Leveraging Blockchain Technology for Corporate Social Responsibility

by Emmy B. Gengler 0

As a technology service provider for Fortune 500 companies, Softjourn gets lots of requests to work on new technologies. One of these new technologies is blockchain. It’s something that intrigues our clients and developers, given all the buzz around it.

According to the World Economic Forum, 10 percent of global gross domestic product will be stored on blockchain technology by 2027. The benefits of blockchain technology include increased financial inclusion for emerging markets, disintermediation of financial services, a surge in tradable assets, improved property records in developing markets and increased transparency since blockchain essentially is a global ledger storing all transactions.

But while the blockchain technology is important, what we find even more intriguing is what it facilitates: smart contracts. According to Deloitte, smart contracts represent a next step in the progression of blockchains from a financial transaction protocol to an all-purpose utility by not simply keeping a record of financial transactions but also automatically implementing the terms of multiparty agreements. All this is done with a reduced risk of error or manipulation, they point out. “Blockchain gives us data assurance i.t.o. who did what, when. Building on this, smart contracts can give us process assurance i.t.o. who did what, how. This is really the heart of the value proposition of ecosystem applications according to Paul J du Plessis, Head of Partnerships at Monax.

Imagine the possibilities here. And that’s precisely what we did. Our contemplation of the implications of smart contracts has led us to envision a social responsibility component through which employees can be encouraged to “spend for good.” Using smart contracts via blockchain has the potential to create endless scenarios in which organizations can collaborate to encourage charitable donations, both in their own communities and abroad where financial transactions can be more challenging, especially in emergencies. In fact, UNICEF is already working on this concept with a blockchain solution to digitize donations and create transparency in global aid.

With all of this disruptive potential, we decided to test out blockchain and smart contracts for ourselves by creating an in-house employee loyalty system based on cryptocurrency with smart contracts. We call our internal currency “SJ coins” and employees can spend it on drinks and snacks using a loyalty system we designed with blockchain technology. There are a number of available blockchain and smart contract systems. Our research led us to Monax Industries for a permissioned chain with rich smart contracts based on Ethereum blockchain technology. Monax also has excellent documentation and is easy to set up and run. We purchased a Saeco vending machine without a payment system and installed a Raspberry Pi single-board computer.

Our developers used a hardware keyboard emulator to control sales on the vending machine through a web service. Raspberry Pi runs a Java-based client for the blockchain to run smart contracts, get machine account token balances, and initiate transfers and communication with the goods inventory service. iOS and Android mobile clients were also developed to operate as token wallets and vending machine inventory browsers. Employees purchase goods from the vending machine with coins from their account and the token distribution service acts like a smart token treasury to send SJ coins to employees as a monthly loyalty reward based on performance and collects SJ coins from the vending machine.

This debuted last December and so far, so good. So what comes next? That’s where the social responsibility component comes in. The same SJ coins employees use for the vending machine can be spent to support orphanages, animal shelters, or to help raise funds for families with sick children. With a voting system built on the blockchain, employees will be able to vote on which projects they want the company to support via the Softjourn Foundation, which was set up to help social causes. For example, if employees vote to spend 10,000 SJ coins in support of a specific community program, the Foundation will give the equivalent dollar value of the 10,000 SJ coins—the value of the coins established by the blockchain—to that project. And we envision, in the not too distant future, that employees will also be able to donate SJ coins they earn, on their own, from other service providers, not just from Softjourn.

Why not just donate the money? Why engage smart contracts via blockchain technology? After all, currently employees can get involved in corporate giving and have a voice in how money is spent without this technology. Our answer is that on a practical level, as an international tech firm, we see multi-party smart contracts and blockchain technology as an efficient and transparent way to exchange currency. It allows for better tracking of funds and contributors. Depending on the number of users with their own node servers that are participating in block creation and monitoring, it can be more secure. And, as described, smart contracts do a lot of the heavy lifting as a utility. Transactions—and the conditions of those transactions—take place automatically, quickly, and accurately.

But there are other reasons, too. For employees, it grants them privacy, knowing that they can choose where the money goes and that their employer cannot touch their coins since they don’t have access to them. For social/community organizations, they can trust in the companies that send them funds because smart contracts ensure everything is trackable. They’ll know the exact makeup of the funds they’re receiving, whether it is employee funds or employer matching funds, or something else. Blockchain and smart contracts secure the terms and delivery of the expenditure. So donors—both the employees and the corporation—are assured that the money they donated has been spent according to their intent. But, all these benefits rely on all of the organizations in the chain to be blockchain users and that there are connections all the way down the line, from donation to expenditure.

How would this work? Let’s start with a basic scenario between an employee, a health club, and a charitable organization. The health club agrees to give a discount to the employee in the form of bitcoins added to their virtual wallet if the employee fulfills certain metrics—and the employer will match that contribution. Let’s say they’re that the employee attends 25 yoga classes. Scanning tools track attendance and that data automatically is delivered to the blockchain application. After the 25th class, 100 coins are transferred from the health club’s virtual wallet to the employee’s. Based on employee voting on the charitable recipient, the coins would be transferred from the employee’s virtual wallet to that of the designated charity, along with matching coins from the employer. The application would have tracked the source of the coins and via the multi-party contract, the health club would have authorized the employer to request the equivalent dollar value of the 100 coins from the health club. Embedded in the blockchain, the smart contract would also already have the employee’s authorization to initiate a funds transfer to the charity on their behalf and any conditions or directives to the charity on how the donation is to be spent.

This concept has us so excited that we’re developing an internal reward system for employees that will enable them to earn more SJ coins so they can donate them to projects they’re passionate about. We’re considering options like awarding SJ coins after a positive employee evaluation that addresses teamwork, living up to our company core values, levels of project success, positive client input, or achieving additional education through certification programs. Values will be assigned for each item and the equivalent number of SJ coins will be deposited in the employee’s SJ account.

Gradually, we’ll build on this. We envision extending the program to work with service providers like health clubs, retailers, and cafes who will provide discounts to employees that employees will receive in the form of more SJ coins. But beyond our own program, what we’re most excited about is smart contract potential in corporate social responsibility programs globally.

Given the tangible and intangible benefits it offers to organizations, employees, and social service agencies, we envision businesses around the world deploying blockchain technology with multi-party smart contracts for their own giving programs. Not only does it offer security and ease, but it offers companies unique opportunities to create innovative programs that inspire employees to participate more in giving back. Yes, the technology is in the early stages but by starting small and building pilot programs, we see a clear path to something bigger. We realize it depends on the numbers of the various users, crunching blocks in the chain, to make it truly a trusted solution. And, critically, it also depends on how legal, commercial, and governmental institutions treat the technology. Will they consider smart contracts legally binding? But this technology has very practical implications for the nuts and bolts of payment solutions. We want to be part of what will certainly be the future of currency and contract transactions, but why not also deploy it where it can do good?