AxiomSL, a provider of regulatory reporting and risk management solutions, has launched a new environmental, social and governance (ESG) solution to automate compliance with new sustainability and social impact reporting requirements being developed by the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and other regulatory bodies.
The new solution standardises the process of integrating ESG data attributes, such as counterparty exposures, climate risk reference data and social impact data, with existing financial reference data in a common data dictionary to streamline ESG reporting for financial institutions.
“Creating a sustainable future is about more than just reducing emissions and committing to global initiatives,” said Alex Tsigutkin, Founder and CEO, AxiomSL. “Financial institutions need to be able to accurately measure and report on their exposure to ESG risks to track progress and drive improvement,”
He added, “By integrating essential climate risk and social impact data with our existing financial data in a common data dictionary, we are making it possible for institutions to automatically capture and report ESG exposures in the same manner in which they’ve been reporting traditional financial risks, bringing some much-needed rigor and standardization to ESG reporting.”
The AxiomSL ESG solution ingests proprietary, bank reported and third-party ESG data from all major data vendors, reducing that information down to granular data attributes that can be tagged with reference data required for regulatory disclosure.
By incorporating these individual ESG attributes with existing financial data in a common data dictionary, ESG risk disclosures are automated using an appropriate methodology that ensures both accuracy and consistency.
In addition to meeting regulators’ disclosure requirements, this consistent data flow also makes it possible for institutions to continually benchmark their progress against stated sustainability and social impact improvement goals.
The EBA is working on ESG reporting requirements for financial institutions with its proposed draft technical standards which are expected to be applicable starting in June 2022.
These provide a framework for disclosing how climate change may exacerbate other risks within institutions’ balance sheets. They also included how institutions are mitigating those risks, and their green asset ratio on exposures financing taxonomy-aligned activities, such as those consistent with the Paris agreement goals.
ESMA has also begun to develop a taxonomy for financial institution ESG reporting. Firms will need to be able to disclose their climate-related exposures consistently and accurately in addition to traditional financial risk data.
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