Blockchain Technologies for Partnerships and Outcomes-based Approaches

Session Overview

Can blockchain technologies help improve the ways in which we work together towards better social and environmental outcomes?

We welcomed speakers with a wealth of cross-sectoral knowledge and experience applying blockchain technologies for measuring, verifying and delivering social impact. The session had a practical focus, structured around experts' insights and case studies.

Speakers

Houman Haddad - Head of Emerging Technologies, United Nations World Food Programme

Teemu Kääriäinen - Senior Advisor, Public Sector ICT Department, Ministry of Finance Finland

Shaun Conway - Founder, Ixo

Areti Kampyli - CEO, Alice

Discussants

Luigi Telesca - Co-founder and CEO, Trakti

Tim Cummins - President, World Commerce and Contracting; Professor, University of Leeds School of Law

Agenda

1. Welcome
2. Case Study Presentation
3. Discussant's response and reflections
4. Open Q&A
5. Closing remarks
   

Meeting Summary

[Digital Identity Project]

We began the session by discussing Finland’s digital identity project using blockchain technologies.

▪ Storing various forms of documents and licenses in a digital format can ensure equitable access to efficient service delivery, while protecting user control over their personal data. The ultimate goal of the digital identity project is to build an ecosystem with an integrated infrastructure. In this context, Finland is also working with European nations towards a development of common legislation to enable secure and efficient information sharing across various jurisdictions.

▪ In considering the implementation of blockchain-enabled digital identity project, the importance of the foundation and infrastructure needs to be recognised. Since such foundation cannot be built overnight, it requires appropriate sequencing and adoption of hybrid solutions to ensure interoperability on multiple levels of governance and across sectors. In achieving interoperability, helpful existing resources and open standards developed by organisations such as the World Wide Web Consortium (W3C) should be leveraged.

[Development Impact Bond]

We then reflected on a blockchain-based pilot programme of a development impact bond with Ixo, exploring how blockchain might help build system-level solutions to challenges in adopting outcomes-based approaches.

▪ There are multiple system-level challenges and resource requirements in implementing outcomes-based financing mechanisms, including the level of expertise, upfront commitment, and coordination required for delivery. In this context, blockchain technologies can alter the ways outcomes-based approaches work by facilitating coordination, digitalising and automating outcomes verification, and using the outcomes data in adjusting the price.

▪ For instance, Ixo’s Alphabonds provide a way to make outcomes-based instruments more adaptable to changing circumstances, adjusting the outcome pricing in accordance with changing probability of outcomes achievement. In a development impact bond within EdTech sector, for instance, these signals can come from the data collected from tablet devices distributed at the outset of interventions. These features may alleviate the administrative burden and help scale outcomes-based approaches that offer localised solutions.

[Automated Impact Data Analytics]

We then turned to the journey of Alice, a company providing automated data analytics for verified impact data on blockchain.

▪ Alice’s operation model has seen a pivot in the last few years, shifting away from its initial model of payment-by-results mechanism towards its current model of automated outcomes data analytics. Blockchain does not automate the processes of outcomes verification as it requires manual input. Rather, its value lies in storing the data in a tamper-resistant and transparent manner.

▪ Resonance, a social impact property fund manager based in the UK, uses Alice to manage impact data linked to various charity partners and funding streams in social programmes for the unhoused population. In its current iteration, Alice is developing an infrastructure on which achievement of pre-defined outcomes are financially rewarded to accelerate the beneficiaries’ journey towards financial independence. It is hoped that this model helps programme managers learn ‘what works’ in supporting the unhoused population.

[Expert Responses]

Finally, we heard from experts with a wealth of cross-sector expertise in contract management sharing their reflections on the case studies and the potential of blockchain technologies in the coming years.

▪ Blockchain is used to support deliver greater value for money by simplifying and streamlining costly contractual management processes. In the private sector, transparency is an enabler for greater oversight and economic resilience, facilitating a move towards visibility of supply networks and ecosystems. There are also emerging applications in the public sector. For instance, blockchain may also help procurement processes by breaking down the data siloes across agencies and enhancing oversight and auditability.

▪ However, the widespread adoption has been hindered by familiar problems of any technological solutions, including inconsistent data records and user accessibility. In addition to these issues, blockchain also suffers from an image problem due to the public’s primary associations with cryptocurrencies. For the potential of blockchain technologies to fully materialise, there is a need for a fundamental shift away from transactional approaches to contract and economic management towards more relational approaches.

▪ Attention needs to be paid to the overall architecture rather than focusing on a single application of the technology in an isolated manner. Currently, data is stored in incompatible systems, resulting in inefficiencies and undermined trust in the insights these data can provide. Bourgeoning frameworks and concepts such as ESG investment and social value provide opportunities to rethink our approach towards society and economy. Blockchain-enabled transparency and decentralisation can give shape to these abstract concepts by streamlining the process of reporting and monitoring the performance across sectors and help us see these overlapping systems more holistically.

Discussion points

[Trust] Widespread distrust towards governments and institutions may make rapid adoption of emerging technologies more challenging. However, the experience during the pandemic has resulted in a dawning realisation of the need to collaborate and improve transparency in trading relations in the private sector. While it may be implausible to expect this shift at a national level given the current political climate, a localised approach driven by VCSE sector and local government may be effective in delivering blockchain-enabled initiatives.

[Power] Scepticism towards governments and institutions is also linked to historical distribution of power and unequal control over various types of resources. While the anonymity and pseudonymity afforded by blockchain can be controversial, it can also be an equalising force that enables greater economic and political participation.