Visa and National Australia Bank are among the collaborators on a carbon credit initiative that's designed to expand payment technology for transactions that reduce carbon emissions.
As part of a pilot, Visa purchased carbon credits from Sustainable Carbon, a environmentally focused project developer, using Carbonplace, a bank-supported carbon credit settlement platform. National Australia Bank, BNP Paribas, CIBC, NatWestGroup, UBS, Standard Chartered and Itau Unibanco are the founding members of Carbonplace, which plans to launch its platform, which it refers to as the "SWIFT of the carbon offset market," by the end of 2022.
The banks can share existing infrastructure, including tools for know-your-customer compliance and digital payment processing, to address pain points in the voluntary carbon market.
Carbon-emitting parties use voluntary carbon markets to offset emissions by buying carbon credits from projects that aim to reduce greenhouse gasses. Each credit is equal to one metric ton of greenhouse gas removed. Once the greenhouse gas has been verifiably removed, the carbon credit is added to a registry and removed from trading. Visa is participating in the test as part of its pledge to reach net-zero emissions by 2040, or 10 years ahead of the Paris climate agreement goal.
"This successful pilot transaction with Visa is a significant step towards being able to help more of our customers tackle existing barriers and make carbon credits more accessible to everyone," said David Gall, group executive of corporate and institutional banking at National Australia Bank, said in a press release.
Visa's test comes as payment companies and financial institutions see ways to reduce their own carbon footprints, and entice partners and clients to pursue environmental sustainability projects.
