Asset servicing provider Northern Trust signed a partnership with the National University of Singapore to explore the implementation of blockchain technology on green finance frameworks and credentials.
The partnership aims to bring the green credentials of bonds on-chain through the Matrix Zenith platform, Northern Trust’s solution for digital asset management and tokenization, according to a joint statement.
One example of credentials is environmental data from the university campus’ refurbishment projects funded by a bond, said Alvin Chia, Northern Trust's Singapore-based head of digital assets innovation for Asia-Pacific, in emailed comments.
“The solution that we’re developing will allow the data to be refreshed in a more timely manner, and stored on an immutable ledger,” he said.
The partnership aims to create a solution that leverages an existing sustainability framework for testing on the blockchain that will eventually be adopted as part of the industry’s standard, Chia said.
“The solution will be reusable for the future green bonds and other assets with similar reporting needs,” he added.
Since 2021, NUS has issued three bonds, with the third issuance raising S$340 million ($253 million) to finance green buildings or precincts, renewable and energy efficient infrastructure and systems, and pollution prevention and control, among other initiatives.
The range and complexity of methods issuers use to catalog the impact of their green investments is one of the biggest challenges in the green bond market, noted the Official Monetary and Financial Institutions Forum in a 2022 report.
“Even the term sheet — one of the most ubiquitous pieces of documentation in the conventional bond market — still does not have a standard format, and ESG data is far more complex and varied,” the OMFIF report wrote.
Northern Trust had $17.4 trillion in assets under custody and administration as of Sept. 30.