A fund of Russia's Norilsk Nickel GMKN.MM has launched the world’s only physically backed carbon-neutral nickel Exchange Traded Commodity (ETC) which offer investors exposure to the spot prices of nickel without owning them, it said.

Nornickel, the world's largest producer of refined nickel and a major producer of copper, hopes to attract more European-based investors in these base metals through ETCs launched earlier on the London Stock Exchange (LSE).

Targeting institutional investors, the new ETC has a low investment cost, its total expense ratio stands at 0.75%. The minimum investment is $100,000 and daily valuations are available on Wiener Börse (the Vienna Stock Exchange). Prior to the issue on the exchange, the carbon-neutral metal was tokenized on Atomyze, a Blockchain platform.

Anton Berlin, Nornickel Vice President, Sales and Distribution commented: “Carbon neutral nickel ETC is another important development for Nornickel and testament to our commitment to the global climate change agenda. Today’s announcement furthers our ambition to be the leading producer of green metals, highlighting the attractiveness of our portfolio of low-carbon commodities which provide a transparent and fully-audited source of sustainable metals.”

The carbon credits embedded into the carbon neutral nickel ETC represent the carbon saving generated by Nornickel in 2019 — 2020. International auditor EY verified the volume of Nornickel’s emissions and Sphera GmbH, a leading European environmental and sustainability consultant, confirmed the methodology behind emission calculations.

Nornickel and Sphera have been working together since 2013 to record the Company’s CO2 emissions. The recorded data show Nornickel’s long-term commitment and strategy to cut greenhouse gas (CO2) emissions at all stages of the production chain, from underground ore mining to processing and refining.

Alexander Stoyanov, Chief Executive Officer of GPF said: “This is yet another tangible benchmark achieved and thanks to Nornickel’s commitment to emissions reduction we can bring the world’s first carbon-neutral nickel ETC to market. Investors can take advantage of low-cost access to nickel which plays a fundamental role in the transition to clean energy in the knowledge it has been mined and produced responsibly.”

The carbon savings were made possible thanks to upgrades to the hydro power plant which feeds Nornickel’s production facilities in the Norilsk Industrial District and the upgrade and repair of power equipment, rollout of the automated control and metering system, reduction of heat losses in buildings and pipelines, and decommissioning of obsolete power units.

The carbon-neutral nickel ETC is an addition to GPF’s portfolio of six physically-backed, low-cost metal ETCs, which include gold, silver, platinum, palladium, nickel and copper, and are now listed on Xetra. The ETCs are also available on LSE, Xtra, SIX and Borsa Italiana.

Digital assets that will be backed by ESG compliant products have an important difference from conventional financial instruments. Given the specifications of the blockchain technology, the origin of goods and services at all stages of their production up to disposal will be transparent, news outlets reported.

Potentially, tokens for such products can become an investment tool and be in demand not only among traditional industrial clients, but also among other categories of investors focused on ESG.

Earlier, Norilsk Nickel, the world's largest producer of palladium and nickel, issued the first metal contract tokens to its main industrial partners Traxys SA and Umicore SA. Norilsk Nickel became one of the first companies in the industry and in the world to launch this mechanism.