Société Générale, one of Europe’s largest banks, announced on 4 December that it has launched a €10m green bond on the Ethereum blockchain. The bond will be stored as a Security Token and structured as a 3 senior preferred unsecured bond, meaning it is relatively low-risk. Proceeds from the sale will “be exclusively used to finance or refinance Eligible Green Activities,” according to the press release. [do I need the press release in here? Unsure of how guidance applies on this with quotes now]
The bank claims that storing the bond as a Security Token on the public blockchain will help develop the blockchain as “a data repository and certification tool […] to foster transparency on ESG and impact data on a global scale.” It is keen to emphasise future benefits of a tokenised asset class, including the ability to view the carbon footprint attached to the bond infrastructure itself and on-chain securities settlement.
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This announcement touches on two particularly popular themes in digital finance at the moment: blockchain and ESG. Banks including JP Morgan and Citigroup have been exploring potential uses of tokenised assets on blockchains both public and private this year, and central banks are increasingly interested in the possibility of digital currencies, particularly for international transfers. Whilst the €10m that SocGen is beginning with is a relatively small amount, it shows there is continued interest in the technology amongst large banks.
SocGen has also been active in the ESG space recently, announcing on 27 November a reiteration of its green transition objectives, including a target of an 80% reduction compared to 2019 in the bank’s upstream exposure to the oil and gas sector by 2030 and an intermediary goal of a 50% reduction by 2025. The bank has also “largely completed” its withdrawal from the thermal coal sector.
These goals are paired with regular updates on its transition through progress reports, the most recent of which includes its efforts to reduce CO2e emissions from its real-estate portfolio. The main decarbonisation lever it sees in this space is retrofitting existing building stock to reduce emissions, though it acknowledges that the current rate is too low, with an annual renovation rate of 1%.
Across all themes tracked by GlobalData, ESG has consistently been the most talked about in financial services company filings, beating out geopolitics and even terms related distinctly to financial services.
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