European Investment Bank taps blockchain for Climate Awareness Bond

The European Investment Bank (EIB) has issued a blockchain-based digital bond powered by environmentally-incentivized node infrastructure.

An announcement from the financial institution outlined the key points of a “digital native green bond” denominated in Swedish krona. The 1 billion krona bond is set to offer a 3.638% fixed rate over two years to institutional investors.

The Climate Awareness Bond is also being touted as the first blockchain-based bond to be registered on the Luxembourg Stock Exchange Securities Official List and displayed on the Luxembourg Green Exchange.

The bond will operate on the recently launched sustainable blockchain digital bond platform So|bond. As Cointelegraph previously reported, the platform allows issuing, trading and settlement of digital bonds using pro-environmental incentives for its node operators.

So|bond’s “Proof of Climate awaReness” protocol incentivizes nodes to reduce the environmental impact of their infrastructure. This is done by remunerating nodes according to a formula linked to their climate impact, with lower impact ratings resulting in higher rewards.

French-based IT provider Finaxys developed the protocol, while So|bond itself is a joint project operated by Skandinaviska Enskilda Banken (SEB) and Credit Agricole.

In a statement, EIB vice president Ricardo Mourinho Felix said the first-ever green and krona-denominated bond aims to harness blockchain technology to move toward more sustainable financial systems:

“This Climate Awareness bond will run on a platform designed to minimise the environmental footprint of the IT infrastructure.”

Ben Powell, the head of sustainable DCM at SEB, added that blockchain technology adoption has been “restrained” by perceptions of high energy consumption in recent years. So|bond looks to address the environmental impact of financial infrastructure by using technology that has typically been criticized for its carbon footprint:

“The platform we have built aims to address this by introducing a disclosure of the environmental footprint of the operators of the network.“

Cointelegraph has reached out to the EIB for more details about the bond and its prospective institutional buyers.

In 2022, the institution settled a 100 million euro-denominated ($103.7 million) digital bond on a private blockchain platform in collaboration with Goldman Sachs and Société Générale Luxembourg.

The EIB has been exploring the use of blockchain-based platforms for digital bonds over the past three years. News of a potential EIB-issued Ethereum-based digital bond sent Ether (ETH) to all-time highs in April 2021.

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