AI Blockchain IoT Convergence for ESG Digital Transformation Webinar

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AI Blockchain IoT Convergence
for
ESG Digital Transformation
May 20, 2021
Alex G. Lee

ESG Ecosystem

©2021 TechIPm, LLC All Rights Reserved
ESG Investment Matters?
WSJ on ESG Funds

ESG Management Matters?

Carbon Disclosure Project (CDP): www.cdp.net/en
Climate Disclosure Standards Board (CDSB): www.cdsb.net
Global Real Estate Sustainability Benchmark (GRESB): https://gresb.com
Global Reporting Initiative (GRI): www.globalreporting.org
International Financial Reporting Standards (IFRS) Foundation https://www.ifrs.org/
International Integrated Reporting Council (IIRC): https://integratedreporting.org
International Organization for Standardization (ISO): www.iso.org
Sustainability Accounting Standards Board (SASB): www.sasb.org
Task Force on Climate-related Financial Disclosures (TCFD): www.fsb-tcfd.org
United Nations Sustainable Development Goals (SDGs): https://sdgs.un.org
United Nations System of Environmental Economic Accounting (UNSEEA): https://seea.un.org
World Business Council For Sustainable Development (WBCSD) ESG Disclosure Handbook
https://www.wbcsd.org
World Economic Forum (WEF) ESG Reporting Metrics and Disclosure Standards https://www.weforum.org
ESG Reporting Frameworks & Guidelines

The risk in ESG investing is the difficulty in measuring how well a company is doing with ESG
issues because of a lack of standard terminology. Leading ESG standards organizations have
declared their intent to collaborate to develop ESG Standards . The IFRS Foundation is forging a
path toward a global common language for sustainability .
Financial market participants are now required to make mandatory ESG disclosures: EU
Sustainable Finance Disclosure Regulation (SFDR). The requirements are designed to make it
easier for investors to make informed investment decisions, improve industry-wide
comparability, and prevent greenwashing (a false impression or misleading information). The so-
called level-1 disclosures must be complied with as from March 10, 2021 . Asset managers must
publish on their websites information about their policies on the integration of sustainability
risks in their investment decision-making process or their investment advice or insurance
advice . They must also provide information on certain features of financial products that promote
environmental or social characteristics.
When the COVID-19 pandemic hit, it brought widespread social unrest around income inequality
and worker safety . The death of George Floyd while in police custody put a necessary spotlight
on the ugly systemic racism in the U.S. The ESG conversation evolved rapidly to give more
priority to social issues.
President Joe Biden pledged to set the U.S. on the path to net-zero greenhouse gas emissions
by 2050 . The Federal Reserve recently joined the Network for Greening the Financial System, a
group of central banks and supervisory authorities from around the world that are collaborating to
develop climate risk management tools for the financial sector.
ESG Trends to Watch in 2021 (AI Summarization)

ESG Knowledge Map (AI Topic Modeling)

My ESG Book Recommendation

AI Blockchain IoT
Introduction

AI Innovation State Of The Art
3D Image Recognition

Microsoft AI for Earth Project
Source: https://www.youtube.com/watch?v=f8wPULL7VYw

Blockchain State Of The Art: Issues with Public Chain
Directed Acyclic Graph (DAG): IOTA, Locus Chain
Blockchain Interoperability
How to communicate/transact across different blockchain networks?
Layer 1 approach: multichain/cross-chain blockchain networks -
Cosmos/Polkadot
Layer 2 approach: relays/sidechains/cross-chain swaps -
Plasma/Rollups
Blockchain Scalability
High scalability can process high volume transactions/achieve
high TPSs (transaction per second)
Layer 1 approach: Ethereum’s dynamic sharding/ Polkadot
Layer 2 approach: Bitcoin’s Lightning Network/ Plasma/StarkWare

UPCO2 Blockchain based Carbon Credits Token Project
Source: https://www.youtube.com/watch?v=qsXo3hJTVGk

IoT Innovation State Of The Art: 5G & Edge AI
Source: https://www.researchgate.net/publication/342402668_Towards_Edge_Intelligence_Multi-
Access_Edge_Computing_for_5G_and_Internet_of_Things; https://jelvix.com/blog/what-is-edge-computing

BlocPower: Fighting Climate Change with IoT & Data
Source: https://www.youtube.com/watch?v=Du0iYMHeJoc

AI Blockchain IoT Innovation Insights from Patents
Ref. https://www.slideshare.net/alexglee/ai-blockchain-iot-convergence-insights-from-patents

AI & Blockchain Applications
for
ESG Investing & Financing

Demo video Link: https://www.youtube.com/watch?v=iZB-U0zrzr8
Text summarization for ESG trend analysis
Topic modeling for ESG knowledge map development
Text analytics & classification for ESG performance scoring & opportunity/risk
scoring
ESG scoring with respect to Stock earnings & volatility analysis
Sentiment analysis for Greenwashing detection
Semantic sentiment search & analysis for advanced ESG scoring
- ESG Data Augmentation-Text Translation
- ESG Data Augmentation-Text Generation
- Supervised learning for ESG classification via auto-labeling
AI Applications for ESG Investing Demos

Step 1. Tokenize ESG related assets (e.g., solar power plants, wind farms,
carbon credit) or projects (e.g., energy-efficient digital infrastructure
development) , as a Fungible (ERC20) Tokens or a Non-Fungible-Token (NFT)
(ERC721/ ERC1155 tokens)
Step 2. For fungible tokens, use them as collateral for some money market
DeFi liquidity pools to borrow money values or monetize through fund raising of
a specific ESG project
Step 3. For NFT, put it into a specific bonding curve (smart contract) & anyone
can buy the shares in the ownership rights by sending collateral and receiving a
fungible (ERC20) bonded token. The price can be set by pre-selecting a
bonding curve that makes sense for the NFT/underlining asset.
DeFi Based ESG Financing Platform Development

Part I Blockchain DeFi New Ecosystem
Data Tokenomics: Filecoin/Ocean Protocol/SingularityDAO
DeFi for Off-chain Assets: OpenDAO
Video Link: https://www.youtube.com/watch?v=9n2Bn8es3Io
Part II Blockchain DeFi Liquidity Pool & Mining
Bonding Curves for Liquidity Pools/Automated Market Makers/NFT
Constant Function Market Makers
Automatic Asset Allocation and Aggregation for Yield Farming
Video Link: https://www.youtube.com/watch?v=RmcHU5M_YMg
Part III Blockchain DeFi Token
Crypto-Collateralized Stablecoins
Token Engineering/Monetary Policy: Pool token supply & distribution & pricing & incentive
Governance Tokens
Part IV Blockchain System
Blockchain interoperability/scalability/privacy/security
Layer 1 (Ethereum/Cosmos/Polkadot) & 2 (Plasma/ZK rollups) Systems/Gas Fee Reduction
Money Legos/Composability
Patent Development
Video Link: https://www.youtube.com/watch?v=osvvEktjyBE
Part V Risk Management
Technical Risks: smart code vulnerability/front-running attack
Financial Risks: collateral risk/exploitation of flash loans/impermanent loss
Legal/Regulatory Risks: SEC/FinCEN/FATF/GDPR
Part VI AI Applications
AI for Blockchain System
AI & Blockchain for Finance
AI for DeFi Asset Management: yield farming optimization/AI advisor
AI for DeFi Trading: algorithmic trading/arbitration bots
Video Link: https://www.youtube.com/watch?v=0pK96t6fYWs
DeFi Reference

AI Blockchain IoT
Convergence

AI+Blockchain+IoT Convergence AT A Glance

AI Blockchain IoT Convergence System Development
Link: https://www.slideshare.net/alexglee/ai-blockchain-iot-convergence-
system-development
AI Blockchain IoT Convergence System Technology & Business Development
Link: https://www.slideshare.net/alexglee/ai-blockchain-iot-convergence-
system-technology-business-development-239302652
AI and Blockchain Applications for Patents
Link: https://www.slideshare.net/alexglee/ai-and-blockchain-applications-for-
patents
5G Based AI + Blockchain + IoT Convergence AT A Glance
Link: https://www.slideshare.net/alexglee/5g-based-ai-blockchain-iot-
convergence-at-a-glance
AI Blockchain IoT Convergence Reference

AI+Blockchain System Demo for Medical Data Sharing/ Diagnosis

AI+ Blockchain System Demo for E-Commerce Use Case

Patent applications in the USPTO/EPO/IPO during the period of January 1, 2010 -
September 30, 2020 in priority date that specifically describe the major
AI+Blockchain+IoT integrated technologies are searched and reviewed. 1,288 published
patent applications that are related to the key AI/Blockchain/IoT technology innovation
are selected for detail analysis.
Convergence Technology Innovation Insights from Patents

1. Blockchain-based Privacy-Preserving Federated Learning System
2. Blockchain-based Decentralized IoT & AI Data Marketplace
3. Blockchain-based Trustworthy AI & IoT Systems
4. Blockchain-based Decentralized Parallel Edge Machine Learning
5. Predictive Maintenance Platform for Industrial Machine using Industrial IoT
6. AI+Blockchain System for Car Sharing Service
7. Connected Autonomous Vehicle Communication Management System
8. 5G-based AI+Blockchain+IoT Edge Computing System
AI+Blockchain+IoT Convergence Use Case System
Implementation Insights from Patents
Ref. https://www.slideshare.net/alexglee/ai-blockchain-iot-convergence-use-case-system-
implementation-insights-from-patents

AI Blockchain IoT Convergence
for
ESG Digital Transformation

AI Blockchain IoT for ESG Digital Transformation AT A Glance

Patent applications in the USPTO/EPO/IPO during the period of January 1, 2010 -
September 30, 2020 in priority date that specifically describe the ESG related AI,
Blockchain, IoT technologies are searched and reviewed. 625 published patent
applications that are related to ESG digital transformation innovation are selected for
detail analysis.
ESG Digital Transformation Innovation Insights from Patents

1. Use Case for Reducing Carbon Footprint (AI + IoT)
2. Use Case for Increasing Renewable Energy Use (AI + Blockchain)
3. Use Case for Waste Management (AI +Blockchain+IoT)
4. Use Case for Workplace/Workforce Management in Social-Human Care
(AI+IoT)
5. Use Case for Cybersecurity & Privacy in Social-Business Relationship
Management (AI +Blockchain+IoT)
6. Use Case for Corporate Governance (Blockchain)
AI Blockchain IoT Convergence for ESG Digital Transformation
Insights from Patents
Ref. https://www.slideshare.net/alexglee/ai-blockchain-iot-convergence-for-esg-digital-
transformation-insights-from-patents-248353384

ESG Performance
Reporting & Evaluation

ESG Performance Score - Materiality Comparisons Across Industries

Source. https://www.mckinsey.com/business-functions/sustainability/our-insights/bringing-
discipline-to-your-sustainability-initiatives
How to Determine Materiality?

Source. https://materiality.sasb.org/
SASB Materiality Map

In 2015, Volkswagen accused of cheating of its diesel cars emissions testing.
Volkswagen was identified as the most sustainable auto manufacturer
according to the Dow Jones Sustainability Index in 2015, the year of the
scandal.
In 2019, Pacific Gas and Electric (PG&E) filed for bankruptcy in the face of
potential civil liabilities due to multiple wildfires in California. PG&E recognized
the risks of wildfire that is related to climate change risk and could address the
risk appropriately.
PG&E lists a number of recognitions in sustainability from 2016 including the #1
most sustainable electric and gas provider from Newsweek Green Rankings
and the #1 utility in Corporate Responsibility Magazine’s 100 Best Corporate
Citizens ranking.
Source. Daniel C. Esty; Todd Cort. Values at Work: Sustainable Investing and ESG Reporting,
Springer International Publishing
Issues with Current ESG Performance Evaluation

ESG digital transformation (DX) measures as a forward-looking analytic tools
for ESG performance scoring?
What’s the ESG DX metrics? & How to measure the ESG DX metrics?
ESG DX metrics as a tool for selecting best-in-class investment portfolio?
ESG DX metrics as a global standard for ESG performance evaluation?
Forward-looking ESG Performance Evaluation

Thank you!

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AI Blockchain IoT Convergence for ESG Digital Transformation Webinar