As ESG disclosure requirements tighten, markets and regulators increasingly demand information that is verifiable and traceable. Blockchain is suggested to be a supporting infrastructure because of its decentralization, immutability and traceability. Prior studies have argued that blockchain may reduce information asymmetry, limit greenwashing, and support audit trails. However, blockchain is neither automatically trustworthy nor environmentally friendly; therefore, drawing on a risk-cluster lens, this paper critically reviews the literature and identifies three implementation risk clusters shaped by (A) risks related to monitoring, reporting and verification (MRV) quality and measurement frameworks alignment, (B) risks around privacy, data subject rights and accountability, and (C) risks linked to energy use, cost structures and the inclusion of smaller or weaker actors. This paper integrates these risks and their control conditions, and proposes a suitability assessment framework to determine when blockchain can generate sustainable net benefits in specific ESG disclosure scenarios, and to provide insights for internal control design and regulatory practices.
Yiming Wang (Tue,) studied this question.