In conjunction with meeting of the High-Level Expert Group on Sustainable Finance, Stockholm Green Digital Finance today announces the launch of a ground-breaking initiative that will see the development of a blockchain-based solution for validating green investments.
Delivering on the Sustainable Development Goals
Trillions of dollars of public and private investment are needed to reach the United Nations’ Sustainable Development Goals and the objectives of the Paris Agreement. Green investments require significant scaling to facilitate the transition towards sustainable societies, especially in emerging and developing economies. One way to achieve this is by monitoring and verifying the investments. “Our aim is to help grow the green bond market by lowering the threshold for issuers and enabling investors to verify impact, as well as stimulating growth of other green investment products,” says Cecilia Repinski, Executive Director, Stockholm Green Digital Finance.
Trustworthy investment products
Green bonds represent one of the few trustworthy investment products that abide by certain principles and require third-party verification for green use of proceeds and the demand for access to them is on the rise. “The application of blockchain technology and big data will offer companies and investors a cost-effective way to validate sustainability claims regarding fair trade, green foreign direct investment, property rights, or the use of green bond proceeds – especially in less transparent markets. Many investors are interested in moving their capital into sustainable projects and companies, but need to identify reliable products that deliver real impact,” adds Cecilia.
Partnerships with asset and technology experts
A partnership between Stockholm Green Digital Finance, asset management firm Öhman, and fintech startup Hiveonline, the initiative will comprise an application build and a demonstration of the opportunities surrounding blockchain technology in the green finance space at the at the Annual Meeting of the International Monetary Fund (IMF). “We see a major need for green bond investors to ensure that green money goes to the financing of environmentally friendly projects and deliver promised environmental benefits. The new technology will create the reliability of environmental certification many investors lack to dare to take the step of investing green,” says Erika Wranegård, Fund Manager, Öhman Group.
Further funds needed for the full application build
The project proposal, Scaling Green Investment – Verifying and Monitoring Green Bonds Proceeds Through Blockchain Technology, was submitted during the Climate KIC Ideation Day in Aarhus, Denmark on 22 August 2017, and received a 10,000 EUR grant from the EU's main climate innovation initiative, Climate-KIC. The project will focus on green bonds, but the technology is intended to assist other types of green investment.
Now, Stockholm Green Digital Finance – part of Stockholm Fintech Hub – is fundraising for the full application build, which will take an estimated 10-12 months to complete. The result will be a fully open-source green cryptocurrency application for institutional investors and other capital market actors to ramp up green investments."Blockchain will stimulate the green investment market through cost-effective technology that enables investors to directly verify and monitor their green investments. Technology will help scale the green investment market – partly by reducing the cost of issuers and increasing supply and partly by enabling investors to engage in more difficult markets where the needs are greatest for delivering on global sustainability targets,” explains Cecilia.
“Stockholm Green Digital Finance is an essential part of Stockholm Fintech Hub and this EU climate action grant is further validation of its role in the fintech ecosystem. I am thrilled to see the initiative take off and look forward to charting its progress as Cecilia attracts additional funding for the full application build. Only then will investors be able to monitor and verify green investments and – most importantly – the impact they have on their recipients,” says Matthew Argent, CEO & Founder, Stockholm Fintech Hub.
"A blockchain-based solution such as that proposed by Stockholm Green Digital Finance and partners will provide a way to verify and ultimately scale green investment. I, for one, cannot wait to see this evolve into a fully functioning platform that supports our work in reaching sustainability targets.This leadership on green fintech from Stockholm is part of a wider shift in European markets linking digital innovation with sustainability,” says Nick Robins, Co-Director of the UN Environment’s Inquiry into the Design of a Sustainable Financial System.