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Abstract

The promising markets for voluntary carbon credits are faced with crippling challenges to the certification of carbon sequestration, and the lack of scalable market infrastructure in which institutions can invest in carbon offsetting. This amounts to a funding problem for the agricultural sector, as farmers are unable to access the liquidity needed to fund the transition to sustainable practices. We explore the feasibility of mitigating infrastructural challenges based on a DLT Trading and Settlement System, for ‘green bonds’. The artefact employs a multi-sharded architecture, in which the set of nodes retains carefully orchestrated responsibilities in the functioning of the network. We evaluate the artefact in the supranational context with an EU-based regulator as part of a regulatory sandbox program mandated by the new EU DLT Pilot regime. By conducting design-driven research with stakeholders from industrial and governmental bodies, we contribute to the IS literature on the practical implications of DLT.

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