FCA to Open Second Phase of Digital Sandbox for ESG Solutions

The eligibility criteria specifies that the solution or product should be sufficiently different from what already exists in the market and should be beneficial for UK consumers or financial services firms by solving one of the ESG data and disclosure use cases. Additionally, the application should proposed a well-designed testing plan, detailing success criteria and future steps. The company does not need to be domiciled in the UK, but the solution needs to be intended for use in the UK market. The purpose of this sustainability cohort is to accelerate innovation and to address the specific market challenges on how technology can be used to 

• enable transparency in disclosure and reporting on sustainability, especially on the characteristics of corporate assets and the profile of their supply chains (for example, open source and eco-friendly decentralized ledgers, centralized platforms)
• automate the assurance of a listed issuer’s ESG data and validation of its ESG-labelled corporate bond issuance (for example, Internet of things, decentralized ledgers, centralized platforms, satellite imaging, artificial intelligence)
• help consumers understand the ESG characteristics of the products and providers they engage with as well as provide visibility around alternatives aligned with their needs and preferences

In terms of engagement and collaboration, FCA is seeking inputs from established market players, potential end-consumers of the products being developed, sustainability experts, investors, and others who may be able to provide mentorship, guidance, and expertise to the participating firms. FCA is also seeking guidance from data experts in identifying useful real data or creating synthetic data sets for the participants to test and train their models. The following features are the foundations of the Digital Sandbox pilots:

• Access to synthetic and publicly available data assets to enable testing, training, and validation of prototype technology solutions
• An application programming interface (API) marketplace where digital service providers list and provide access to services via APIs
• An integrated development environment, in which applicants can develop and test their solution
• A collaboration platform, to facilitate an ecosystem of key organizations that will provide support and input to digital sandbox participants, such as incumbents, academia, government bodies, venture capital, and charities
• An observation deck to enable regulators and other interested parties to observe in-flight testing at a technical level, to inform policy thinking in a safeguarded environment

Related Link: Notification

Keywords: Europe, UK, Banking, Securities, Digital Sandbox, ESG, Reporting, Disclosures, Sustainable Finance, Regtech, FCA