Northern Trust has successfully completed the initial phase of creating a digital platform for a voluntary carbon credit ecosystem, aiming to connect institutional buyers with leading project developers.
Following this announcement, Northern Trust said it had achieved a crucial milestone, having conducted entirely automated transactions on its recently developed digital carbon credit platform.
This initiative saw the collaboration with carbon avoidance and removal project developers, including Go Balance Limited, ReGen III (TSXV: GIII), and a direct air capture firm, alongside institutional buyers.
The system, built upon private ledger digital blockchain technology, seeks to bridge the gap between institutional buyers and carbon credit suppliers who aim to reduce greenhouse gas emissions. Through this fully digital platform, purchasers can acquire tokenised carbon credits directly from the project developers and offset these against their carbon emissions.
Interactions between project developers and buyers occur on an online platform, where legal agreements are formed using smart contracts via the Avvoka legal contract tool. These contracts then guide the transaction, ensuring the straightforward transfer and settlement of the digital credits for fiat currency on a predetermined settlement date.
Diverse project developers have collaborated with Northern Trust for its MVP. This list includes Go Balance Limited, supporting the Trocano Araretama REDD+ Project in Borba, Brazil and ReGen III, which aims to prevent 900,000 metric tonnes of CO2e annually through a Texas-based recycling facility.
The MVP saw transactions initiated by purchasers such as MyCarbon, White Star Capital and Northern Trust themselves.
Further refinement and development of this platform are underway, with the debut official transaction anticipated in late 2023.
Justin Chapman, global head of digital assets and financial markets, at Northern Trust, said: “The use of digital technology to manage the lifecycle of carbon credits gives both the buyer and project developers confidence and transparency through the lifecycle of their voluntary carbon credit transactions.”
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