EY, one of the world's four largest consulting and accounting firms, has built an Ethereum-based system to help big businesses manage their carbon footprints and satisfy environmental, social and governance (ESG) mandates.

The carbon tracking prototype, which builds on the firm’s existing supply chain traceability product suite, is known internally as “Ops-chain ESG,” said EY global blockchain leader (and CoinDesk columnist) Paul Brody.

Many first-wave enterprise blockchain projects worked within the constraints of closed-by-design shared ledgers, situations where it might make more sense to simply run a web server. The EY blockchain team, in contrast, has remained focused on how business users can leverage Ethereum, the public blockchain that allows content-rich applications to run on it.

In fact, the data privacy concerns that have hobbled many applications of enterprise blockchain, largely melt away when it comes to transparent carbon emission tracking and accounting, hence an explosion in interest from EY clients for the new product, Brody said in an interview.

“When it comes to tracking carbon outputs, companies want to show that they’re both properly tracking their carbon and properly offsetting it,” Brody said. “They’re very comfortable letting the whole world know that they are taking into account their full carbon footprint, so we’ve made a lot of progress.”

The challenge met by a tokenized approach is the need to get granular data for determining the carbon footprint of the many component parts of, say, a packet of medicine or a TV set or a mobile phone, said Brody.

Using the example of a phone, the various parts such as the display, battery, SIM card and CPU each have their own carbon footprint. Then there’s the additional carbon footprint associated with transporting the parts, assembling them and marketing the product.

“Blockchain tokens that represent a CPU made in Taiwan, for example, and a display from Japan can transcend boundaries allowing a sum of all the carbon footprint data and carbon offsets to be calculated including the footprint when the parts are married together,” said Brody. “It’s a really powerful tool because almost nothing that gets to your border these days is made entirely by one company, everything is an amalgamation of other companies.”