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Societe Generale-FORGE Unveils Pioneering Report on Carbon Footprint of Security Tokens

The Tokenizer November 24, 2023

Societe Generale-FORGE (SG-FORGE) has released a new report on the carbon footprint of security tokens, covering their entire life cycle. The report, produced by the Lamarck Group with independent third-party review by the Institut Louis Bachelier and the Crypto Carbon Ratings Institute (CCRI), aims to establish a comprehensive methodology for calculating the carbon footprint of financial products issued in token form on the Ethereum public blockchain infrastructure.

This innovative approach provides insights into the environmental impact of digital bonds throughout their life cycle, encompassing issuance, management (including corporate actions), and final redemption. The report indicates that the carbon footprint of a digital bond on the blockchain is 0.82 kg CO2, equivalent to a 3.8 km car ride. It also highlights the relatively low greenhouse gas (GHG) emissions associated with the Ethereum network post-protocol change in September 2022 (“The Merge”), resulting in a reduction of electricity consumption by over 99%.

In a move towards transparency and traceability, this report represents a significant step for the financial industry in terms of reporting. SG-FORGE envisions future reporting on the estimated carbon footprint of its security tokens at the issuer’s request. This information will be directly available in the smart contract, empowering investors to measure the carbon emissions of the issuance infrastructure supporting their token portfolios.

“Blockchain and smart contracts have the potential to generate significant efficiency gains in the issuance and trading of financial instruments. Issuers and investors now also have access to a new measure of environmental impact. Our ambition with this initiative is to make it a market standard.” – Jean-Marc Stenger, CEO at Societe Generale – FORGE

Industry responses to this initiative have been positive, with organizations such as ICMA and AFME welcoming the efforts to explore innovative ways to measure the carbon footprint of transactions underpinned by public blockchains. The report is expected to stimulate a broader debate on the environmental impact of technology in financial markets.

Thomas Boidot-Dorémieux, Director of Lab’ Innovation at Lamarck, emphasized the report’s value in demonstrating the shared and decentralized nature of public blockchain while setting an example for all financial players. Dr. Christian Stoll, Co-founder of CCRI, commended SG-FORGE’s commitment to developing methodologies for assessing environmental impact in tomorrow’s finance.

The support from the Institut Louis Bachelier focused on the audit phase, highlighting the innovative nature of the methodology. Louis Bertucci, Researcher at the Institut Louis Bachelier, noted that the report provides valuable information, offering stakeholders a comprehensive view of the carbon impact of the tokenization process implemented by Societe Generale-FORGE.