Japanese multinational conglomerate Hitachi (NASDAQ: HTHIF) has launched a JPY10 billion ($69.3 million) unsecured digital green bond, the largest of its kind in the country.
Hitachi first announced the five-year bond in mid-November, revealing it would use a green hub to track carbon emissions reductions. Developed in collaboration with the Japan Exchange Group (JPX) – owner of the Osaka Exchange and the Tokyo Stock Exchange – it provides emissions data to investors.
Hitachi and JPX partnered with Japan’s largest investment bank, Nomura, and BOOSTRY, a blockchain company majority owned by Nomura, which provides the blockchain technology for the green bond and has received the highest rating from Moody’s.
Hitachi will use the bond proceeds to refinance the construction and renovation of “Kyōsō-to of the Central Research Laboratory (energy-saving building),” the company said in a statement. The building was renovated in 2021.
When issuing bonds, there is usually a central securities depository, which acts as an intermediary, holds the securities in custody and ensures that ownership can be easily transferred. The use of blockchain eliminates the need for an intermediary, with a DLT-based platform serving as a securities registry.
The four organizations have previously collaborated on similar initiatives. In 2022, they worked on a $3.5 million green corporate bond, with Nomura as underwriter and Hitachi tracking emissions. They called it Japan’s first large-scale digital green bond.
JPX later engaged more than 50 Japanese companies to study the lessons learned from the first attempt. One of the challenges they encountered was settlement issues due to a lack of payment solutions in the chain. This forces participants to turn to legacy payment systems that are outside the scope of the blockchain ecosystem.
The consortium will explore on-chain payment arrangements over the life of the five-year bond, including the potential use of a regulated stablecoin. Japanese companies are ramping up their stablecoin efforts, with the largest bank, MUFG (NASDAQ: MUFG), recently announcing a partnership with yen-backed stablecoin JPYC.