Capital markets News

Northern Trust unveils DLT platform to access tokenized carbon credits directly

northern trust carbon credits

Today Northern Trust unveiled a new DLT solution that connects institutions directly with carbon credit projects. The private blockchain provides the workflow for sustainability project managers to track, manage and transact with tokenized carbon credits. The first live transaction is planned for later this year.

So far it has completed the minimum viable product (MVP), enabling fully automated transactions with three project developers, Go Balance, ReGen III and an air capture company. It uses smart legal contracts via the Avvoka tool.

“This new development from Northern Trust’s Digital Assets and Financial Markets team represents a significant milestone toward delivering a market-leading platform able to support a diverse range of digital assets,” said Pete Cherecwich, president of Asset Servicing at Northern Trust. “Allowing institutional clients to access carbon credits and doing our part to help these firms along their carbon offsetting journey is important for the future.”

The three MVP transactions were bought by UK consultancy MyCarbon, technology investment firm White Star Capital and Northern Trust.

Northern Trust has a fair bit of DLT experience. In 2017 it launched a private equity fund workflow platform that it sold to Broadridge – it wanted to maintain its independence. It is a minority shareholder in Standard Chartered’s institutional custody platform Zodia Custody. And it provides a custody solution for BondbloX, a bond fractionalization solution. The company has also participated in multiple Swift blockchain trials.

Other carbon credit DLT projects

Meanwhile, there are numerous carbon credit and tokenization initiatives. While Northern Trust is demonstrating an end-to-end solution, CarbonPlace aims to deliver a carbon credit post trade solution and more. It was founded by nine global banks, including four systemically important ones, BNP Paribas, SMBC, Standard Chartered and UBS. Additionally, CarbonPlace aims to provide a wallet and distribution network for carbon credits by linking marketplaces and registries. 

The UNDP has recently open sourced its carbon registry software that uses Amazon’s blockchain-like database, QLDB. And the UAE unveiled plans for a national registry using blockchain.

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