The Climate Conscious Bond, denominated in Swedish Krona, will be deployed on a blockchain designed to encourage node operators to enhance the environmental efficiency of their infrastructure.
The European Investment Bank (EIB) has embarked on a green journey by launching a blockchain-powered digital bond that operates on a node infrastructure, offering environmental incentives.
The banking authority detailed its latest “digitally rooted green bond” in Swedish Krona in an official announcement. The bond, valued at 1 billion Krona, guarantees a fixed 3.638% return over two years to institutional investors.
The Climate Conscious Bond is lauded as the pioneering blockchain-based bond to make its appearance on the Securities Official List of the Luxembourg Stock Exchange, and it will be featured on the Luxembourg Green Exchange.
The bond will function on the newly initiated So|bond digital bond platform committed to sustainability. As previously reported by Cointelegraph, this platform facilitates the issuance, trading, and settlement of digital bonds while offering environmentally-friendly incentives to node operators.
So|bond’s “Proof of Climate awaReness” protocol encourages nodes to limit the environmental impact of their infrastructure by compensating nodes through a formula connected to their climate effect, where reduced impact leads to increased rewards.
Finaxys, a French-based IT company, devised this protocol, while So|bond is a collaborative project by Skandinaviska Enskilda Banken (SEB) and Credit Agricole.
EIB vice president Ricardo Mourinho Felix commented on the debut of this green, Krona-denominated bond stating that its goal is to leverage blockchain technology for the evolution towards more ecologically friendly financial systems: “This Climate Conscious bond will operate on a platform aimed at reducing the environmental impact of the IT infrastructure.”
Ben Powell, the Head of Sustainable DCM at SEB, observed that the high-energy consumption associated with blockchain technology had led to its restrained adoption. However, So|bond aims to counteract the environmental effects of financial infrastructure by utilizing a technology generally criticized for its carbon footprint: “The platform we have established seeks to tackle this issue by revealing the environmental footprint of the network operators.”
Cointelegraph has requested additional details about the bond and its potential institutional investors from the EIB.
In 2022, the bank settled a digital bond denominated in 100 million euros ($103.7 million) on a private blockchain platform, in partnership with Goldman Sachs and Société Générale Luxembourg.
Over the past three years, the EIB has been exploring blockchain-based platforms for digital bonds. In April 2021, the announcement of a potential Ethereum-based digital bond issued by the EIB led Ether ETH $1,909 to reach new all-time highs.