- On 7 July 2022, BNP Paribas structured, tokenised and distributed a bond, the proceeds of which aim at refinancing a solar energy project sponsored by EDF through its subsidiary EDF ENR.
- This native digital asset, issued on the public blockchain, represents the first renewable energy bond tokenisation on the project financing market.
- This innovation will be instrumental in broadening the scope and increasing the efficiency of project financing, including better transparency of ESG data along the value chain.
Solar–based electricity production is the leading energy transition segment, with several trillions of financing needs in the near future. Almost half of these financing needs will come from smaller projects, which are currently being underserved.
Tokenisation[1] has the potential to be a game-changer for ESG-linked financing. It provides better granularity for smaller amounts, which means that the approach can facilitate the development of smaller renewable energy projects by offering dynamic bundling opportunities to investors.
It also enables greater transparency and verifiability of data across the whole value chain, which is key for ESG projects. Both the bond term sheet and ESG data are embedded in the token, representing a strong improvement in terms of verifying investors’ ESG impact.
Arnaud Boyer, Chief Digital Officer at BNP Paribas Corporate and Institutional Banking (CIB) stated: “This trade, based on tokenisation for renewable financing, is the first of its kind, and fully aligned with the Bank’s development plan: “Growth, Technology and Sustainability 2025”. This innovation creates further bridges between issuers and investors, bringing a unique end-to-end ESG financing solution to our clients – from origination to distribution, to custody.”
Benjamin Declas, President of EDF ENR stated: “EDF ENR, 100%-owned subsidiary of EDF dedicated to rooftop and shadehouse solar plants in France, is pleased to contribute to this unique project financing tokenisation, thanks to the cooperation between EDF and BNP Paribas. Such experiment opens new financing opportunities for smaller photovoltaic projects under our sponsorship or sponsored by our clients.”
For this transaction, the BNP Paribas Group leveraged its tokenisation platform, AssetFoundry[2]. BNP Paribas Securities Services managed the custody aspects of this token. In order to ensure clean energy usage of the blockchain, utility tokens were minted with low carbon energy by Exaion, the EDF subsidiary dedicated to Blockchain and High Performance Computing services. The issuance was performed on public Ethereum blockchain, under French law for unlisted securities, with legal advice from Jones Day. BNP Paribas Asset Management acted as the investor.
David Bouchoucha, Head of Private Debt & Real Assets at BNP Paribas Asset Management stated: ”Innovation and sustainability are at the heart of our investment philosophy for private debt investing. Tokenisation and blockchain are opening exciting new opportunities to diversify portfolios for our clients hence our commitment to work with strong partners on those new developments”.
The transaction also tested token reversibility, as the tokenised bond was seamlessly switched back to a traditional bond within 48 hours, a key element for the interoperability with traditional systems.
Footnotes
- ^ [1] Tokenisation is the issuance of securities as native digital assets, which means that they can be recorded, moved and stored on the blockchain in a transparent way. This technology broadens market opportunities for smaller assets, improves data transparency as well as possibly bringing liquidity thanks to its digital format.
- ^ [2] Asset Foundry is BNP Paribas CIB integrated platform covering all elements of tokenisation from legal and compliance, to technology and business processes. This platform is fully integrated in the bank’s systems and business processes to offer scalable digital assets solutions to our clients, so they can experiment and assess impact and opportunities of tokenisation.
BNP Paribas is the European Union’s leading bank and key player in international banking. It operates in 65 countries and has nearly 190,000 employees, including nearly 145,000 in Europe. The Group has key positions in its three main fields of activity: Commercial, Personal Banking & Services for the Group’s commercial & personal banking and several specialised businesses including BNP Paribas Personal Finance and Arval ; Investment & Protection Services for savings, investment and protection solutions ; and Corporate & Institutional Banking, focused on corporate and institutional clients. Based on its strong diversified and integrated model, the Group helps all its clients (individuals, community associations, entrepreneurs, SMEs, corporates and institutional clients) to realise their projects through solutions spanning financing, investment, savings and protection insurance. In Europe, BNP Paribas has four domestic markets: Belgium, France, Italy and Luxembourg. The Group is rolling out its integrated commercial & personal banking model across several Mediterranean countries, Turkey, Eastern Europe as well as via a large network in the western part of the United States. As a key player in international banking, the Group has leading platforms and business lines in Europe, a strong presence in the Americas as well as a solid and fast-growing business in Asia-Pacific.
BNP Paribas has implemented a Corporate Social Responsibility approach in all its activities, enabling it to contribute to the construction of a sustainable future, while ensuring the Group's performance and stability.
When EDF ENR was founded in 2007, it was because of our belief that solar energy is everyone’s future.
The company, fully a part of EDF and supported by it, creates separate solar energy systems on buildings and on, or as, canopy structures for parking lots that enable private individuals, businesses, and local governments to produce carbon-free electricity, sell it and use it themselves, based on innovative offers. EDF ENR thus totally embodies the EDF group’s CAP2030 strategy and its inherent goal to “build a CO2-neutral energy future that combines preservation of the Earth, well-being and development thanks to electricity and to innovative solutions and services.
EDF ENR has assisted more than 50,000 energy producers since its founding and is thus a leader in its various markets due to the quality of its services, and to the commitment and acknowledged competence of its staff.
For more information: www.edfenr.com
Contact
- Corporate & Institutional Banking
- Corporate & Finance
- Economic research
- Engagement / CSR