Two key challenges facing the market for sustainable financial instruments are the increasingly stringent expectations of regulators and the proliferation of different standards around the world. The top-down regulatory expectations are seen in the EU’s Sustainable Finance Disclosure Regulation (SFDR), the EU Taxonomy and the European ESG Template (EET), which all aim to increase market transparency in standardised ways. But this is just one jurisdiction. Around the world we can see 35 separate green taxonomies in place so far. Although there is a 70-80% overlap across the various taxonomies, this leaves a 20-30% discrepancy.
It is our firm belief that the way through the thicket of competing regulations, different data standards against the backdrop of the ever-evolving landscape is collaboration. This belief was affirmed during our time at the World Economic Forum (WEF) in Davos this year. One of the most notable aspects of the Davos meetings is that they provide a chance for business, technology, and civic leadership to come together and find new ways of working together. Our role as one of the world’s leading Financial Market Infrastructures (FMIs), allows us to bring together and engage a coalition of participants across both the public and private sectors, including the WEF as an international NGO and lobbying organization. Such collaboration aims to bring about a systematised process for the issuance and trading of sustainable securities.
Concretely, we are already undertaking industry initiatives to make this a reality. Our digital fund distribution platform MFEXbyEuroclear now offers a new ESG reporting solution to asset managers, adhering to the European ESG Template (EET). It is the product of our financial and business collaboration with Greenomy, that began in January this year. Greenomy helps corporates, credit institutions and asset managers comply with new European Union sustainable finance legislation by digitalising the data capturing and reporting process. The company also provides data analytics features to help improve sustainability performance and facilitate the redirection of funds towards sustainable activities.