Open:FactSet Forum

New Report From ISS ESG: Bitcoin from a responsible investor’s perspective: Do the ESG risks outweigh the benefits?

Below is an excerpt from ISS ESG’s recently released paper “Bitcoin from a responsible investor’s perspective: Do the ESG risks outweigh the benefits?” The full paper is available for download from the Institutional Shareholder Services (ISS) online library.

KEY TAKEAWAYS

  • Proof-of-work cryptocurrencies raise a range of concerns for responsible investors, particularly on the topic of climate change risks.
  • Climate impacts associated with the maintenance of the network can be seen to outweigh the benefit derived from a digital store of value.
  • ESG data can be leveraged to assess companies involved in the wider Bitcoin ecosystem.
  • The governance structure of Bitcoin has proven remarkably resilient in its relatively short history.
  • Although there are initiatives to make Bitcoin less impactful for climate, the technologies and innovations that would enable such transition are not yet realized.
  • Future iterations of digital assets may perform differently in terms of ESG risks.

By Johanna Schmidt, Senior Associate, ISS ESG. Timo Honsel, Senior Associate, ISS ESG. Thiago Toste, Associate, ISS ESG.