Blockchain and CSR: emergence of a Social Smart Contract Smart Contract
Although Nick Szabo already imagined the contours of a smart contract in 1996, it was not until the arrival of Ethereum and the Vitlik Buterin protocol that these new forms of smart contracts began to develop. Since then, many other protocols (EOS, Tezos, Dune, FANTOM, Neo, etc.) have been developing the part of intelligence integrated into the blockchain and different technological underpinnings (DAGchain, Holochain, etc.).
The smart contract: the brain of the blockchain
It is a computer protocol designed to automate the execution of the terms of a contract. Once coded and deployed on the blockchain, the smart contract is tamper-proof, autonomous in its execution, and verifiable by all parties of the network because it is distributed.
There are an infinite variety of potential applications for a smart contract (multi-signature, escrow accounts, inter-chain, payment flows, data collection from oracles, etc.). It is easy to see the advantages offered (automation, precision, reliability, speed, economy, transparency, security, storage, etc.) by these different protocols to the legal and financial professions.
If the blockchain is the forgery-proof memory of the accounting ledger, the smart contract is the intelligent overlay that conditions the execution of transactions of a currency that has become programmable. The time has come to endow this intelligence with a form of societal awareness and make the digital asset industry the figurehead of a more responsible economy. The social smart contract is the ideal tool for developing and programming corporate social responsibility.
The Social Smart Contract (SSC): what is it?
The social smart contract is a programmable protocol at the service of companies’ societal ambitions. Considering that, all companies must now design a business plan that integrates a significant response to the societal challenges of our time and that this assumption of responsibility must bring to a substantial proportion of the real economic performance of the company, the SSC must facilitate its implementation.
Concretely the SSC is a set of IT rules between 3 (or more) parties directly concerned by the execution of the contract. Two of the parties (or more) program the terms and rules for the execution of the contract. The 3rd party (or more) will not be involved in this configuration step but will be defined as “social beneficiary” of the contract.
The social beneficiary is the third party representing, a cause, an association, an NGO, or a project designated as a beneficiary of the social engagements of the party(ies) concerned.
Fictitious illustration by example: Renault and Société Générale
Let’s say Renault wants to sell a car fleet to the Société Général. And assures the bank’s teams (sensitive to the orangutan cause in Malaysia) that the company is financing a vast program to remove palm oil from biofuels via the BioGaz Palm Free NGO (BGPF ONG) and this, up to 0.5% of its annual revenue. This information is confirmed by Renault’s corporate website in the CSR section.
The manufacturer and the bank define the conditions of sale of the car fleet (quantity of vehicle, models, delivery date, degressive rate, payment schedule, etc.) and determine who will be the social beneficiary. The “social” part of the smart contract determines Renault’s financing properties to the NGO up to 0.5% of the financial flow (turnover) achieved throughout the contract. During the execution of the contract, Renault’s financial contribution to the NGO will be paid automatically at each payment due date from the bank. Société Générale will be able to transparently monitor the proper execution of this social responsibility commitment indexed to Renault’s turnover. For its part, the NGO may not even be aware that a social smart contract is at work for its benefit.
SSC: the origin of a concept in the making
The concept of the social smart contract was born at the end of 2018 during the development of fintech retreeb’s business design. In the case of retreeb (new payment network), the model is based on the tokenization of the transaction by relying on a network of stable corners collateralized to the user’s currency of use. Since payment is made using the token, there is no need to pay the interbank commissions applied by banks and networks (Visa, Mastercard, etc.) to merchants. By reducing the intermediation of banks, retreeb applies its commissions to each transaction (1.5% without a fixed fee). Then, retreeb undertakes to pay one-third of the revenue generated to the social or environmental project chosen by the user from a selection of projects available on his wallet.
The first social smart contract from retreeb was designed with automation, transparency, and reliability in mind. A 2-level, 4-party process that runs for every transaction on the network.
A first-level between the three signatory parties of the contract:
· the user with the funds (stablecoin) on his wallet and choosing a project
· the merchant collecting transaction funds on his business wallet.
· retreeb earning a commission (1.5% of the transaction amount)
A second level is integrating the social beneficiary (project) selected by the user on his wallet with the payment of ⅓ retreeb commissions to the wallet of the social beneficiary.
With such properties, this SSC provides full automation of the process and complete transparency for all parties. In this way, retreeb gives a new dimension to payment by making a daily act at the heart of economic exchanges a responsible act. It is a new way of understanding finance. It’s a new approach that correlates, at the root of the economic model, growth, and social responsibility.
SSC: technology brick for a responsible economy
The SSC is the ideal tool for companies that are making the shift to corporate social responsibility (CSR) and a leading marketing argument for consumers/customers who are increasingly sensitive and demanding about corporate engagement, transparency, and probity of governance.
Although technically accessible, the overall level of acculturation of companies on the subject is still very low, and even more so when it comes to programmable CSR. Also, it is simpler to design a social smart contract at the start of new business because it is by nature, easier to implement. Therefore, the digital asset industry and the set of startups that compose it, are in the front line to develop and deploy them.
This is also the idea defended by one of the industry personalities, Owen Simonin alias Hasheur and founder of Just Mining: “The blockchain is just a technology whose properties of each protocol depend on its designers. But with extreme traceability, transparency, and governance programming, this technology offers the unique world features to move towards greater corporate social responsibility.”
Blockchain and the digital asset industry are still inseparable. But this will not always be the case. Gradually the blockchain will be assimilated and become a significant underlying of all sectors and all types of services. This is a rare opportunity for startups in the industry to contribute to the advent of a responsible economy actively.
