The first transactions have now been executed on The Northern Trust Carbon Ecosystem, which enables institutional buyers to access digital carbon credits. It’s goal is to make carbon offsetting accessible, convenient and more transparent and it showcased a minimum viable product last year.
Two carbon projects, Water Recovery Systems IP and CUT Carbon Distributed Technologies, sold carbon credits to institutions in the first transaction.
The solution uses the new digital asset platform, Northern Trust Matrix Zenith.
“The Northern Trust Carbon Ecosystem is just one example of the current and future planned applications of Northern Trust Matrix Zenith – the latest milestone in our asset servicing innovation journey,” said Justin Chapman, global head of Digital Assets and Financial Markets, at Northern Trust.
“It supports key digital asset lifecycle events from asset creation, trading, pricing and custody to reporting. Leveraging blockchain technology, Northern Trust Matrix Zenith integrates with our core traditional asset servicing infrastructure to support digital and traditional assets side-by-side.”
Matrix Zenith uses a permissioned version of the Ethereum blockchain, Hyperledger Besu. All the nodes are controlled by Northern Trust.
Apart from convenience and accessibility, one of the hopes is that tokenizing carbon credits might reduce the potential for double counting of carbon credits. While that works within a single platform, potentially a project could attempt to tokenize or sell it on multiple platforms. The World Bank-backed CAD Trust aims to address this by creating a blockchain log which aggregates data across multiple carbon registries. It went live in late 2023.
Northern Trust’s blockchain credentials
Meanwhile, Northern Trust has considerable DLT experience. It developed a private equity fund workflow platform in 2017 and subsequently sold it to Broadridge to maintain its independence. It is a minority shareholder in Standard Chartered’s institutional custody platform Zodia Custody. Plus, it provides a custody solution for BondbloX, a bond fractionalization solution. The company has also participated in multiple Swift blockchain trials.
Update: A previous version of this article stated that we suspected Northern Trust was using a different blockchain, but we were awaiting confirmation.
