Northern Trust is developing an industry-wide carbon credit platform that would allow institutional buyers to digitally access carbon credits from leading project developers, it has announced.

The system will use private ledger digital blockchain technology to connect institutional buyers with carbon credit suppliers, allowing purchasers to transact tokenised carbon credits directly with the project developers and retire these against their carbon footprint.

The US financial institution has completed the first stage toward the platform, it said yesterday. It has completed a fully automated transaction on the platform, which it has developed with providers including Go Balance Limited, ReGen III and a direct air capture company in addition to institutional buyers.

Go Balance is a project developer that supports the Trocano Araretama REDD+ project in the municipality of Borba in Brazil and ReGen II is a clean-tech firm recycling used motor oil into high-grade group III synthetic lubricants.

The first official live transaction is planned in late 2023, 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,” said Justin Chapman, global head of digital assets and financial markets at Northern Trust.

Ciaran Kelly, chief executive officer at Go Balance Limited, said the iniative to digitise the voluntary carbon credit market has the potential to enable project developers to “enhance [their] focus on initiatives to avoid deforestation by streamlining time consuming administration tasks”.

“The solution will make it easier for all participants to track, manage and transact the registry of carbon credits, whilst also delivering full transparency to the end-to-end lifecycle of a voluntary carbon credit,” he said.

Northern Trust’s announcement comes as the Voluntary Carbon Markets Initiative (VCMI) is due to publish its latest update in November as the market moves towards tighter rules and regulation surrounding carbon credits.

In the summer the VCMI published a provisional code of practice for how investors and companies should treat carbon credits in net zero strategies.

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Susanna is deputy news editor at IPE. At IPE she covers responsible investment and EU regulation, but also enjoys reporting on developments in and around the UK pensions industry. Having been a financial journalist since 2008, Susanna started her career as a corporate governance/corporate social responsibility analyst at proxy advisory firm PIRC.View full Profile

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