EIB creates environmentally incentivised blockchain

The European Investment Bank (EIB) has released a digital bond. The bond, denominated in Swedish krona, is supported by blockchain and will be driven by environmentally-focused infrastructure.

According to a statement from the EIB, the bond is called a ‘digital native green bond.’ It will amount to 1 billion kr and will offer a fixed interest rate of just over 3.6% over a two-year period. It is aimed at institutional investors to increase digital investment and promote climate awareness.

The bond called the Climate Awareness Bond has been highlighted as the first blockchain-based bond to be registered on the Luxembourg Stock Exchange Securities Official List. It will be showcased on the Luxembourg Green Exchange for the first time.

The digital bond will operate on  So|bond, a newly launched sustainable blockchain digital bond platform. So|bond makes use of a Proof of Climate awareness protocol. The intention behind the protocol is to motivate nodes that will minimise the environmental impact of their infrastructure. This is achieved by rewarding the nodes with lower impacts receiving higher rewards.

The Proof of Climate Protocol

The protocol was developed by French IT provider Finaxys. The So|bond platform itself is a collaborative project between Skandinaviska Enskilda Banken (SEB) and Credit Agricole CIB.

EIB Vice-President Ricardo Mourinho Felix stated that this green bond is a unique project and aims to leverage blockchain technology to encourage more sustainable financial systems. The bond will operate on a platform specifically designed to reduce the environmental impact of its infrastructure. He stated:

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

Ben Powell, Head of Sustainable DCM at SEB, emphasised that the adoption of blockchain technology has been hindered by concerns about its high energy consumption in recent years. However, So|bond aims to address these concerns by introducing a disclosure of the environmental impact of the network operators.