The carbon credit platform from Northern Trust is aimed at institutions.

Northern Trust (NASDAQ: NTRS) is developing a digital program to connect institutional buyers with project developers, facilitating the purchase of voluntary carbon credits. This initiative aims to support institutions in their efforts to achieve net-zero goals. The platform employs private ledger digital blockchain technology, enabling seamless interactions between buyers and carbon-credit suppliers. Smart contracts automate the transaction process, ensuring immediate settlement when predefined conditions are met.

Northern Trust conducted successful automated transactions with selected project developers and institutional buyers earlier this year, with plans for live transactions in 2023. By bridging the gap between buyers and sellers, Northern Trust also offers banking services, fostering long-term investment relationships.

The platform offers the tokenization of carbon credits, allowing buyers to work directly with project developers to offset their carbon footprints. Importantly, it is not a trading platform; its primary focus is to prevent double-counting and ensure transparency. (CIO)

Potential buyers include corporations, institutional asset owners, and investment managers looking to measure and mitigate their carbon emissions. The market currently lacks standardized transaction infrastructure, making it a prime candidate for growth in the coming years.

The carbon credits market, valued at $2 billion, is expected to expand as businesses seek to offset emissions to meet net-zero 2050 goals. Blockchain technology plays a pivotal role in Northern Trust’s platform by enhancing transparency and due diligence. It provides an immutable record, standardization, and secure payment infrastructure.

However, while the blockchain enhances transparency, it cannot differentiate between accurate and false data. Buyers must still verify project quality and authenticity. Regulators are also taking steps to ensure the integrity of voluntary carbon-offset markets, addressing issues like fraud and manipulation.

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