Is there any market state-dependent contribution from Blockchain-enabled solutions to ESG investments? Evidence from conventional and Islamic ESG stocks

We examined the relationship between three Blockchain-based platforms (Advanced Internet Blocks (AIB), Blocktix (TIX), and BlockCDN (BCDN)), and the prominent global ESG-based in-dexes (S&P Global 1200 ESG Index (ESG) and its shariah-screened counterpart (SESG)).Based on the results of the research conducted between 3/5/2018 and 3/30/2022 reveal that the coherence of BCDN with ESG and SESG investments, strictly higher than AIB and TIX, decreases both by moving from a higher to a lower quantile and from a long-term to a short-term perspective. Additionally, it would be able to illustrate that in a pairwise directional connectedness analysis that excludes AIB-SESG pairs, all Blockchain-enabled innovations make significant contributions to both ESG-screened businesses at normal and bullish market conditions. According to this outcome, by analyzing the entire network of them, only BCDN and AIB could provide the network-transmitting function, respectively, in a bull market and a normal market, demonstrating the market state-dependency of Blockchain-based innovation spillovers. According to these findings, it would be an illusion to expect BCDN (a decentralized CDN trading market) or AIB (a platform that facilitates the use of advanced smart applications) to play a significant role in contributing to the creation of ESG markets and achieving sustainable objectives without putting a particular focus on market conditions. The concluding remarks could be useful for those who work in the field of environmental policy, investors who care about ESG factors, and market regulators.

Automated summary

This study examines the relationship between three Blockchain-based platforms (AIB, TIX, and BCDN) and global ESG indexes (ESG and SESG). The results show that BCDN has a higher coherence with ESG and SESG investments compared to AIB and TIX, but this coherence decreases with lower quantiles and shorter-term perspectives. Additionally, all Blockchain-enabled innovations significantly contribute to ESG-screened businesses under normal and bullish market conditions, except for the AIB-SESG pairs. Only BCDN and AIB provide network-transmitting functions in a bull market and a normal market respectively, indicating the market state-dependency of Blockchain-based innovation spillovers. Therefore, expecting significant contributions from BCDN or AIB in creating ESG markets and achieving sustainable objectives necessitates a focus on market conditions.