Monday, 16 May 2022

OCBC and MetaVerse Green Exchange to develop new green financing solutions with tokenised carbon credits

5 min read

 OCBC Bank and MetaVerse Green Exchange (MVGX), a digital green exchange licensed and regulated by the Monetary Authority of Singapore (MAS) have announced a strategic partnership to develop new green financing solutions aimed at accelerating large corporates’ journey to carbon neutrality.

Scheduled to be launched later this year, these financing solutions will include tokenised carbon credits in the form of MVGX’s Carbon Neutrality Tokens (CNT™s), for large corporates to offset their carbon emissions, simplifying their path to carbon neutrality. An independent party will verify the expected carbon emissions from projects utilising these financing solutions, to calculate the corresponding carbon credits required.

MVGX’s CNT™s are supported by MVGX’s proprietary Non-Fungible Digital Twin (NFDT™) distributed ledger technology that provides corporates a verifiable, immutable and constantly updated record of the carbon performance of the climate-action projects that they have invested in through these digital carbon credits.

The partnership comes at an opportune time when carbon credits are becoming an increasingly popular solution for corporates after they have explored other decarbonisation options to achieve carbon neutrality. This is particularly important for companies in hard-to-abate industries such as shipping, steel and energy. By purchasing carbon credits, corporates are also investing in green projects such as reforestation and renewable energy that contribute to future decarbonisation. The Institute of International Finance’s Taskforce on Scaling Voluntary Carbon Markets estimates that the global demand for carbon credits could increase 15-fold by 2030.

The ability to properly account for and track carbon credits under existing systems has resulted in challenges which have prevented uptake and impact at scale, such as double counting and the difficulties involved with cross-border carbon trading. The CNT™s provided in the new green financing solutions can mitigate these challenges by providing businesses with a reliable and accurate view of their emissions and offsets.

Elaine Lam, head, global corporate banking at OCBC Bank said, “With the recently released report by the United Nations' Intergovernmental Panel on Climate Change (IPCC), there will be increased urgency in corporates' transition to a low carbon future by cutting down greenhouse gas emissions. We hope to accelerate these efforts by providing financing solutions with tokenised carbon credits, and expand the reach of privatesector finance in areas and sectors most crucial in mitigating climate change”.

This partnership underscores the bank’s commitment to combating climate change and supporting customers in their journey to carbon neutrality, by seizing growth opportunities in green and sustainable financing. By end-2021, the bank had extended over $34 billion in sustainable financing to customers, surpassing its original target of SGD 25 billion ($18.15 billion) by 2025 four years ahead of schedule. A new target of SGD 50 billion ($36.31 billion) in sustainable financing commitments by 2050 has been established.

Bo Bai, executive chairman and co-founder of MVGX said, “Despite the best intentions, governments and businesses around the world have come to realise the limitations of the current systems for tracking and neutralising carbon emissions. Thankfully, there is now a greater urgency to embrace new solutions that leverage technology to promote carbon reduction and finance green initiatives. By joining forces with Southeast Asia’s second-largest bank, we have the opportunity to advance our sustainability ambitions and fast-track our nation’s goal of achieving Singapore’s 2030 Green Plan. We are excited to be building the bridge between green investments in traditional finance and the global carbon trading markets of the future through green digital assets”.

Last year, MVGX launched its first batch of CNT™s ahead of COP26 in Glasgow. These asset-backed tokens were tied to carbon credits generated by a wind project in Zhangjiakou, China that was verified and registered with China’s National Carbon Registry. The first tranche of 5,000 carbon credits was sold to a Hong Kong-based private equity firm last year, lowering barriers to access ESG assets for retail and institutional investors in Asia Pacific.

Re-disseminated by The Asian Banker

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