The National University of Singapore (NUS) has taken a significant step toward enhancing transparency in sustainable finance by adopting blockchain technology to tokenize its green bond credentials. This initiative will convert green bonds into digital tokens stored securely on the blockchain, offering tamper-proof and real-time tracking capabilities. The tokenization aims to provide investors with greater transparency and accountability regarding their sustainable investments.
This project is part of the broader Project Guardian, launched in 2022 under the leadership of the Monetary Authority of Singapore (MAS). The initiative serves as a collaborative effort between policymakers and the financial sector, focusing on the potential of tokenization and digital assets. One of its primary goals is to explore the use of public blockchains within a regulatory sandbox to facilitate the storage and trading of digital assets.
The adoption of blockchain for green finance is not unprecedented. Bhutan, for instance, uses blockchain technology for its national carbon registry, enabling secure and efficient trading of carbon credits on a global scale.
Green Bond Tokenization and Strategic Partnerships
In this venture, NUS is partnering with Northern Trust, a provider of digital asset platforms, and United Overseas Bank (UOB), a leading financial institution, to tokenize one of the university’s green bonds. NUS had previously established a sustainable finance framework in April 2020 as part of its Climate Action Plan 2030. This framework outlines criteria and guidelines for the university’s green finance transactions, including green bonds and loans.
In March 2023, NUS successfully raised S$340 million through its third green bond issuance, following the strong reception of its initial offerings in 2020 and 2021. The 10-year notes, with a fixed coupon rate of 3.268 percent, are set to mature in 2033.
Northern Trust’s role includes hosting the green bond token and providing environmental impact reporting data related to the 2023 issuance. Investors purchasing these tokenized bonds will have access to immutable and comprehensive information, even as the bonds change hands. This marks a departure from traditional methods where issuers like NUS would manually update investors regarding fund usage.
As the lead arranger, UOB will collect feedback on how tokenized data impacts sustainability reporting for investors. The bank aims to ensure that tokenized data meets the required standards for transparent and reliable sustainability reporting.
Broadening Blockchain Applications in Green Finance
NUS is the first university in Singapore to employ blockchain technology for sustainable reporting, and it views this initiative as a foundational step in its long-term strategy to improve green finance practices through blockchain.
The university has entered a three-year agreement with Northern Trust, which will also collaborate with the Singapore Blockchain Innovation Programme (SBIP) housed at NUS’s School of Computing. This collaboration will involve research fellows and PhD candidates working to design and develop blockchain-based solutions.
By leveraging its academic and research expertise, NUS aims to create a robust green finance framework. This framework will help issuers and investors verify environmental, social, and governance (ESG) claims while meeting regulatory requirements for their investment portfolios.
Through these initiatives, NUS is poised to play a pivotal role in driving innovation in green finance and setting new benchmarks for transparency and accountability in sustainable investments.
