Toward a less incomplete contract: Merging smart contracts and ESG metrics contracts

Growing attention to environmental, social, and governance (ESG) concerns has pushed companies to include conditions and obligations linked to ESG indicators in their contracts. Those contracts, defined as ESG metric contracts include, for example, managers' remuneration plans, supply chain and merger and acquisition agreements. Such contracts are, however, incomplete, as they do not establish all the possible contingencies that can happen during the contractual relationship. Using smart contracts can lessen the incompleteness of those ESG metric contracts. Nevertheless, smart contracts are still incomplete. Although smart contracts have immutability as their most important characteristic, this paper suggests that different mechanisms can be used to address uncertainty and incompleteness in smart contracts. Oracles and upgradeable smart contracts can help address the incompleteness that still permeates smart contracts, adding a needed layer of flexibility to these contractual relationships.