Platforms for sustainable investments benefit from tokenization as assets become digital securities.

Sustainability is a trend. The market for sustainable infrastructure projects and business models is growing due to politically and socially driven change. Ethical investments and interesting returns attract more investors to the market. Traditionally investment vehicles however quickly reach their limits. Asset investments, such as subordinated loans, have fundamental disadvantages compared to securities. They are very difficult to transfer and offer limited structuring possibilities. Through digital securities, platforms offer investors more flexibility, as they can be transferred before maturity.

This allows platforms to build a marketplace where investors can easily transfer digital securities. When it comes to structuring, digital securities in the form of, e.g. participation rights, bonds or certificates are more flexible and allow more interesting structuring options. Structuring classic investments as securities is often not cost-effective, as many intermediaries such as central securities depositories are involved. However, the tokenization of securities changes this fundamentally. Many intermediaries are no longer needed. Overall, digital securities offer many advantages over investments and traditional securities.

Why tokenization?

Advantages for platforms

  • Intuitive and simple digital issuing and investment process for investors and issuers - no blockchain-specific knowledge necessary
  • New asset classes and share opportunities in the field of sustainable investments
  • Simplicity and transferability of digital securities
  • The Securities Prospectus Act applies to the issuance of digital securities. However, the thresholds for prospectus exemptions are similar to those for investments
  • Issue process possible within 4 weeks (plus approval times in case of securities information sheets (WIB))
  • Reusable contracts, WIB and legal document templates save up to 65% costs and allow for fixed cost degression
  • Become part of the capital market of tomorrow today
  • New business areas can be opened up by expanding the variety of supply for platforms

Status Quo

Sustainability AG operates a platform for sustainable investment opportunities such as sustainable infrastructure projects and investment opportunities in sustainable business models.

When placing investments, retail investors are often unsure about two things:

  • Investors want to diversify their risk and not depend on the success of an investment project
  • Due to long durations of infrastructure projects, capital might be tied up in the long term. This can discourage many investors. This is why shares, funds or ETF's are often preferred for larger investments, as they are more liquid and can be sold at any time.

The project

Sustainability AG hears about digital securities and carries out a tokenized issuance as part of a pilot project. Learning from the pilot project, Sustainability AG decides to issue more digital securities. There are many advantages, but the prominent one is that thethe structure of digital securities is more flexible. This opens up interesting investment opportunities for investors. For example, Sustainability AG tokenizes a wind farm and issues a digital participation right with a term of 10 years.

Investors thus participate directly in the profits of the wind farm.

Thanks to the easy transferability of digital securities, investors can also transfer their securities to the investment object before the end of the term. This option is particularly well received by investors, as investments in sustainability projects usually have long terms to maturity. Furthermore, there is the possibility to invest in projects that are already running successfully. This allows investors to minimize their risk when an already successful infrastructure project distributes ongoing profits.

Investments 2.0

Due to the novel and diverse possibilities of digital securities, the demand for investment opportunities on the platform of Sustainability AG is increasing. This also leads to an increased demand from issuing companies that place projects on the platform of Sustainability AG. The easy transferability of digital securities opens up a new business area for Sustainability AG, as it offers investors a marketplace for digital securities.
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