JPX intends to issue the bond to help it achieve carbon neutrality, while enabling investors to track its progress over time.
Japan Exchange Group (JPX), owner of the Tokyo Stock Exchange, is exploring the possibility of issuing tokenised green bonds as a way to raise funds to achieve carbon neutrality across the group.
JPX aims to switch 100 percent of the electricity it consumes to renewable energy and achieve carbon neutrality across the group by fiscal year 2024. The plan includes investments in solar and biomass power facilities.
In a statement on Monday, JPX said it considering raising part of the funds needed for these investments through the issuance of a “Digitally Tracked Green Bond”.
The bond will use blockchain to improve the transparency of data and the efficiency of data collection. “This is the first initiative of its kind in Japan,” JPX said.
To improve transparency around the use of funds raised by the planned bond issue, JPX will create a mechanism that automatically measures the amount of power generated by the solar and biomass power facilities and converts it into an amount of CO2 reduced.
“By utilising digital technologies in this way, we will aim for greater transparency than just annual reporting by creating a mechanism that enables investors to monitor progression from outside at any time,” JPX said.
For the bond issuance, JPX plans to use a security token platform provided by BOOSTRY, which is backed by Nomura, Nomura Research Institute, and SBI.
The security tokens will also enable tracking of holdings by investors, a feature which JPX plans to utilise for investor relations activities.
“We believe that in the future it will be possible to consider creating a sustainability-linked bond that automatically changes bond issuance conditions, such as the interest rate, depending on achievement of sustainability targets,” JPX said.
The initiative will also allow JPX to explore how digitalisation can improve operational efficiencies in the bond issuance process and yield other benefits such as in green bond reporting.
“The primary objective of this initiative is to help JPX achieve carbon neutrality as an issuer, but in the future, we aim to contribute to the carbon neutrality of society as a whole by sharing the lessons learned and the issues discovered in the process,” JPX said.
The research will be led by JPX Market Innovation & Research, a subsidiary launched in April to accelerate the group’s work to diversify its businesses, advance the sophistication of its services, and improve market efficiency.