Why we need a global decentralized ESG rating system - Tee Ganbold and Daniel Ellison

so today we're going to make a case for why we need a globalized decentralized esg rating system i'm here to introduce daniel my co-founder and cto hello everyone and i'm t gown bold and we're here at east denver 2022 so to introduce esg dao to you all to give you a bit of an idea you've all seen the film don't look up now is the time for us to look at ourselves it is time for us to look at ourselves and what we're doing to our planet today we can actually save ourselves from mass extinction mass extinction by looking at ourselves so we need truth to do this we need to take action we can mitigate risks we will save our planet so our vision imagine a world where you have an incredible imagine you can monitor every bit of esg data on a company did you know that every company right now a third of every company kirk i was telling you over brunch is esg rated imagine that a third of every company trading in the public stock exchange that could be every company guess what a third of those companies are we do not know why they are available why they are esg compliant so our vision is to create a real-time view of every esg or every company trading every small medium enterprise but let's make it actually possible but how do we do this it's a pretty broad and it's a very audacious goal but we can do this if we aggregate every esg database and if we enable every company to be able to assess themselves the health of their organization imagine you could today as a company business owner look at your environmental social and governance data and say okay here's why i'm falling behind here's where i can actually improve you do not necessarily have to share that data but what you might want to do is share that within your team within your management to mitigate the risks for your own business think about your own business and then once you have that and once you have that data you can make decisions to improving your esg score that is how we start to make the right progress with technologies today and web3 we have privacy we have got incredible developments in zero knowledge proofs we have got dow technologies we have the ability now to pull together lots of data sources and not see where it's coming from we have the ability now to also make sure there's an aggregate view of data and to see the overall esg view and today we have a ability to have a governance model using dell technologies so let's let's step back for a moment what is an esg rating system so an esg rating system is a environmental social and governance pillar we we have made a fantastic start so far we've got a few organizations that are already tracking the health of an organization but we believe that it is important to start to really take the next step it is time to actually rethink it a little bit further take it to the next step we can improve it so why do we think it's broken so the fundamental problem we believe is that it is opaque to us all well the businesses we own are actually they are they're the businesses we own as citizens we put our capital into the markets we own those businesses we have a right to know how they're performing on the environmental and social and governance side we need to stop for a second and say what is what is every other business doing if a third of every company in the public markets has an esg score what about the rest and why the third that is already available how are they getting these scores let's think about that for a second so we believe the only reason why businesses will not share their esg scoring there are actually two categories of businesses number one a business might have a fantastic esd score but they will not share it because it's a competitive advantage you will be performing very well as a business from an economic standpoint if you have a high esg score so you might want not want to share that data it is a competitive advantage that's camp number one camp number two are businesses that are greenwashing or businesses that have something to hide that are destroying our planet yes they are destroying our planet so what can we do if we if we actually create the right incentive models without revealing the data on competitive data of businesses we do not have to share business data because that is that is not going to happen it is not strategic it's not going to and no business will ever share their data i will not share my own data let alone a business if you think about it so we believe a few incentive models can encourage businesses to share their data so number one if we look at privacyfast esg rating this is a product we've created imagine you can share your data first of all imagine you're a business you can get an idea of the health of your business from an esg perspective but imagine you can say well a finance team let's go and make sure that our water we've used less water in that part of our supply chain and here that will result more of less operating costs therefore higher margins imagine that for a second imagine however if that data is private but if you want to publicize it if you're a large entity if you're a small medium enterprise imagine if you publicize it and then you get political or if you get let's say government incentives what if you get a tax break what if you get financial returns what if you get the economic value from sharing that data more publicly number two we believe that and we've seen a lot of data to suggest that there needs to be an aggregation of financial and non-financial reporting so financial non-financial reporting is based we call it first second third-party data your third-party data is everything on the internet second-party data is best information about your business online but very related to you say your esg or sustainability reporting that other journalists have been writing about you your first party data is your business data your business data that you have internally you might not want to share that but we are going to help you pull it together in the most efficient manner and finally there are there is no real-time view of our global esg rating system of businesses these are businesses that create the bottles that we use every day global commerce touches everything we do everything here touches the supply chain that is global commerce everything that we do is run by an organization from a business if we help businesses to change their behavior and if we know how they're doing but if it's private and if there's an aggregated real-time view without knowing exactly who's doing what maybe we'll have an accurate reading of their health an accurate reading of how we're doing as a global society and to making sure we're making this progress so you're all thinking why web 3 again if let's say two years ago ahead of the global pandemic i was working on a global supply chain knowledge graph business and actually this is something i've been thinking about and building for years a thesis that i've been building for years we did not in the global supply chain have zero knowledge proof we did not have the privacy-enabled technologies we have today we did not have a governance system which is now called the decentralized autonomous uh organizations and we're going to talk a little bit about that in a second and we also did not have the policy and financial incentives tied to the current system so these are some of the challenges we see in the global esg reporting efficacy so a lot of find a lot of i would say global consultancies have been focused on and collecting a lot of data from executives to see what is the problem why is it not happening and by the way this is just one view we think the dao is a solution to this to making sure we can actually fix some of these problems whether it's a disconnection between esg reporting and uh financial media so that's a lot of data being pulled together secondly lack of real-time information we have these technologies today by the way the lack of information about how a company creates long-term value and so on so forth mething like this is pretty tough let's let's let's be very frank i'm a i'm a realist daniel's a realist and we we know this is a pretty tough task we have got the former head of china the world economic forum someone who's been looking at the international system for 15 years someone who is at the olympic committee bringing together international stakeholders bringing together the global experts and esg a hundred of the wealth experts to create the expert panel that makes up the dow imagine at the moment we have a number of organizations very large financial organization rating agencies run by an executive team a management team people who might have good friends at large companies imagine we can actually incentivize not um we by the way a lot of great work has gone into the sas b's mis msi c's of the world we want to actually pull them together together with the experts the academics who've been at the world economic forum who go there every year who create these reports to come together but the academics and the experts to be paid by the dow so the governor's structure of the dow is critical because you we are going to pay the experts who know the data who work every single day with the data who know what who know the challenges and who have been looking and reading the reports to create such a system but to give you an idea of the actual product we don't believe that we need to recreate anything let's not try to do this let's create have you guys has anyone used a sky scanner have you guys used skyscanner you know skyscanner you go and you see all the different flights and you get a you know recommendation engine and you can pick which one works for you imagine you have a you as a business leader have a sky scanner for all the different esg rating systems then the pricing is available then you also get all the consultancies that provide certain auditing services i would if i were a business leader whether i'm an owner or a executive i'd look on this platform called esd rate i would pick the best price the highly rated service and product and i would pick one just to check the health of my organization to check you know we check the health of our bodies i think it's the same we can apply that to our own businesses because i'll give you one case study this is one of my greatest case studies so i've read the history of one of the largest industrial companies in america this company went from 500 million to 20 billion i don't want to reveal the name but this family had one crisis they had they had an environmental crisis that has haunted them from a pr perspective their entire let's say for over 15 years imagine you can mitigate those risks by analyzing that data by knowing internally get your teams to look at the health of your organization make sure that you do but again you don't have to share it with everyone until you're ready until you want the tax incentives until you won the financial incentives you don't have to share it but it is important for you to get the help and it is important for all of us to get the help in a transparent way to see where how we're all doing how is the health of our society which is largely run by companies and we all know that so let's create again we have guidance today we do so we let's work with incumbents and very happy to work with incumbents let's create a transparent process so here's the key a transparent process in this and let's create a private yet independent global rating agency to monitor the health of businesses today because it is critical to saving all of us literally all of us here today so we believe the validators of this data needs to be global it needs to be independent and we need businesses to earn our trust today so if you look at the market of esgs did you know did you know that this is global most very sophisticated economies have an esg market a lot of people probably did not know that and a lot of people do not know by 2025 every company actually a third of the companies in the stock exchange con if we look at the same forecasting will be worth 53 trillion think about the scale of that how large is the crypto economy right now 2.9 billion how large is the esg market in 2025 53 trillion that is a third of commerce that is a lot so let's think about the impact here and again this is tied to economic incentives we are after all in web 3 where all is we all look at incentive models we have vcs sitting here we have economists sitting here we have academics we have business people we have scientists we need to look at the data the data clearly says your business is health economically will do well if you have a higher esg scoring so imagine a world let's go let's take a large e-commerce platform imagine you're amazon and you have an esg score rating system alongside your e-commerce products imagine the companies that you list have a five-star rating i bet you that recommendation engine that amazon is very good at will sell more products and guess what if we pull those products up and if we sell more sustainable goods we are going to transform our society because there are businesses who are trying to source the right goods that are trying to make sure there is no child labor they're doing the work they have the data let's pull those businesses up by using technology because we have those products today let's just pull it together that's literally what daniel and i and the team have in mind so going back to our business model we have the incumbents we have all the esg rating systems out there already we have the data providers we have the web 3 esg rating projects that are about to rise guess what let's pull them together let's make this available to every business why should we not even be rating web 3 companies think about it if we could we were speaking to ryan at missouri ryan imagine we could have an overlay and look at the health of web3 companies and we can sustainably grow as an ecosystem let's think about let's not go fast and break things let's actually try to think about it but in a quantitative way let's measure it let's think about it as a leadership team in organizations so that's where we play we actually bring all the pieces together so the greatest case study for this is make a dell so daniel and i actually happen to be sitting with the maker dial team this morning and we verify the numbers guess what do you know how much how profitable a decentralized banking system that we have today is let's let's read out the numbers 100 million a year 4.5 billion on assets on the balance sheet it is the most efficient bank in the world it is the most transparent bank in the world right now its banking processes are transparent it is completely transparent you can see everything they're doing it is also a very small and it is a team that works in a distributed way it is changing the game but guess what user data is private we also asked them this morning did we not we did we asked them this morning and they said they do not know who is using uh make adele's who they don't know their customers why should they why should we know anyone's data why should we know any individual's data why should we know any business data we shouldn't but we should have efficient processes and we should have transparent processes and have more efficient businesses today so if you look at the market size for those who are investors and those who are on finance uh it's a 2.5 trillion a billion dollar industry but if you look at the total addressable market it has 140 trillion that is the total addressable market for the industry so our let's say our esg ecosystem roadmap we're here today at east denver february 2022 and we're talking quite publicly about the esg dao we are by june 2022 when we give a talk at consensus we're going to announce our initial well the people are inviting as the dao initial community members these will be global experts a hundred of those that know and have been studying this every single day not daniel not i but the experts and we are going to that's tier one tier two fifty percent will be those with a voice those who can influence make change imagine your elon musk sitting there imagine your leonardo dicaprio matt damon leonardo dicaprio just created a film saying don't look up i mean this is highly highly relevant elon musk you're doing fantastic things matt damon with your water initiatives let's pull together resources let's make sure we incentivize our experts to oversee and govern this it is not it really requires the experts to and then we have our esg community submitting proposals and then we will start to look at the rating system of course these timelines are variable uh disclaimer so the team uh that's daniel you can see over there and he's very spacey and uh that's actually we worked on an asteroid mining deal carg is sitting in the audience we all worked on the planetary resources deal at consensus five years ago that's how daniel and i know each other dave park he comes from finance he comes from wall street he he knows and understands the challenges of financial data and he also understands why these rating companies exist so we really want to work in partnership as crypto native individuals we want to work in partnership with the financial services industry and our cpo uh is also from wall street initially then he was a lawyer then he came up he became a graph database guy imagine that and he also is very good at design he actually designed this so [Music] ishan he's our cro he's looking at if i after speaking i need to go and have a nap he'll be going doing the mingling that's that's it so i just want to say thank you to everyone and we really again to wrap up it is time for us all to help our businesses the businesses we support the businesses we buy from understand the health of their organizations from an environmental social and governance perspective let's make sure that our the businesses that we're buying from that we invest in we are they align with the values in which we all believe let's make sure that they're moving in the right direction but guess what we can vote with our investment we can vote with how much we buy so let's start the process but let's also do it in partnership we can we do not need to ignore our history let's work all together to make this happen so [Music] thank you very much