The open-source protocol will enable issuance of Sustainability-linked bonds on blockchain solving the impact washing problem and democratizing impact finance The market of green and sustainability-linked bonds that are designed to finance sustainable projects is expected to reach a new record of 350 bln USD in 2020 despite the crisis.
However, there are still challenges preventing market growth: low accuracy and transparency of impact measurement, high back office cost, relatively low liquidity of impact finance. Digital technologies such as AI, IoT, and blockchain can solve these challenges, which is confirmed in the latest UN and EU statements.
Evercity platform for impact measurement & investment aims to solve these problems by introducing an open-source, blockchain-based Smart Sustainable Bond (SSB) protocol. The SSB protocol is designed to support the full lifecycle of sustainability linked bonds from structuring to issuance and reporting.
Within the ongoing proof of concept the SSB protocol is used to issue a bond with floating coupon rate that is linked to CO2 reductions from a 25 MW power plant of Hevel Group – a vertically integrated solar power producer. The results of the PoC will be announced by the Evercity team during the Web Summit.
The project is being funded by a grant from Web3 Foundation. Web3 Foundation funds research and development teams building the technology stack of the decentralized web. It was established in Zug, Switzerland by Ethereum co-founder and former chief technology officer Dr. Gavin Wood. Evercity has chosen to build their SBB protocol using Web3 tech (Parity Substrate& Polkadot) because it has significantly lower carbon footprint than blockchain 1.0 solutions and provides for interoperability to prevent double accounting of impact results.
In 2021, the SSB protocol will have integration with IoT sensors to collect the impact data and calculate the coupon rate automatically. This will significantly increase transparency and lower issuers expenses for such a complicated debt instrument opening it to small-scale projects in developing countries.
The SSB protocol and pilot SDG bond issuances planned for 2021 will be presented at the global UN Climate Summit COP26 in Glasgow in partnership with the UNFCCC-backed Climate Chain Coalition