GEMExpert - Blockchain: Climate Disaster or Sustainable Technology? – News

According to a study conducted by three researchers from Grenoble Ecole de Management, companies that file a large number of blockchain-related patents tend to experience a decline in their Environmental and Social (ES) performance scores. However, the opposite effect is sometimes observed as well... So, what should we make of this booming technology?

Interview with Jamil Jaballah, Associate Professor at Grenoble Ecole de Management (GEM), and Rebecca Cardot, PhD candidate

Why did you conduct this study, and what kinds of companies did you focus on?

Jamil Jaballah: Blockchain technology is the subject of intense debate, especially in its use for cryptocurrencies. In 2021, the United Nations even published an article on its website questioning whether blockchain might be a potential “climate calamity.” We therefore decided to investigate further by analyzing the evolution of ES scores for more than 2,000 U.S. companies that filed patents between 2008, when blockchain was invented, and 2020.

But filing a patent doesn't necessarily mean the company uses the technology, right?

J.J.: Companies create intellectual property primarily to protect the products and services they develop. Moreover, by using a patent-based approach, we were able to capture all existing uses of blockchain.

What are your main findings?

Rebecca Cardot: Companies that are most active in filing blockchain patents tend to have lower ES scores—particularly in two areas: resource consumption and “product responsibility,” which includes aspects like product quality, responsible marketing, data management, and privacy. However, this negative effect is less pronounced among large corporations.

How do you explain this difference?

R.C.: Blockchain is a database technology shared among participants in a network. The larger the company implementing it, the more extensive its internal and external networks are—allowing for more applications and transactions. In such cases, the R&D costs, infrastructure setup, and energy consumption are better amortized. For example, when a blockchain is used across a supply chain, it provides excellent visibility over product components, carbon emissions, and supplier compliance with ethical standards. This allows companies to assess, optimize, make informed choices, and improve their ES scores.

Yet your study suggests the overall effect remains negative…

R.C.: Yes, which is why we conducted a follow-up study focusing on the state of Vermont, which as early as 2016 passed a law recognizing the legal validity of blockchain-stored data. The result: in this context, the impact of blockchain patents on environmental performance was positive! This is likely because a legal framework strengthens contractual and business relationships involving blockchain, making it easier to achieve economies of scale and share costs—especially environmental ones.

What can decision-makers take away from your research?

J.J.: No technology is inherently virtuous or dangerous. However, all technologies have an impact on extra-financial performance, which is becoming increasingly important. Our goal is to provide insights and raise awareness on how to choose, implement, and use blockchain in a way that is sustainable—not just profitable.

The Publication
Bernard, Carole, Cardot, Rebecca, and Jaballah, Jamil, The Impact of Blockchain on Firms' Environmental and Social Performance (June 04, 2024).

Bio Snapshot
Rebecca Cardot is a PhD student within the “Finance, Innovation and Governance” research team at Grenoble Ecole de Management. Her research focuses on financial innovations (both product and technological) and their impacts, particularly in terms of sustainability. She specializes in green and sustainable finance, blockchain and its applications, and how these areas interact.

Jamil Jaballah is an Associate Professor and head of the “Finance, Innovation and Governance” research team at Grenoble Ecole de Management. His research explores the interactions between firms and investors, focusing particularly on how investors perceive financial and non-financial information, as well as the link between corporate governance and the adoption of socially responsible strategies.

Carole Bernard is a Professor affiliated with the “Finance, Innovation and Governance” research team at Grenoble Ecole de Management. Her research interests include actuarial science, theoretical economics, and finance. She analyzes investor behavior modeling and the optimization of financial decisions, especially in retirement planning, risk management, and the valuation of guarantees in insurance and finance.