A commonly known reality is that incentives go a long way toward inspiring people to take action, regardless of where they fall on the moral spectrum. What if, with the help of technology, it is now possible to design a system that both incentivizes and assigns a relative value to constructive social and environmental impact? The concept of assigning monetary value to the effects of actions is not new. Carbon credits and the concept of carbon offsetting are two apparent examples of financial value being assigned to an environmental effect.
Blockchain technology provides an amazing opportunity to take this concept to an even larger, more feasible state. In this case, we look at how non-fungible tokens can make impact certificates mainstream. Although it seems to be a concept that is fairly new, much like sustainability and other newer concepts that are geared towards creating as much good as possible socially, environmentally, and economically, impact certificates may have an integral role to play going forward.
Firstly, what is the concept around impact certificates?
The concept of impact certificates is relatively new, and as such, there is not a singular, generally accepted definition. However, idealistically, impact certificates are (digital) proof of real-world action for which an individual is willing to invest time, money, or whatever means through which they can contribute to ensuring a positive general outcome. similar to a certificate for carrying out a long-term social or environmental action. This concept is largely similar to how carbon credits function. To demonstrate sustainability and the elimination of carbon from the atmosphere, a business or individual can buy a carbon credit. Impact certificates can be used for a wider range of purposes than simply carbon sequestration; they can represent many social and environmental impacts.
Organizations and individuals can have a collection of impact certificates for a range of impact actions. They can be used to show a person’s or organization’s commitment to a cause or value, as well as how much money they have invested in championing whatever actions those may be. Some of these impact certificates may have more inherent value than other certificates, creating a demand that can incentivize individuals or companies to accumulate these certificates from businesses, NGOs, government agencies, and so on, by carrying out these altruistic acts. The value of these impact certificates can be directly correlated to the value people place on them based on the impact they generate in the real world.
The value attributed to impact certificates can provide a unique opportunity that can be leveraged, collateralized, or used to create avenues for investments by interested parties. As such, creating a business model for impact-focused companies or individuals, whichever the case may be, As long as there’s demand for good and positive impact, impact certificates will always be valuable. It becomes possible to envision a new standard for the measuring, reporting, and valuing of any kind of positive impact by using verifiable data and verification proof, especially with the application of blockchain technology.
In what areas can impact certificates be used?
In reality, an impact certificate can be integrated into a wide range of areas, ranging from business activities to government initiatives, consumer products, and donations; essentially, anywhere a positive action is required, an impact certificate can stand as a valuable incentive. A handful of situations in which impact certificates can be generated and collected by individuals are:
- Making a donation to a non-profit organization
- Investing in carbon credits
- Preserving a tropical rainforest,
- Safeguarding biodiversity
- Establishing a non-profit
- Purchasing a social business
- Financing a scientific investigation
- Speaking at a conference
- Supporting programs for affordable housing, among several other activities.
The application of blockchain technology can make it even easier to create and distribute these impact certificates, making it easy to look them up and verify their authenticity without any doubt. A useful application for this would be an organization offering discounts to individuals who have an impact certificate for recycling 1,000 plastic materials. This incentivizes recycling while providing an obvious benefit to the individual. The application of social impact to create a positive impact is essentially limitless.
Impact certificates can function optimally as NFTs.
Seamless authentication and verification is one of the main issues the certification industry is now dealing with. What evidence do we have that a certificate was actually issued? Among other things, how long will it take to show that it was issued? Transparency is another problem with certified impact programs as they currently exist. One example that comes to mind is the market for carbon credits, where one of the main problems is that impacts aren’t nearly as transparent as they should be, and impact verification is also quite difficult.
The integration of impact certificates as NFTs provides a solution to several of those problems. Blockchain-based impact certificates provide an open-source, programmable digital infrastructure that can carry instructions to track, measure, value, and issue certificates based on the activities carried out. The transparency and ease of verification associated with blockchain technology have long been a standing quality, and in this case, a defining quality that can be aligned with positive impact activities. Smart contracts, with the advent of IoT, have the potential to automate several of these processes.
This creates the opportunity for incentive impact, which can be verified and rewarded financially, reputationally, and socially. For example, impact certificates for achieving Sustainable Development Goals or climate adaptation or mitigation strategies can be tracked, verified, and financed over a period of time with impact milestones to show for it. In addition, this creates opportunities for all impacts, regardless of where they are from, to be recognized and receive relevant attention, placing an emphasis on the quality of the impact rather than the quantity. The quality of the impact is determined by how much actionable data is available for verification.
Several criticisms exist around the concept of impact certification, citing a lack of standards for measuring impact and calling into question the effect of incentivizing and financializing impact and potentially corrupting these positive activities for personal gain. In reality, it will be impossible to know if the creation of a market for impact will have a negative impact; however, the truth is that the world we live in requires more social and environmental activity. If the financialization of good impact is what it will take to create the radical change required, then it certainly is worth exploring.
Impact certificates are a new dimension to an old concept, and as such, there will be room for improvement. However, what cannot be called into question are the positive ramifications it can have on the community and the planet in general. We could see a massive increase in the attitude of the public towards carrying out altruistic roles. Impact certificates certainly can play a significant role in good in the world.