain consulting and advisory services. We have global offices in India, Philippines, Vietnam and we are based out of Morrisville, North Carolina. As of today we have done more than 50 engagements in various Hyperledger blockchain technologies which includes Hyperledger Fabric, Hyperledger Beizu, Hyperledger Indy. We are very active contributors to Hyperledger Foundation and we support a number of customers both here and overseas. Some of our major customers include Lenovo, IBM, the Dubai government, the government of Bahrain, the US federal government and other major customers. We also have a software platform. It's called Trust Your Supplier. Trust Your Supplier was conceived, designed, implemented and now operates and governs and we operate and govern that network as a consortium. So let us explain, let us explore what is ESG a little bit. ESG stands for environment, social and governance. ESG has off late taken a lot of importance in, from a climate crisis as well as from an environment, social governance and DEI perspective. So let us explore what is ESG? So every business has an impact on the environment. Businesses consume raw materials. They consume energy. They emit carbon dioxide and other pollutants into the atmosphere. So naturally the climate has been impacted by carbon emissions and ESG framework essentially addresses one of the key concerns of the environment. The other key concern is social. Most corporations employ people and people have to be treated fairly in terms of their wages. People have to be treated in terms of getting fair healthcare. Companies have to monitor unfair labor practices and companies that actually consume from customers and their business partners must give back to the communities in which they operate. And lastly governance. Every corporation has to establish certain policies, principles and guidelines from an ESG perspective and these policies and procedures govern how the company operates from an ethical standpoint, from an environment standpoint, from treating people. In a recent analysis or a survey conducted by Moody's almost 70% of the companies expressed ESG as their key concern for 2023. What does ESG mean from an actual categorization perspective? The environment is impacted by very many things okay and ESG addresses the following areas within the domain. One of them is compliance and reporting. ESG mandates that every company has to report, has to commit towards certain carbon emissions and it has to report on those emissions such as COPE 1, 2, 3 emissions mandated by the Paris Accord as well as the US federal government. So in addition to that the environment, some of the environment projects include emission reduction and these can be done through various means such as carbon sequestration, carbon farming to name a few. Plastics. Plastics are a major pollutant of our oceans and micro fiber plastic has been a major concern. It has been eradicating species as well as it has been damaging a majority of our environment. The third aspect is land and water management and lastly how do we manage our waste? How are we recycling? How are we reusing, collecting and processing industrial waste, household waste and other waste? A very simple ESG approach is corporations commit to how much of the emissions will they reduce? They make these commitments and these commitments translate into projects. These projects can be either initiated by third parties or voluntary organizations or they could be internal to a company in order to reduce ESG waste. The next aspect once these projects are online how do you measure the emissions reduction? If you can measure then you have to report it and someone has to validate and verify these reports in terms of commitments against actual emission reduction. If the reports are valid then they are accounted for in terms of the offsets or credits that a company purchases and lastly projects have to be monitored and controlled. So this is a very simplified ESG process that any company or any organization follows. So we all hear about carbon credit tokenization and life cycle management. Carbon credit is nothing but corporations offset their own emissions by funding other projects. So if I am Acme Corporation and I'm emitting 10 metric tons of carbon and I commit to reduce it by 5 metric tons then rather than improve my own process I would fund a project that is going on somewhere else. For example the MOS project that focuses on protecting the Amazon forest. A typical one carbon offset is equal to one metric ton of carbon dioxide emissions. If you really look at it it takes a car to pollute one metric ton of carbon within a three month period whereas it takes the same amount of carbon to be sequestered to plant a tree it takes 40 years for a tree to sequester one metric ton of carbon. So there's a big gap between emissions and how easy it is to sequester carbon. There are various carbon sequestration projects in the world. Reforestation, forest conservation, wind farms, solar energy, landfill gas capture, providing energy efficient cookstows and appliances, efficient waste management. These are all carbon credit projects that companies can offset their own emissions by purchasing or funding in these projects. We also hear about carbon in setting and reporting. Carbon in setting is the complete opposite of carbon offsetting. In carbon in setting a company tries to improve its own internal process, its technology and the way it does business, the way it manages the environment, the way it procures raw materials is it doing sustainable manufacturing. So carbon in setting is when a company tries to improve its own processes in order to reduce its emissions which is a much preferred approach to carbon emission management than carbon offsetting. We also have seen the regulated carbon credit market which is cap and trade. In the regulated market the government sets certain thresholds in terms of emitting carbon and those thresholds are translated into allowances. Every company is allocated a certain allowance in terms of how much carbon it can emit and a company can then buy credits which are equivalent to its allowance. Now during the course of the year if the corporation has emitted more carbon than its allowance then it would go and buy offsets if it has emitted less carbon than its allowance then it would sell its credits for a profit. That's the regulated carbon trade cap and trade market. So there are carbon offsets, there are carbon credits and there are carbon cap and trade. Now there are many many different projects in the world in order to manage carbon emissions. I want to briefly touch upon Trust Your Supplier which is our own platform for companies risk assessment and risk qualification. And the risk assessment includes how much environmentally ethical are the practices of a company, how social is that company in terms of dealing with its employees, in terms of child labor practices, in terms of conflict minerals, how are they processing these. Trust Your Supplier is a platform for supplier qualification and it's a buyer network of IBM, Nokia, Lenovo and so many other buyers who invite their suppliers to the platform in order to measure and qualify the risks associated with their suppliers. Now blockchain is very essential in order to help ESG meet its goals as well as our own platform, Trust Your Supplier. So blockchain is an essential component. Trust Your Supplier is built on Hyperledge of Fabric and Hyperledge of Fabric like other blockchains provides a number of features that allow one to apply and manage ESG. First of all immutable recording. So one of the biggest issues in the carbon market is how can you measure whether the emissions that have been reduced are really true. Is there a way? If the data collected by a company to prove that it's emission, it is actually reducing emissions, can you prove it? So blockchain provides an immutable record of all that data. The second is it allows smart contracts. So in the carbon offset market one is selling credits, one is minting credits. Smart contracts can manage them more efficiently than a centralized body that is managing the offsets. The third is digital identity. One of the biggest weaknesses in the ESG market is we cannot prove if a project is successful or not and if a project is legitimate or not. There are companies that are actually buying land in the MOS project in order to help reforest the Amazon forests. Now do you know if it is really if it is a true project? Well if a digital identity is assigned to each one of these projects then that digital identity using the DID standards can help verify the identity of the projects that a company claims to fund as part of its offsetting process. Proof of existence, cryptographic verification of carbon emissions, consensus on the ledger to prove that so-and-so's offset can be retired, transparency on the life cycle of those projects, privacy and anonymity because companies do not want to disclose their internal processes as part of their carbon emission reduction. So they want to protect their IP. They also want to protect their internal processes. At the same time they want to be transparent to the government and to everyone. And lastly tokenization and incentivization. So the blockchain really complements TYS and ESG. Three ESG blockchain use case patterns. The blockchain helps in the ESG space. Three different specific blockchain implementation patterns. The one the first one is provenance and track and trace. So every project in the blockchain space has got a life cycle. How do you track the life cycle of a project? How do you track the Toucon project or the Klimtau project or the Mars project in the voluntary carbon market? You need to have a provenance of what was the project about and how do you manage its life cycle and track and trace of all those emissions and the life cycle management of those projects. The second use case is training and trust record keeping of carbon offsets and credits. We do want to manage the carbon offset tokens. We want to make sure there is no double counting or double spending of the same credit. We also want to make sure that the company that purchases that offset is the company that is actually accounting it in its books. If you put a carbon offset token in an exchange then we lose track and we lose sight of which company actually took advantage of that credit. So that's the second use case of blockchain. And the third one is supporting risk audit and compliance reporting. Almost every country, every corporation is required to report on scope one, scope two and scope three and we will talk about it more. Trust your supplier and ESG and blockchain. What we do within trust your supplier is we capture ESG information in the form of questionnaires that go out from the buyer to the suppliers. Suppliers answer these questions and these questions are then funneled as business events to companies like third parties like Moody's, S&P Global, EcoVartis, Dunn & Bradstreet and several others. Those companies verify the data on the blockchain that has been supported and supplied by the supplier and they attest to the fact that this is indeed valid giving them a rating on ESG. This allows trust your supplier to support scope one, scope two and scope three reporting which is soon becoming mandatory. A very simple architecture of trust your supplier network and this is pretty much the standard architecture that Hyperledger Fabric applies to many of the projects. Hyperledger Fabric is a decentralized enterprise blockchain. In this model we do have a blockchain client and the blockchain and then we have off-chain databases. We have an integration framework that talks to a partner agent that can talk to enterprise ERPs. The partner agent can communicate with marketplace applications or marketplace partners who can verify the proofs such as Moody's and Dunn & Bradstreet. Audit and reporting and an analytics engine enables off-chain data to be analyzed for actual reporting. So this is a simple architecture of trust your supplier which is a network of buyers and suppliers. Today we have a million suppliers on this network and the network is growing and some of the key clients include Saudi Aramco, GlaxoSmithKline, AB & Bell, IBM, Lenovox on this production grade enterprise blockchain. TYS blockchain and ESG the architecture is the same. The ESG information that is captured on TYS includes environment, social and governance practices. Suppliers actually onboard that information into the blockchain and companies such as EcoValus, Moody's, Dunn & Bradstreet enable ratings against the data that the supplier has actually put into the network. This is how SCOPE123 reporting is possible, a verified reporting to the government agencies. Things that we typically look for in an ESG compliance is how sustainable are the manufacturing practices within a company? Do they use renewable energy? How much of their energy consumption comes from solar and other forms of renewable energy sources? How do they manage the water and raw materials? Do they reduce, recycle their waste matter? What is their emission of carbon dioxide and how much other pollutants? How much have they committed? From a social perspective, TYS captures corporate labor practices. You have to capture relationship with the community. How much are they contributing back to the community? We recently looked at the East Palestine Toxic Spill. ESG would have prevented that if it was mandated that the company is responsible. So as we look forward, ESG and TYS and blockchain are all complementing each other. How does a company treat its partners and how do they treat the communities in which they serve? And lastly, governance. Do they have an effective governance? What's the reputation of the company? What is the reputation in terms of how are they consuming their offsets? How are they consuming their credits? Are they implementing monitoring and controls? What are their ethical practices? And all this contributes to business risk. One of the key aspects of ESG is to estimate business risk. I was talking to Moody's the other day and one of the key concerns they are looking at is geopolitical risk and supply chain risk caused by the environment. Scope 1, 2, 3 reporting. I'm not sure how much of you all are familiar with the reporting that the Paris Accord and the US EPA is mandating. But Scope 1 emissions are when a company emits carbon, it's all about its own emissions. Direct emissions that a company emits into the atmosphere. Scope 2 emission is indirect. If they're consuming energy, what portion of that energy is coming from renewable sources? They have to report that. And Scope 3 emission is tier 3, tier 4 partners both upstream and downstream, which is the most difficult aspect of ESG and carbon emission reporting. Trust your supplier essentially builds a network of buyer to a supplier to a supplier, supplier to a supplier, supplier. So over time, one is able to measure how much a company is actually emitting in terms of its carbon all across its entire supply chain. Now a lot of people do not know that ESG standards and bodies are active all across the globe. I was surprised to see that Climate Action Reserve is one of the carbon registries. There are other registries like the Gold Standard and Vera. These are bodies that actually establish carbon measurement standards, carbon emission standards in the voluntary carbon market. And the GHG protocol, which is greenhouse gas emission protocol, defines how to measure and report on carbon emissions. In addition to that, there are so many other corporations like the European Commission, the Open Earth Foundation, the Hyperledger Climate Special Interest Group, Vera. Vera then task force on climate action related financial disclosures. There are so many bodies that are actively working in the ESG space. And ESG is going to dictate how the future of business will work across the globe as climate action, climate crisis takes front and center across the globe. The total investment just in ESG compliance will be trillions of dollars and blockchain definitely becomes a very integral part in terms of measuring the voluntary carbon market, the mandated regulatory carbon market, the internal and setting projects as well as the reporting of regulatory reporting that is necessary. The role of blockchain is very important because there is no consistency in the standards. So whether Vera has a standard, the Gold Standard, they all are different standards and there is no consistency. So the blockchain can bring consistency across all these standards using digital verifications as well as verifiable credentials. Environment management transcends beyond CO2, so today we are only focused on CO2 emissions but there are a lot more other like sulfur dioxide emissions. There are many other emissions which are not yet being recorded. Microfiber plastic emissions are one of the biggest issues that are impacting the environment and killing species. Double spending. Many companies can buy an offset and they account for it twice. How can you prevent ownership and retirement of offset? So if I buy an offset, I should be able to retire it and not sell it. Proving voluntary carbon market related project benefits and status. Can I prove that the MOS project and the MOS token that is protecting the Amazon is actually valuable? If it was on a blockchain it definitely can help third parties verify and lastly verifiable and trusted regulatory reporting. The federal government has one place to go and verify the reports generated by corporations. TYS is positioned to become a player in the voluntary carbon market and this is a very high level conceptual architecture that shows that at some point IOTs will become a key player and IOT data has to be trusted and IOT devices have to be authenticated. The blockchain plays a very critical role.