The European Investment Bank (EIB) is taking a step ahead in innovation with its first ever ‘digital native green bond’, powered by an environmentally-incentivised node infrastructure.
The EIB priced the Climate Awareness Bond (CAB) on 19 June, using so|bond model, which is a sustainable and open digital bond platform built on blockchain technology. It is denominated in Swedish krona and the issued amount accounted for one billion krona.
The model is operated by Crédit Agricole CIB, SEB and CACEIS, with the first two acting as joint lead managers. The bond has a maturity of two years and bears a 3.638% fixed rate coupon.
The platform also uses a new type of blockchain validation logic called the Proof of Climate awaReness (PoCR) protocol. Here, each node will be remunerated for its efforts in accordance with a formula linked to its environmental impact evaluated with the Life Cycle Assessment ISO standard. Therefore, the lower the environmental footprint it is, the larger the reward will be.
This is expected to effectively incentivise participating nodes to continually improve the environmental footprint of their infrastructures.
EIB’s Vice-President Ricardo Mourinho Felix called the move a “ground-breaking milestone” for the bank. In his announcement, he said: “We take immense pride in leading the charge towards sustainable finance and technological innovation, with the support of our valuable partners and investors. By combining the power of blockchain with our unwavering commitment to environmental stewardship, we further strengthen our path towards a greener and more sustainable future.”
Crédit Agricole CIB, which has taken the role of the central account keeper (i.e. in safekeeping the newly issued digital bond) also expressed its joy in being associated with EIB’s first ever digital green bond.
Global head of Crédit Agricole CIB’s Global Markets Division, Pierre Gay, commented on the same saying: “We strongly believe that the open so|bond model and the innovative Proof of Climate awaReness blockchain validation protocol respond to EIB’s philosophy and willingness to push boundaries and support new solutions aimed at improving inefficiencies in primary market processes and infrastructures in a sustainable manner.”
CAB is also the first Distributed Ledger Technology (DLT) bond registered on the Luxembourg Stock Exchange Securities Official List (LuxSE SOL) and displayed on the Luxembourg Green Exchange (LGX).
LuxSE Director of International Capital Markets and Member of the Executive Committee, Arnaud Delestienne, called this joint effort a reinforcement of its commitment to “a sustainable and digital future for international capital markets”.