IBM, Veridium, Stellar launch blockchain for trading carbon credits

IBM, Veridium, Stellar launch blockchain for trading carbon credits

Environmental fintech company Veridium Labs is partnering with IBM to use blockchain to help companies offset their environmental footprints and reduce global warming.

The idea is to help transform carbon credits into fungible (exchangeable or interchangeable) digital assets that can be redeemed or traded on Stellar, the decentralised financial network for digital banking tools.

In this relationship, Stellar acts as the underlying ledger, IBM as the token manager or broker, and Veridium provides the environmental expertise and structure.

The resulting “digital environmental assets” are designed to help companies and institutional investors purchase and use carbon credits to mitigate against their environmental impacts, and hedge against potential future liabilities.

Veridium says that the carbon-credit tokens concept will encompass “the entire process of carbon footprint accounting and offsetting”.

Less complexity = greener world

Many companies purchase third-party carbon credits. However, the process of measuring emissions throughout a complex supply chain can be confusing and costly. At the same time, purchasing and valuing carbon credits can be equally complex, as they do not have a simple market value, like a stock.

Veridium believes that blockchain-based digital assets (tokens) can enable new, simpler, and faster ways to buy and use the underlying carbon offset using the power and trust of a distributed ledger and network.

“Tokenisation provides increased trust and integrity in the flow of information among trading partners and network participants,” said the company in an announcement today.

“Integrating the entire process of carbon accounting and offsetting into a digital token on a public, permissioned blockchain network can help make measuring environmental impact, transferring ownership rights, and redeeming the underlying carbon offset more efficient.”

A token approach to global warming?

The company claims that its new token will help tackle global warming.

Over the past 50 years, the world has lost more than 50 percent of its agricultural land to urban and industrial development, nearly 40 percent of its biodiverse tropical forests to industrial agriculture, and up to 80 percent of the world’s fresh water has been contaminated, according to Veridium’s figures.

“For years, we’ve been trying to mitigate environmental impacts at every point in the value chain,” explained Todd Lemons, CEO & co-founder of Veridium. “However, previous solutions still presented significant complexities and costs.

“Our work with IBM is the first step in dramatically simplifying the accounting and offsetting processes, and therefore ultimately helping reduce costs.”

“By using a public, permissioned blockchain network, we can help Veridium create a new sustainable marketplace that is good for business and good for the world,” added Bridget van Kralingen, senior VP for IBM Industry Platforms and Blockchain.

“This is a great example of how industries are being reinvented by blockchain, in this case establishing a far more efficient and transparent approach to carbon accounting and offsetting, which will empower individuals and companies to play a role in improving our environment.”

Internet of Business says

The extent of IBM’s move into blockchain-based systems, alongside cognitive services, has become apparent in recent months.

For example, IBM’s Institute for Business Value (IBV) recently issued a white paper, Moving to a Token-Driven Economy, which outlines the many ways in which tokenisation is impacting on existing business models, and challenging traditional concepts of finance.

Earlier this month, IBM emerged as one of the founders of the promising MOBI consortium alongside Ford, GM, Renault, BMW, and the IOTA Foundation, among others. This cross-industry alliance between technology and automotive companies seeks to explore the many ways in which blockchain, along with cryptocurrencies and AI, could transform connected transport and related services.

Meanwhile in April, IBM joined the Sovrin Foundation, a private non-profit organisation that wants to build a global blockchain for decentralised identity. Also in April, IBM collaborated with Marsh on a blockchain-based insurance network.