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Crypto Poses Governance, Climate Risks, ISS ESG Warns

A new paper published by ISS ESG, the responsible investment arm of Institutional Shareholder Services, outlines the governance and climate impacts of crypto assets for investors. As well as the cryptocurrency industry’s rate of growth slowing, it continues to evade regulations applied to traditional finance players, the report said, meaning that investors are more vulnerable to issues such as the recent collapse of the FTX network. Further, mining of cryptocurrency is very energy intensive. Although this process can be done using renewable energy, ISS ESG said crypto mining carries a risk of “crowding out” other needs for renewable energy. ISS ESG has outlined some recommendations to address these risks, including assessing the alignment of crypto investments with the UN Sustainable Development Goals (SDGs), or adopting a proof of stake algorithm.

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