Sustainable Finance

OCBC Bank and MetaVerse Green Exchange Collaborate for Green Financing Solutions

Published on: 29 April 2022 07:00 PM
by KnowESG

OCBC Bank, a Singaporean multinational banking and financial services company, joined hands with MetaVerse Green Exchange (MVGX), a digital green exchange, to devise green financing solutions to help large corporates achieve carbon neutrality.

The financing solutions entail tokenised carbon credits, MVGX's Carbon Neutrality Tokens (CNTs), which help large corporates offset their emissions and facilitate their goal of carbon neutrality. An independent party will monitor the emissions from projects that use these financing options and help figure out how many carbon credits they need.

MVGX's proprietary Non-Fungible Digital Twin distributed ledger technology will support MVGX's Carbon Neutrality Tokens. It provides corporates with a verifiable, fixed, and continuously updated record of the carbon performance of climate-driven projects.

The collaboration comes as carbon credits are increasingly becoming popular as an alternative for businesses seeking to achieve carbon neutrality after exhausting other decarbonisation options. This is especially significant for companies in difficult-to-abate industries like shipping, steel, and energy.

According to the Taskforce on Scaling Voluntary Carbon Markets of the Institute of International Finance, worldwide demand for carbon credits might climb fifteen-fold by 2030.

Due to the inability to adequately account for and manage carbon credits under existing systems, issues such as double counting and the problems associated with cross-border carbon trading have hampered uptake and impact at scale.

CNTs, part of the new green financing solutions, can help businesses get around these problems by giving them a trustworthy and accurate picture of their emissions and offsets.

Ms Elaine Lam, Head, Global Corporate Banking, 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 private-sector finance in areas and sectors most crucial in mitigating climate change.”

By capturing development opportunities in green and sustainable financing, the bank demonstrates its commitment to tackling climate change and helping customers on their journey to carbon neutrality.

By the end of 2021, the bank had provided over $34 billion in sustainable lending to customers, four years ahead of schedule, surpassing its original aim of $25 billion by 2025.

By 2050, a new goal of S $50 billion in sustainable financial commitments has been set.

MVGX Executive Chairman and Co-Founder Bo Bai 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.”

MVGX released its first batch of CNTs, just in time for the COP26 conference in Glasgow. These asset-backed tokens were linked to carbon credits created by a wind farm in Zhangjiakou, China, which were confirmed and registered with China's National Carbon Registry.

Last year, a Hong Kong-based private equity firm purchased the first 5,000 carbon credits, eliminating barriers to ESG asset access for retail and institutional investors in the Asia Pacific.

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