Climate Finance and Carbon Banking | European Blockchain Convention

[Music] thank you very much and uh good morning to all of you still a pleasure to be with you for the second day I can see that we had a very good party yesterday so uh for for me I was in the bit po party and it was an excellent party so uh I'm lini I'm head of innovation for society General I'm also blockchain and crypto uh leader so so today we are going to speak about a very very important topic which is the carbon credit and the climate Finance I have to say that yes it's a very important topic because we all have a big responsibility we as a bank uh we have a strong responsibility but it is the responsibility of all the citizen in the world so we are going to explore in the next 20 minutes with uh my two uh panels my two experts uh where blockchain where crypto can have uh an impact on the way uh we are looking for the future it's it's a bit it's a call for action it's a call for wake up also because I don't see so many people so it's a wake up call it's a call for Action so now uh I will uh give the floors to my uh two panels lady first of course course so Emily who you are where are you working and what's your current focus in term of climate finance and carbon credit so thank you for all of you that decided to wake up to hear us um so I'm Emil alart I'm the head of the Luxembourg blockchain lab we are based in Luxembourg uh this small rainy country right now uh I'm uh focusing on education upskilling reskilling and um promoting the use of DT in the sdg space so we're nonprofit organization and uh we aim to uh let's say use blockchain for good uh why we are here is because uh recently we published a report on the use of DLT in green finance and what is green washing what is green hershing what can really be achieved with DLT so I will provide some insights on that today thank you very much so now Martin up up to you I I have to say that I have been very impressed but what you have done since two three years in this context so I give you the floor thank you very much thank you for being here so my name mat shant I'm program manager tokenize securities within ABM R so uh what we try to do is get the value chain of Securities uh at par but then working with with the blockchain um and there we have also some uh ESG angles uh in it to to make it also more trans to make use of the transparency of the blockchain um and that's uh yeah but we will tell a bit more about that thank you very much so uh if you can Martin maybe if you can go a bit in details of uh what you have recently uh have made in term of uh green bones and uh I I have seen that you work also with a startup yeah yeah for sure um So within abro we we published two years ago our um uh climate strategy uh where we are uh connecting also to the uh zero banking climate strategy from from Paris um and we also announced that we will invest up to 1 billion to 2030 to decarbonize the uh the economy uh and for that we have uh certain activities so we have our own uh uh impact fund that can invest in all kind of companies that that help to um uh reorganize the the economy uh mainly from an uh um uh pollution uh aspect and on the other hand what we also uh do is that we we look with uh startups uh companies that can help uh us to innovate to get also other data across uh our clients uh so last year we had uh Tech Stars Tech Stars our accelerator that we work with and we always have two uh themes there one is uh sustainability and digital assets last year we worked with Kumo Unfortunately they were not able to to be here because they are still in the US uh but uh what they provide is carbon Landing so uh we did also POC with them to see can we get carbon credits in as a future uh and then we back it with a with a loan and the first test was quite successful so we would like to uh leverage on uh on that one uh and if we look to the uh digital bonds that we have done so far uh the last one was a uh bond with a Dutch corporate it's Festa where we did a Green Bond so firea their green Finance framework we uh we issued the the bond uh and then at the endend what we saw is that okay now we have only the green Finance framework but there's also a of uh data publicly available that the investors need to check manually uh currently so what we recently uh developed is we call it the green uh Ledger or ESG wallet but that the investor can see the impact metrics uh per invested Euro in CO2 uh in the wallet directly so if they have multiple uh uh investment in in green Bonds in this case from abro they can just click uh to the wallet and they see directly what the impact metrics are and that's a way also to get uh engagement with the investors on the green angle to to talk with them about it so yes we have definitely a strong responsibility when we are talking about Green bonds for the financement of uh the the economy and also in term of innovation with the carbon credit so Emil a question for you based on your uh experience what do you see because I have already read your white paper what do you see as the main benefits of using uh DLT for the carbon credit it for the climate finance and also on the other hand uh we know that we spend a lot of energy of using uh blockchain and crypto so what's your point of view because I have seen also interesting figures in the white papers yes indeed um let me start by the characteristics of DLT that make it so appealing for um sdgs and especially climate Finance is the traceability I don't know if you're familiar with the carbon credit Market but if you do not use DLT it might be that the carbon credit is transferred multiple times and you do not know it so you're actually diluting the value of a carbon credit um so the traceability makes it really appealing and um well you're able to say okay I've actually transferred only once this carbon credit um and actually with the green washing that we've experiencing because it's so cool to be taking care of the planet without actually potentially making real efforts you're able to track and especially if you're a citizen you want to know whether the company you're investing it or you're using is really making efforts with the LT you can make sure that this company is actually making efforts in the field and is not just saying it because it's so cool at the moment on the other side there is this green hushing I don't know if you're familiar with this it's the fact that due to the green washing and the bashing around this and people not trusting anything anymore well people do act but they tend to be really low voice about it so they are not mentioning too much their effort because they think okay anyway even if we do something big people will say it's green washing with DLT in the field then you're able to say okay we've actually done something and it's real so you're actually compensating the green washing and the green hushing and you're finally entering a market where you're okay there is really something happening and I can't trust this company and I could keep working with them on the electricity consumption I think it's a big topic because uh the European commission even when they were writing about Micah they were saying okay should we just say no to blockchain technology because it's too much of energy consumption well in the report we have used uh the tool by Cambridge um um laboratory on digital assets and we found out that etherum the new version is actually using much less energy consumption than the bush Khalifa and do you know how much less 20 actually it's 50 times Less in terms of energy consumption than bsh Khalifa and do you know the let's say capitalization of Dutch bank who knows 30 30 yes um do you know the market cap of ethereum okay 300 sorry about 300 billion correct and in real life the energy consumption of etherum is 100 time less than the one of Deutch bank so you see there is this bashing about energy consumption of ethereum for example or the DLT technology in general because people do not know that there are multiple Technologies and still in real life if you make the parallel well you see that there is really a bashing that is happening and we should be really really careful and check our facts because before acting or decided to invest and I would like to open the question and maybe next time you can ask me lauron what is the energy consumption of AI and all the chat Bots and all the chat GPT nobody is asking that because you have direct consumption it's bringing you direct impact while DLT it's still in the background and you think okay yeah no but you know electricity there well think about it before making a request or a prompt on chat GPT next time thank you very much em uh Martin uh as you have made a lot of achievements in term of uh uh ESG banking using DRT what's your first uh feedback Main benefits and challenges and I will come to the last question for you what will be the next the next step for ab nro yeah thank you for that question and hearing your story I think we have to move completely to uh to new infrastructure than uh than than using the old one but uh I think most people like that if if I look around here um so what are main benefit so um yeah we've done uh different transactions with different uh uh client groups also and also different uh uh issues different investors uh if you look at our last transaction that we did that was an Institutional one then really the uh uh investor uh was uh intrigued by the fact that uh we could we could settle quite soon uh compared to the normal uh uh bonds that they do uh although we didn't use cash on chain here so we see also I think here at the the the conference a lot of talks about all the new developments on the the cash on chain side so that's really something that we would like to add uh for a new transaction that we uh they were going to do uh because with every deal that we do uh we would like to extend our uh capabilities uh as we are still a Traditional Bank it's quite hard to go from zero to 100 on Innovation pace so we need to do it step by step and that's why we started with uh small transaction uh then we did a bigger one and now we would like to add then also the the cash on chain part uh uh but if we are able to use uh the the blockchain right and we have a native bond that we are going to issue we can also directly include metad data like uh the the impact metric for uh for ESG uh and on this aspect we are currently uh working with our green bone desk uh so I'm working on the Innovation side but most of the work we do within the bank is uh on the side of global markets uh so they do help out to to get us in contact with uh with their clients where we are now talking that all right the ESD wet is nice uh tool for ab investors but if you go to the big asset managers they not only invest in bonds they have multiple bonds so we need to have more Banks active on the on the platform or issuers active on the platform uh to make it more useful and that's what we are trying to uh uh to get in right now uh and there's quite some some nice uptake because for an investor they see now a benefit where they say right if I uh invest in a digital Bond I can also see the impact metric maybe we can add some other metadata uh from from solar panels or other things that you can uh think about and then there becomes also an intrin value to to use the digital one uh compared to the traditional one so then it's not only about settlement but also we can then also leverage on the transparency uh and that will really also help us with our goal to invest in all kind of companies uh up to 2030 that could help by reorganizing the uh the economy uh so those kind of tools we we combine and then we work with different departments within the bank to to achieve this so I think that the technology is useful for us to not only connect with the uh outside world outside of the bank but also connect with different departments within the bank uh and then we can share all kind of uh metadata there uh and then we combine more the the aspect we say right there there is a financial transaction but there's also a lot of information that we can get around transection as we are a bank and a trusted party so that's what we are currently uh looking into for uh for the future thank you very much uh last question for for you em what do you see as a main key trend uh regarding the climate finance and also the carbon credit and what's your key recommendation as a Visionary uh um so what I see is a multiplicity of products that are derivated from uh the carbon credits I've even read about um um tokenized carbon credits um you could imagine plenty of products that would appeal to a variety of investors because we mentioned everybody is or should be active in the climate um change and act upon it so I guess it's important as well to bring everybody on board and by prod by creating products that are available to the bigger population then you're making real impacts as well and the fact that you're able to invest in projects that you're able to select or know exactly because of this transparency that you mentioned um it's really something that will appeal to people because right now many institutional are doing with the or dealing with the carbon credits but nobody in the population knows what it is and what it helps so what we are seeing right now it's Solutions where you actually buy carbon credit and then reinvest uh potentially the money into worse project worthy project that you have the feeling that are helpful and that is really something that will help as well with the adoption I guess and uh what I hope or at least the future if I I take the crystal bow I think uh well in Luxenberg we're really well placed with all the green bonds and I hope that uh it will be common in the coming months or years let's say with have lot of people investing into it because they believe that we need to save the house thank you and where we can find your white paper finally uh on the website of the luxur blockchain lab okay so do not hesitate to go to the website of the Luxemburg blockchain lab to download the white paper I have to admit that it's very interesting our last word for you yeah I think what's nice on on the approach that we uh that we take currently is that we uh we work mainly on um um public perion infrastructure and there we can leverage all kind of uh data from other companies so if we are stuck with the traditional system yeah we have to go to the existing companies and ask hey can we can we have this uh module can we have that module and the beauty of this new technology is that we can work with with anyone uh and that that uh is helping us to create uh a new value chain where we can bring value for smaller clients for bigger clients uh at at the metadata I think also share maybe other information with Regulators Etc so it's really a new uh way of uh getting the information there which which really helps and then also your story about the energy consumption I think we have to push for this uh because it could really make the market way more efficient I think we see with um wholesale CBC transactions that there is currently more uptake also by institutions um we will do as abro transaction ourselves uh uh next month uh with the also cbdc from Bank of France and then we we will learn again some some parts so I hope that also like next year you will see that more corporates I think are uh willing to invest time to to see what it could bring but also other Banks and and uh investment so not only around investing in the the the Bitcoin ETF Etc but also the value of the technology itself what it could bring for uh all the parties in the value chain so that's I think a nice one for uh for next year yeah because at the end it's a call for Action a call for wake up because the future is now it's not tomorrow and uh working in a in a bank like Martin uh when we are dealing with climate Finance we are not in competition we are in competition we need to work together all banks together together we need to work all the stakeholders together to make our future better and sustainable big Applause