Corporate MovesDecember 17, 2024

Northern Trust Signs Deal in Singapore to Work On Tokenizing Green Assets

The agreement with the National University of Singapore aims to support sustainable investing and blockchain technology.

Reported by Michael Katz

Northern Trust Corp. and the National University of Singapore have signed a three-year memorandum of understanding as part of a collaboration they said will focus on supporting sustainable finance frameworks and improving blockchain technology.

The $1.6 trillion asset manager said the partnership aims to create a framework for “tokenizing green assets” to help investors improve their ability to verify environmental, social and governance claims and meet regulatory requirements calling for increased disclosure. Tokenizing green assets involves converting sustainable investments, such as carbon credits and investments in renewable energy projects, into digital tokens on a blockchain.

Yuval Rooz, CEO of blockchain software provider Digital Asset, wrote in a recent commentary for the World Economic Forum that the tokenization of financial assets on the blockchain is gaining momentum at the institutional and governmental level.

“After years of investment, proof of concept, and testing, the planets are aligning and tokenization of financial assets is finally happening at an institutional and governmental level,” Rooz wrote. “This shift will forever change the way that nations trade and promote more inclusive financial participation.”

According to Rooz, the main reasons tokenizing assets has generated so much interest from major institutional investors include reducing operational costs, improving efficiencies and eliminating settlement risks.

“Industry collaboration is crucial to mobilizing tokenized assets and connecting across participants and global markets,” Rooz said, “Technology developments in financial markets have always moved more cautiously than other industries.”

According to the announcement, a main part of the partnership is a tokenization initiative that uses Northern Trust’s Matrix Zenith platform, intended to tokenize “green credentials” on the blockchain.

“This collaboration with NUS represents a significant step forward in our efforts to harness blockchain technology for the betterment of sustainable finance,” said Justin Chapman, Northern Trust’s global head of digital assets and financial markets, in a statement. “By bringing the green credentials of bonds on-chain, we are addressing investors’ need for transparency and reporting in a fast-evolving market.”

Northern Trust has been increasing its activity in Singapore in recent months. In August, the company named Kai Jebens, who will be based in Singapore, as head of client development for southeast Asia. It also named Chris Vera as a senior digital solutions consultant for Asia Pacific in Northern Trust’s asset servicing business. In May, Northern Trust was named the outsourced trading provider for Singapore-based investment manager New Silk Road Investment.