Computing giant IBM has announced that it has signed a partnership with environmental fintech startup Veridium Labs to issue a cryptocurrency token on the Stellar blockchain.
The initiative, unveiled on Tuesday, will see IBM and Veridium tokenize carbon credits, enabling pollution-heavy companies to offset the damage their operations cause to the environment. Proceeds from selling the “verde” token will be used to reforest a 250-square mile patch of rainforest on the island of Borneo in Indonesia.
Third-party carbon credits have existed for some time, but they’re difficult to value and hold on a traditional balance sheet. The verde token, in contrast, is fungible and can be redeemed and traded on the public Stellar network, removing friction and opacity from the carbon credit supply chain.
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“For years, we’ve been trying to mitigate environmental impacts at every point in the value chain, however previous solutions still presented significant complexities and costs. said Todd Lemons, CEO and co-founder of Veridium. “Our digital environmental assets are designed to help companies and institutional investors purchase and use carbon credits to mitigate their environmental impacts today, and even hedge their potential carbon liabilities risks in the future.”
Significantly, the initiative is not just a proof-of-concept or a pilot program. Nor will the tokens be confined to a private blockchain only available to select companies. Rather — building on IBM’s previous partnerships with Stellar — the credits will be traded across the public Stellar network, enabling the program to have a global reach.
“By using a public, permissioned blockchain network, we can help Veridium create a new sustainable marketplace that is good for business and good for the world,” said Bridget van Kralingen, senior vice president of IBM’s industry platforms and blockchain division.
“This is a great example of how industries are being reinvented by blockchain, in this case establishing a far more efficient and transparent approach to carbon accounting and offsetting that will empower individuals and companies to play a role in improving our environment,” she concluded.
Featured image from Shutterstock.