According to Cointelegraph, financial services company Northern Trust has introduced an institutional carbon credit ecosystem on its Northern Trust Matrix Zenith digital assets platform. The company will serve as the custodian, managing the recording, transfer, and settlement of digital carbon credit trades against emission footprints in the voluntary carbon market.
Legal agreements for these trades are generated by smart contracts on a permissioned blockchain, forming the basis for trading digital carbon credits for fiat currency and subsequently retiring them. The Northern Trust Carbon Ecosystem reached its minimum viable product stage in September 2023 with two project developers and three purchasers, including Northern Trust itself. The full version has been launched with a similar number of participants.
The system supports the entire digital asset lifecycle, from asset creation and pricing to trading, custody, and reporting, according to Justin Chapman, Northern Trust's global head of Digital Assets and Financial Markets. He stated that the Northern Trust Carbon Ecosystem exemplifies the current and future applications of Northern Trust Matrix Zenith, which integrates blockchain technology with traditional asset servicing infrastructure to support both digital and traditional assets.
A carbon credit represents one ton of carbon reduction or removal, offsetting the carbon dioxide or other greenhouse gas emissions from a project. The first carbon credit sellers on the new system were UK-based Water Recovery Systems IP and Lichtenstein-based CUT Carbon Distributed Technologies. CUT launched its Carbon Utility Token (CUT) to facilitate trading in tokenized carbon credits on Arbitrum in June 2023. Adapt Global Limited, a global telecommunications company focused on sustainability, was the only buyer mentioned by Northern Trust.
Northern Trust has been involved in blockchain projects for several years. It partnered with PwC to put private equity data management on-chain and began offering digital asset custody in 2018. Additionally, Northern Trust is one of the co-founders of Zodia Custody and has participated in blockchain-related projects with SWIFT, EY, and others.