First Derivative, one of the world’s leading consulting and managed services firms, together with its RegTech partner Corlytics, have been provided with a project funding award to develop the world’s first publicly available, open-source Environmental Social Governance (ESG) taxonomy mapping project.
The world is undergoing a fundamental, seismic shift in business practices. Traditional finance and sustainable finance are colliding, linked by the critical elements of data taxonomy and risk modelling. With financial institutions facing growing pressure to comply with sustainability regulations, the award will help firms adapt and evolve their approach to ESG regulatory compliance and reporting, risk modelling and process re-engineering.
The joint project will map multi-jurisdictional regulations, reporting standards and green taxonomies - such as the UN Sustainable Development Goals, TCFD (Task Force for Climate Related Financial Disclosure), SASB (Sustainability Accounting Standards Board) and the EU Platform on Sustainable Finance - into a single view. This will be offered as a reference framework for analytics and automated systems, helping financial institutions around the world navigate the emerging and overlapping standards in sustainable finance.
Once complete, the project will be the first publicly available sustainable finance dataset and taxonomy that has been donated to the financial services sector, not just for Ireland but globally.
Johnny Mattimore, Managing Director, Global Head of Risk & Sustainable Finance, First Derivative said:
“Together with Corlytics, we are developing an advanced, automated taxonomy capability for all regulations, standards and risk metrics relevant to ESG. There is nothing else like it in the marketplace. Our vision is game-changing, we have put open source at the centre of our strategy to help everyone better manage the transition, mitigate risk and work faster to achieve a net zero future. It showcases our unrivalled capabilities of bringing together people, data and technology into a single powerful solution.”
John Byrne, CEO Corlytics said:
“We have worked with global regulators developing intelligent regulations and taxonomies over the years. Sustainable Finance regulation within ESG, is the fastest moving class of emerging regulation, where the breath, scale and velocity of regulation is unprecedented. To enable firms to understand how to navigate and comply with the different emerging standards needs a common reference point - the outcome of our project with First Derivative is to produce this common reference, or ‘global source’ and make it an industry wide resource.”
Yvonne Holmes - Chair, Sustainable Finance Skillnet
“Sustainable Finance Skillnet are delighted to work with First Derivative to create this taxonomy mapping tool which will enable financial institutions to navigate all of the important regulatory requirements which are expanding at pace. The fact that this valuable information is open source will help to progress the overall sustainable finance agenda and is another step in Ireland becoming a leader in sustainable finance by 2025.
The universal solution will provide the following positive impacts:
• The monitoring and understanding of both the similarities and differences of each emerging regulatory standard can be tracked and automated using the open-sourced taxonomy
• Firms can more easily comply across standards for sustainable finance obligations both globally and in multiple jurisdictions. This includes both disclosure and sustainability accounting rules.
The programme will see Corlytics applying its existing, proven capability in regulatory analytics to develop and output a systematic sustainable finance taxonomy to First Derivative.
SFI works to advance the country’s sustainable finance agenda and is a supporting player in the Irish Government’s Ireland for Finance strategy 2025. The award is one of18 key actions outlined in Ireland’s first Sustainable Finance roadmap which sets out sets targeted measures with a view to Ireland being a leading sustainable finance centre by 2025. Another key commitment is the launch of a Sustainable Finance Centre of Excellence set to be launched in 2022