France’s third-largest listed bank, Société Générale (SocGen), has forayed into blockchain-based financial solutions by issuing the first digital green bond (worth €10 million) on a public blockchain, according to a December 4 press release.
Following the European Investment Bank’s (EIB) recent launch of a digital bond based on a private blockchain, the French lender’s plan marks another step towards widespread adoption of blockchain technology in the global financial sector.
This issuance not only highlights the growing confidence in blockchain as a disruptive tool for sustainable finance, but also signals the increasing digitalization in the financial sector.
Ethereum’s green bonds
SocGen’s cryptocurrency arm, SG-FORGE, issued a bond as a security token on the Ethereum public blockchain on November 30.
The issuance consists of senior unsecured notes with a maturity of three years. Proceeds from the bond will be earmarked for financing or refinancing activities consistent with Societe Generale’s Sustainable and Positive Impact Bond Framework.
AXA Investment Managers and Generali Investments, representing two major institutional investors, fully underwritten the bonds through a private placement. In particular, AXA IM participated in transactions using a significant portion of its investment in EUR CoinVertible, Societe Generale’s euro-denominated stablecoin.
Settlement through digital currency
According to the French lender, one notable aspect of digital green bonds is the increased transparency and traceability of ESG data enabled by blockchain technology.
Digital green bonds introduce key features to financial markets. First, it provides continuous access to data on carbon emissions associated with digital bond infrastructure through smart contracts. This allows us to effectively monitor the environmental impact of financial securities.
Second, the bond offered an innovative payment method using EUR CoinVertible, a digital asset issued by SG-FORGE in April 2023, in addition to traditional cash payment options.
This issuance highlights SocGen’s strategic focus on developing expertise in cryptocurrency services and digital devices. It also demonstrates lenders’ commitment to strengthening their debt capital market capabilities to meet the growing demand for digital assets, especially ESG-conscious assets.