To celebrate ‘Sustainable September,’ we are sharing with you ‘The Path to Sustainability’, a four-part article series which examines the key elements that underpin the development of the sustainable finance market: collaboration, inclusion and innovation. This article is the final piece of The Path to Sustainability series.

In July 2022 the European Parliament voted to approve the EU taxonomy list of green investments. This is not the final approval, and more policy debates are expected. But the years of work by the EU and other international bodies are coming to a conclusion and with that the first phase of the great green transition.  

The question that we are now asking is how to turn that agreement into practice. It is what we discussed with our clients and other stakeholders at the World Economic Forum in Davos earlier this summer. As we have outlined in our previous articles in this series, the opportunities are as big as the challenges. Working with the guiding themes of collaboration and inclusion, we are taking real action to work towards standardising the processes and practices that will operationalise the market. This requires collaboration and agreement from as wide a range of interested parties as possible. 

That is why we decided to make a strategic investment in Greenomy at the beginning of this year. Founded in 2020, Greenomy helps corporates, credit institutions and asset managers comply with new European Union sustainable finance legislation by digitalising the data capturing and reporting process. Prior to setting up Greenomy, its CEO Alexander Stevens was intimately involved in the EU’s green taxonomy work.  

We have now integrated new synergy features into our global digital fund distribution platform, MFEXbyEuroclear. This now offers a new ESG reporting solution to asset managers, adhering to the European ESG Template (EET). Specifically, EET enables asset managers to gather all their reporting requirements on the EU taxonomy, SFDR, MiFID and Insurance Distribution Directive and then distribute that via the Greenomy x MFEXbyEuroclear solution to their clients.   

The prize for bringing the market for sustainable finance to the next level is huge. According to the white paper on scaling the sustainable finance market published by PwC and us, a cross-border FMI-led approach to developing this market would lead to $25 trillion of additional capital mobilised in the global sustainable finance market by 2030, albeit with some displacement from mainstream capital markets. Further, when this market delivers lower costs of capital to developing countries, the savings can be directed to social investment such as education, health and housing.   

The next action phase in the development of the sustainable finance market is a platform where both the public and private sectors can come together to discuss and agree to solutions around infrastructure that are both pragmatic and ambitious. These solutions will focus on reducing the barriers to sustainable finance. These include increasing the supply of, and demand for, sustainable securities, as well as ways that allow investors to identify, compare, and invest in sustainable securities more easily. Such a platform could also seek to harmonise regional differences. In this way the market will be expanded to more players and more assets classes.  

We are collaborating closely with Greenomy along with other partners to bring the sustainable market infrastructure to life. With this trajectory in mind, we have recently announced our investment into Impact Cubed, an ESG data and portfolio analytics company which helps investors and issuers alike compare the impact of securities and portfolios.  

Impact Cubed provides objective, factual data on a broad range of ESG considerations and impact. With this new investment, we aim to develop services to ease sustainable finance processes, without pushing forward confusing ratings and opaque calculations.  

Now is the time for action, through collaboration, innovation and inclusion, to bring the market for sustainable finance to the next level. Together with stakeholders across markets and sectors, we are creating nothing less than the global market that will finance the transition to a sustainable future.  

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Watch MFEXbyEuroclear addressing this issue