During the Singapore Fintech Festival last month, the Monetary Authority of Singapore (MAS) announced that it will partner the industry to pilot four digital platforms under Project Greenprint to address the financial sector’s needs for good data on sustainability.
Project Greenprint was launched in December 2020 to harness innovation and technology to promote a green finance ecosystem through helping to mobilise capital, monitor sustainability commitments, and measure impact.
According to MAS, one of the key challenges faced in sustainability financing is the difficulty in accessing high quality, consistent and granular sustainability data.
Addressing these data gaps will enable financial institutions to direct capital towards sustainability projects in a more scalable way, effectively monitor their sustainability commitments, and quantify the risks and real-world impact of their portfolios.
“Technology is a key enabler for the financial industry to meet the challenges of green transition and achieving net-zero emissions,” said Sopnendu Mohanty, Chief FinTech Officer at MAS.
“Project Greenprint provides functional digital infrastructure that aggregates new and existing environment, social, and governance (ESG) data from ground-up across multiple sectoral platforms and solutions to facilitate trusted ESG data flows between the financial sector and the real economy – both within Singapore and globally.”
Since the announcement of Project Greenprint, MAS has engaged the financial industry and other industry sectors to identify potential digital enablers to address the data challenges.
One of the four digital platforms it’s currently piloting is the Greenprint ESG Data and Certification Registry. This is developed in partnership with local fintech firm Hashstacs Pte Ltd (STACS), and the pilot is expected to be completed in the second half of 2022.
What does the registry do?
The blockchain-based registry will record and maintain the provenance of ESG certifications accorded by certification bodies in different sectors, as well as data and metrics that are verified by qualified third-party auditors.
This essentially provides financial institutions, corporates, and regulatory authorities with a single point of access to these certified data, and facilitate trusted data flows.
“It is a registry that the financial industry sorely needs, because when it comes to sustainable finance, there is often lack of complete information. So this ESG registry will be able to provide data in one single place,” explained Benjamin Soh, managing director of STACS during a virtual media roundtable held on Tuesday (Dec 1).
“It will be an industry-wide library that will store ESG data and certificates. The overall objective is to allow institutions, financial investors to have continuous monitoring of their ESG commitments to mobilise investments more effectively.”
Benjamin pointed out that there is an existing problem of fragmented ESG data pools. Many different companies are on the road to sustainability, but they are all in very specific and fragmented industry sectors.
The way to get to sustainability is therefore very bespoke. It’s very difficult for a bank today to really understand its impact whenever it makes an investment or a loan. So what we are seeking to do here with the ESG Registry is that we have deployed a blockchain. [It will] serve as a single source of truth, cross-cutting over various industry sectors.– Benjamin Soh, managing director of STACS
Through APIs, the ESG Registry can support various downstream integrations such as to support financial institutions in trade financing and portfolio monitoring.
Financial institutions will benefit from easier access to a tamperproof pool of digitally processed data on sustainability projects across different industry sectors.
As part of the blockchain, STACS has also deployed a few different modules which are already integrated to the different sectors. This will help to firstly, receive and ingest ESG certificates from different sectors.
These certificates are the actual certificates that each sector has produced. For example, there is the Green Mark for the Building and Construction Authority (BCA) and Fair Trade for agriculture. These are various certifications by different bodies that we want to be able to ingest and into the platform. In other words, we digitalise them.– Benjamin Soh, managing director of STACS
Secondly, many of these sectors have a variety of technologies. For example, they are using a variety of Internet of Technology (IoT) data analytics — satellites, drones, et cetera — to capture certain ongoing data from the different industries.
With that in mind, STACs also want to capture some of this ongoing data on an aggregated basis and store them on the registry.
“They’re able to validate the data on our platform to perform ESG scoring or ESG ratings. They are also able to retrieve reports from our platform on-demand anytime to support better portfolio scenario analysis,” he said.
Lastly, STACS want to be able to input various industry standard protocols for reporting such as terminologies and taxonomies, such that users will be able to enhance their financial sector ESG reporting.
The ESG Registry will essentially connect to various certification bodies and trusted sectorial platforms and aim to support end-to-end traceability and transparency of full business value chains. Further data aggregation of ESG data can be performed, creating the potential of continuous impact reporting and monitoring.
The objective is to significantly improve the quality of ESG data available, such that financial institutions can more confidently mobilise capital towards ESG projects, in the form of sustainability-linked financing, investments or insurance, and carbon credits trading.
The ESG Registry platform aims to solve two pertinent issues in green finance — the lack of transparency and trust in ESG certifications, and the inefficiencies in accessing different certification standards and requirements in different industries domestically, and even globally.
MAS is happy to work with Hashstacs in bringing together different players in different industries and sectors to provide, verify, certify and share data in a secure and efficient manner, so as to unlock green finance.– Sopnendu Mohanty, Chief FinTech Officer at MAS
STACS see increased collaboration interest
“STACS has been in the business since 2019, providing digitalisation and automation through our award-winning blockchain-based technology to financial institutions. Over the last two years, we have managed to digitalise many parts of the financial services processes,” said Benjamin.
“Recently, we have started to get involved with financial institutions on the specific aspect of sustainable finance, and that excites us because we want to help bring forward the future of sustainable finance.”
It has deep expertise in providing DLT infrastructure for digitalisation in the financial sector. Its clients and partners include banks, stock exchanges, asset managers, and corporates in different sectors. It has recognised the importance of sustainability, expanding its focus to technologically enhance and enable sustainable practices.
STACS was also a winner at the MAS Global FinTech Innovation Challenge Awards 2020 under the Sustainability and Green Finance theme and awarded the Best FinTech ESG Solution (Asset & Wealth Management) at the DigFin Innovation Awards 2021.
The ESG Registry is currently deployed in its beta phase, with ready modules and APIs for integration, and will continue to be enhanced based on collective inputs from industry partners over the upcoming months.
According to STACS, it has received expressions of interest to explore collaboration with the ESG Registry from various financial institutions and organisations, such as Aviva Singlife, Citi, OCBC Bank, UOB, SGTraDex and Surbana Jurong.
“It is heartening to see more commitment in the green and sustainability space through rising demand from financial institutions for better monitoring and measurements of green impacts,” said Benjamin.
“Collective efforts and synergies between DLT and other technologies/platforms will expedite the achievement of a greener nation by servicing many global leading financial institutions and empowering all institutions (financial and non-financial) to unlock impactful ESG strategies for greater commercial value.”
Featured Image Credit: STACS / MAS