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Magazine Issues » April 2022

Roundtable: The digital transformation opportunity

FundsTech – Have regulatory drivers increased demand for better reporting and data?

Stevens  Financial reporting has been there for years, but now non-financial ESG reporting has become mandatory and more complex, as legislation is standardising it and listing a series of requirements.

New EU delegated acts are coming out on average every six months, and then every three years they will be reviewed. In total, we have referenced, so far, 2,500 datapoints in the EU Taxonomy alone.

The goal is to have all concerned players interact with each other. Issuers are taken step by step through the legislation and their existing databases are matched to the reporting template. Once that’s done, we convert the report into data models that financial institutions can access for their own reporting exercise.

FundsTech – What is Euroclear’s approach to this and how do you see the ESG reporting area developing with new technology?

Harper  Our strategy is focused on three pillars: ESG issuance, ESG data and analytics, and ESG market uplift.

For the first pillar, if you digitalise the taxonomy, people can spend time assessing how they can impact and improve sustainability, rather than their energy going into the administrative tasks in the reporting environment. And that has real value.

For reporting, once you begin to create sufficient source data, you have the opportunity to create a network effect, as the data becomes very valuable because the authenticity is high, the granularity is high, and the users of it can then make decisions based on it.

The second pillar is around enabling asset managers to access fact-based objective data, so they can ask what-ifs and determine how they’re going to position their portfolios.

The third pillar focuses on our role with network participants to build an alliance around people who want to change the way the issuance process operates in ESG. Fundamentally, as the number of sustainable securities goes up – and there are around about 7,000 use-of-proceeds bonds today – we think there’s a meaningful opportunity to enhance that.