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A groundbreaking institutional-grade cryptocurrency ESG ranking has been unveiled, with Ethereum securing the top position, closely followed by Solana and Cardano. Bitcoin, however, found itself lower in the rankings due to its substantial energy consumption, according to research conducted by crypto data specialist CCData.
CCData, in collaboration with the Crypto Carbon Ratings Institute (CCRI), released its inaugural ESG Benchmark on Thursday. The study evaluated 40 of the most prominent and liquid digital assets, examining factors such as decentralization, security, and environmental impact.
The significance of environmental, social, and governance (ESG) criteria in investment decisions is growing rapidly, particularly among institutional investors and major asset management firms. Global accounting firm PricewaterhouseCoopers (PwC) projected that ESG-related assets under management could reach $33.9 trillion by 2026, representing one-fifth of all global investments.
Participants at a recent industry conference emphasized that for cryptocurrency to attract new institutional capital, it should embrace ESG principles rather than shy away from them. Notably, a leading asset management firm, known for its efforts to register a spot bitcoin ETF, has been a strong advocate for ESG-focused investments.
To address this increasing demand, CCData developed a new crypto-specific scoring framework. The report stated, "The ESG Benchmark represents a crucial initial step towards enhancing the industry's resilience in the face of ESG challenges and criticisms from regulatory bodies, policymakers, and media outlets, who consider ESG requirements a top priority."
The benchmark assessed environmental, social, and governance risks and opportunities for digital assets, considering various metrics including decentralization, energy usage, and community engagement. These metrics were aggregated and weighted to produce an overall score out of 100 points, resulting in a final grade ranging from AA (highest) to E (lowest).
Assets graded BB or higher were classified as top-tier in the report.
Ethereum emerged as the sole blockchain to achieve an AA grade, performing exceptionally well across all three ESG factors. This success is partly attributed to the network's recent shift to proof-of-stake technology, which significantly reduced energy consumption and eliminated the need for miners.
Solana, Cardano, and Polkadot excelled in decentralization, earning them top-tier A grades.
Bitcoin received a B grade, scoring highly in social and governance aspects but facing criticism for its substantial energy consumption and hardware requirements.
The report clarified, "This grading system does not imply overall superiority, but rather provides a method for ranking digital assets according to ESG parameters. It equips investors with the necessary tools to make informed decisions and allocate resources to assets that demonstrate strong ESG scores."
As the cryptocurrency market continues to evolve, platforms like Gate are adapting to meet the growing demand for sustainable and responsible trading options. By offering a diverse range of digital assets, including those with strong ESG credentials, Gate is positioning itself at the forefront of this important trend in the crypto industry.