ESMA Consultation Response: Sustainability and ESG Insights


Lesley Chavkin

Publishing date


The Stellar Development Foundation (SDF) is pleased to submit its comments to the European Securities and Markets Authority (ESMA) regarding environmental sustainability impacts of blockchain consensus mechanisms. ESMA sought feedback from industry and the public on the development of technical standards in connection with the Markets in Crypto Assets (MiCA) regulation, including sustainability indicators for distributed ledger technology. In our response, we point to existing methodologies that can help inform EU policymakers as they build an assessment framework for blockchain consensus mechanisms. We also highlight the unique environmental efficiencies of the Stellar network.

SDF strongly supports ESMA's efforts to create a unified approach for assessing both positive and adverse sustainability impacts of blockchain technology. We encourage ESMA and other EU regulators to draw from existing methodologies to assess environmental effects – including work that SDF has undertaken.

In 2022, SDF enlisted PricewaterhouseCoopers (PwC) to create the Blockchain Sustainability Framework, which allows organizations to evaluate their environmental footprint when leveraging blockchain technology. The framework is a comprehensive tool that measures the cumulative environmental footprint of blockchain operations, considering factors like electricity use, greenhouse gas emissions, e-waste, embodied carbon, and differences in consensus mechanisms. It provides an environmental impact methodology, comparative assessments, and blockchain simulation modeling for projecting future impacts as networks scale.

In our response, we also urge ESMA and other European regulators to ensure their approach to environmental, social, and governance (ESG) challenges is truly holistic, and considers more than just environmental effects of novel technology. SDF supports the development of comprehensive methodologies and frameworks that enable stakeholders to assess the broader impact of blockchain protocols on society and governance, along with environmental sustainability.

SDF welcomes the opportunity to contribute to ESMA's thinking on sustainability indicators, and to help build a greener, more responsible future. We remain committed to working collaboratively with policymakers globally to develop clear legislative and regulatory frameworks for blockchain technology.