Lausanne-based wealth manager SwissBorg asked us to review its CHSB tokens across all three ESG categories and identify areas for optimization. Here is our verdict.
We Swiss love chocolate, appreciate quality and have a special relationship with money. After all, our banking sector is one of the most competitive financial centers in the world and number one in cross-border wealth management [1]. So when we heard that SwissBorg aimed to “make wealth management fun, fair and community-centric” by specializing in cryptocurrencies, our interest was piqued, to say the least.
As the first token ever, we have assessed SwissBorg’s CHSB token in terms of sustainability and analyzed it according to the three ESG categories: environmental, social, and governance.
Our approach Overall, we source between 90 to 110 data points per token to feed our quantitative estimation models. We also apply qualitative expert judgment to ensure that soft factors such as visions, roadmaps, or conflicts of interest are taken into account and included in the rating. Our rating system is relative, i.e. we evaluate the sustainability of each coin or token in direct comparison to its peers. In other words, we ask ourselves which cryptocurrency is more sustainable considering a similar market cap and transaction volume. This is to ensure that those with higher transaction volumes and associated higher CO2 emissions are not automatically penalized. |
Before you read on, bear in mind that a token is a cryptocurrency built on an existing blockchain. Since CHSB runs exclusively on Ethereum, the rating of the blockchain also affects the rating of CHSB. Read our latest blog to learn more about how this works: How the ESG rating for tokens differs from coins.
How environmentally friendly is CHSB?
With that in mind, we’re off to a rough start: Ethereum only makes it to a C rating overall in our sustainability analysis and holds the lowest score in the environmental category. This also negatively affects CHSB's environmental score, and we deduct points for lack of eco-friendly trade alternatives.
Nevertheless, CHSB exhibits lower power consumption per transaction than all other tokens examined that are also traded exclusively on Ethereum (e.g., Tether EURT, Utrust, or REN). This is due to the relatively low transaction volume on the Ethereum blockchain in relation to market capitalization. In addition, SwissBorg strives to improve its own environmental impact through active measures. The company is a member of the Crypto Climate Accord and has announced initial plans for a decarbonization roadmap. This includes offsetting the onchain energy required to operate the CHSB token.
“SwissBorg swiftly signed up in May 2021 to the Crypto Climate Accord (CCA), a private sector led initiative that was created to bring together the crypto and blockchain industry to develop and adopt digital solutions to decarbonize the industry.” - Francesco Mochi Sismondi, Head of Risk at SwissBorg
Overall, the token receives an environmental score of B with great potential for further improvement, depending on whether alternatives to Ethereum can be provided for CHSB.
How social is CHSB?
In the social dimension, too, we first take a look at Ethereum as CHSB's operational blockchain. With a social score of B-, it is in the front midfield and provides CHSB with a significantly better starting position than in the above environmental category.
And rightfully so; CHSB plays to its strengths in this category. For example, SwissBorg has introduced a tier system that aims to reward every investor in the CHSB return wallet while reducing wealth inequality. In doing so, the token empowers investors in economic terms but strives to achieve a balance for the benefit of all. Since all trading is regulated, the financial protection of consumers or investors is guaranteed.
The different premium memberships, however, lead to a certain imbalance from a social perspective. The required CHSB staking of 2,000 or 20,000 (depending on the plan) allows for a reduction in fees. However, the amount is set at a level that only people who have already accumulated a certain amount of wealth can enjoy the benefits.
Overall, CHSB achieves a social score of B. The deductions due to the rating of the operational blockchain are also noticeable here.
How well is CHSB managed?
Ethereum achieves an A- in the Governance Score, providing an ideal basis for CHSB in this category. CHSB settles slightly below at a B+ in governance.
Generally, it is worth noting that SwissBorg follows and adheres to high governance and security standards. As shown, for example, by the simulation exercise of a cyberattack on the crypto wealth app last year. The communication and overview of product content and changes are transparent as are the people behind it.
The score deductions result from the limited opportunities for token holders to help shape and influence decisions. So far, only a request form is publicly available. Further deductions are made for missing information about an audit of smart contracts.
Bottom Line
Today, SwissBorg's CHSB token is performing pretty well in all three ESG categories and receives an overall sustainability rating of B. Our calculations show that the token emits between 3’000 - 30’000 tons of CO2 per year. The greenhouse gas emissions are thus many times lower than for most other tokens that we have rated so far. Nevertheless, this figure should be taken with a grain of salt, as it is closely tied to the transaction volume.
An alternative to Ethereum could be beneficial for CHSB's sustainability rating in many ways. It remains to be seen what impact Ethereum's long-awaited switch from Proof of Work to Proof of Stake will have on CHSB.
[1] Swiss Banking Financial Center. Facts & Figures. https://www.swissbanking.ch/en/financial-centre/facts-and-figures
[2] Our Products. SwissBorg press kit
Please note that we regularly review and update our ratings. It is therefore possible that the scores mentioned in the blog post no longer correspond to the current rating. You can find an up-to-date overview of all ratings at any time at greencryptoresearch.com/ratings.
What is the GCR Sustainability Rating?
The GCR Sustainability Rating is the first ESG rating tailored to cryptocurrencies and adjusted accordingly. It reflects the holistic assessment of a cryptocurrency and is composed of three individual scores:
The GCR Sustainable Rating is a relative ranking, meaning that the best cryptocurrency in each category receives an A rating, while the worst receives a D rating. The overall rating ("GCRS rating") is based on three individual ESG categories. An average score is calculated for each category. The overall rating corresponds to the worst ESG score so that failures in a single category cannot be compensated for by good scores in the other two. Thus, if a cryptocurrency is judged not to be environmentally sustainable, it cannot make up for the poor rating with adequate social standards or good governance.
