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If Crypto Wants Institutional Dollars, It Needs an ESG Game Plan: Consensus 2023 Attendees

Sam Reynolds
Updated ·2 min read
Shutterstock

A sizable portion of the world’s institutional money now has an environmental, social and governance (ESG) mandate. Global ESG-related assets under management (AUM) are projected to reach $33.9 trillion by 2026, constituting 21.5% of total global AUM, according to a late-2022 report from PricewaterhouseCoopers.

To put it simply: If blockchain companies want to get that next institutional dollar, there needs to be an ESG direction.

This article is excerpted from CoinDesk’s inaugural Consensus @ Consensus Report, the product of intimate, curated group discussions that took place at Consensus 2023. Click here to download the full report.

While there are some in the crypto industry that want to dismiss ESG entirely as a contraption too difficult to work with, participants in a roundtable discussion at Consensus were optimistic, with the theme being how to embrace ESG and not hide from it.

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For some, the most obvious and easy solution is encouraging the adoption of proof-of-stake (PoS) consensus mechanisms, which see users pledge their assets to become transaction validators. (Just over half of the 165 Consensus attendees who answered an electronic survey voted that this was the best option for addressing climate change.)

“Proof-of-work versus proof-of-stake is just going to fly over the heads of many in Washington,” one Consensus attendee, who had prior professional experience in the U.S. capitol, said during the discussion. “The first step to get this right is for blockchain to be used as a utility to solve real-world problems.”

See also: Could Bitcoin Be the Greatest ESG Investment of All Time? | Opinion

Though attendees were far from consensus on key issues like whether blockchains should ditch the carbon-intensive “mining” process, there was alignment on the disconnect between the crypto industry and regulators.

Unless crypto begins to speak the language of Washington D.C. and is able to converse with those on Capitol Hill, there are few points where consensus on crypto’s ESG mandate could be reached…

Click here to download the full Consensus @ Consensus report.