Decarbonization via Distributed Trust: Leveraging Blockchain and AI for Transparent Carbon Credit Monetization and Automated ESG Reporting

Carbon markets and ESG reporting are now at the center of sustainable finance with the global net -zero agenda. However, their effectiveness remains marred by flawed transparency, low trust, high costs of verification and inadequate disjointed governance. In this chapter, the authors identify how blockchain and artificial intelligence (AI) integration can reduce these systemic limitations by integrating trust, automation and intelligence into decarbonisation systems. Blockchain can be used as a distributed trust system, which allows carbon credits to be tokenised and tracked throughout their lifecycle to discourage duplication and fraud. At the same time, AI improves measurement, reporting and verification (MRV) procedures due to the real-time analysis of various sources of environmental data. The interpreter between blockchain and AI is conducive to sustained, verifiable data generation of ESG, enhanced performance-based green finance instruments, and less information asymmetry of investors and regulators. Extending to circular economy and waste-to-wealth models, the framework enables monetisation of validated decarbonisation outcomes, broadening participation and accelerating scalable, trust-based climate governance.