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Canadian Imperial Bank of Commerce (CM.TO) has joined a new blockchain-based marketplace for carbon offsets to help clients balance their emissions with investments in green projects.
The platform, called Project Carbon, will be a first for Canada's big banks as the world's largest financial institutions up their focus on addressing climate change.
CIBC has partnered Brazil's Itaú Unibanco, National Australia Bank, and British banking and insurance company NatWest Group on the new marketplace, which is set to be launched as a pilot next month.
Buying carbon offsets has surged in popularity as a growing number of companies set net-zero targets in response to investor demand for greener assets. However, the strategy has faced criticism over its real-world effectiveness and the transparency of transactions.
Climate change leaders, including UN Special Envoy for Climate Action and Finance Mark Carney, have stressed the need for an orderly market for buying and selling stakes in green-focused projects, like planting trees or removing carbon from the atmosphere.
Carney, formerly governor of the Bank of Canada, has said the unified market for carbon offsets could be worth US$100 billion by the end of the decade, up from about US$300 million in 2018.
CIBC says Project Carbon aligns with the Taskforce on Scaling Voluntary Carbon Markets established by Carney to remove current barriers to voluntary carbon offset purchasing.
CIBC chief executive officer Victor Dodig says the new marketplace will make offsets more accessible to the bank's clients.
CIBC says Project Carbon is built on the private ethereum platform to provide a digital ledger that will record all transactions, record ownership and avoid double counting. The bank expects it will increase investment in green projects by demonstrating demand and communicating the trade sizes and prices of offsets.
"Project Carbon is a terrific example of how technologies such as blockchain can address existing barriers and make carbon offsets more accessible for our customers," Dodig said in a news release on Wednesday.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.