Sustainability in the Web 3.0: How to Assess ESG Characteristics on Smart-Contract Blockchain Ecosystems

Abstract

The object of study in current Environmental, Social and Governance (ESG) research is often the firm or its management. Of particular interest is also the link between ESG and its impact on financial market performance. I extend existing literature introducing concepts to measure ESG issues for smart-contract blockchains and their ecosystems. Legally, such platforms are often foundations, not for-profit companies. Rather than company management’s decisions and the analysis of related risks, three novel elements emerge: technology, mechanism design and community, take centre-stage in the decentralized context. I propose one environmental metric (Consensus Algorithm), a social metric (Gini coefficient) and one governance metric (Validator risk index) to start the discourse around assessment of ESG issues on smart contract blockchains and their ecosystems.