Societe Generale Issues First Digital Green Bond as Security Token on Ethereum Blockchain

Hassan Shittu
Last updated: | 3 min read
Societe Generale
Source: iStock/AdrianHancu

Societe Generale, the third-largest bank in France, has marked a significant milestone by issuing its inaugural digital green bond on the Ethereum public blockchain.

Societe Generale announced Monday that it issued its first green bond on the Ethereum blockchain. The bond, valued at 10 million euros (approximately $11 million), was executed in late November and carries a three-year maturity. This initiative was facilitated through Forge, a subsidiary of Societe Generale.

This pioneering digital green bond is dedicated to financing or refinancing products and companies falling under the eligible green activities category. The “green” status underscores Societe Generale’s commitment to environmentally responsible financing. The net proceeds generated from the bond will be directed towards financing or refinancing products and companies falling within the eligible green activities category.

One of the key innovations accompanying this digital bond is its transparent and accessible digital infrastructure. Through the bond’s smart contract, stakeholders, including issuers and investors, gain 24/7 open access to data pertaining to its carbon footprint.

The bank aims to leverage the Ethereum blockchain as a data repository and certification tool for issuers and investors, particularly in the context of environmental, social, and governance (ESG) considerations. The issuance of tokenized bonds aligns with the bank’s commitment to enabling greater transparency on ESG matters.

This empowers market participants to measure the carbon emissions associated with their securities directly on the financial infrastructure. The smart contract governing the green bond includes comprehensive carbon footprint information accessible to the public.

Societe Generale Embraces Blockchain for Tokenized Bonds to Boost Transparency and Efficiency

In a bid to enhance transparency, traceability, and efficiency in financial transactions and settlements, Societe Generale emphasized the tokenized nature of these bonds. The move towards blockchain technology is a strategic initiative by the bank’s crypto team to harness the advantages of decentralized ledger technology.

By leveraging the Ethereum blockchain to provide increased transparency and traceability, it also improves fluidity and speed in transactions. Additionally, the bond introduces a technical option for investors to settle securities on-chain using the EUR CoinVertible, a stablecoin pegged to the euro that Forge issued in April 2023.

This approach not only enhances efficiency in settlement processes but also positions the bank to navigate the evolving landscape of central bank digital currencies (CBDCs). The bank acknowledges the ongoing experimentation with CBDC solutions and positions itself as a provider of a comprehensive range of on-chain services.

The Third-Largest Bank in France Continues Crypto Initiatives with Tokenized Bond and Focuses on Environmental Impact

Beyond its collaborative efforts, Societe Generale has been an active participant in the cryptocurrency space. Prior to this digital green bond on Ethereum, the bank had successfully issued Eurobonds on the Ethereum blockchain and security tokens on the Tezos blockchain.

Moreover, Societe Generale has proposed Dai stablecoin loans in exchange for bond tokens. The team’s proactive approach resulted in the acquisition of the highest access license to operate as a digital asset service provider in France in July.

In November, Societe Generale-FORGE, in collaboration with the Lamarck Group, Institut Louis Bachelier, and the Crypto Carbon Ratings Institute, released a report focusing on the lifecycle of security tokens. The report aimed to establish a methodology for calculating the carbon footprint of financial products issued in token form on the Ethereum public blockchain infrastructure.

The report specifically focused on Ethereum’s network due to its relatively low greenhouse gas emissions following the merge in September of the previous year.

In June, the European Investment Bank (EIB) issued a tokenized bond using Credit Agricole CIB and SEB’s blockchain-based bond platform. The EIB’s bond was denominated as a Swedish Krona 1 billion bond, equivalent to approximately $95 million, with a maturity period of 2 years.

While this is SocGen’s first tokenized bond, the bank had previously collaborated with the EIB on its inaugural digital bond issuance in 2021.