The FCA hosted the first Global Financial Innovation Network (GFIN) Greenwashing TechSprint Showcase day on 20 September 2023.
Participating firms and regulators showcased their potential solutions that could help tackle the risk of greenwashing in financial services to a panel of independent judges, made up of industry experts, professionals and innovators.
As Chair of the GFIN, the FCA brought together 13 firms and 15 international regulators and organisations to collaborate using its Digital Sandbox with a focus on Environment, Social and Governance (ESG) as a collective priority.
Speaking at the event, the FCA’s Chief Data, Information and Intelligence Officer, Jessica Rusu said:
'Both the FCA as a regulator and the GFIN network want to ensure that consumers have access to genuinely sustainable financial products that meet their needs or preferences. This TechSprint is the first of its kind and I’m very excited at the use of social media data, web-scraping techniques, and artificial intelligence methods that have been leveraged by the teams.'
The solutions support IOSCO’s ambition of building trust through high standards of behaviour and calling out greenwashing. Rodrigo Buenaventura, Chair of IOSCO’s Sustainable Finance Task Force, gave a key-note address.
The winners for Problem Statement 1:
- The Eureka Solution - Impact Scope (Estonia) - An AI powered tool to detect potential greenwashing in the products of financial services companies.
- The Jump Solution - ICAG Partners (UK) - An internationally validated, standardised and taxonomised methodology that can be used to independently assess and verify all major green finance programmes across the globe against potential greenwashing risks.
- The Globe Trotter & The Fast Solution - GaiaLens (UK) - A sustainability benchmark to assess if ESG products are scoring higher or lower than the benchmark and flag areas where there may be risks of violating ESG claims.
The winners for Problem Statement 2:
- The Fast Solution - Neotas Ltd (UK) - A solution that uses open-source intelligence and natural language processing to identify greenwashing by public and private companies.
- The Eureka Solution - Kings College London (UK) - A solution which uses text analysis and machine learning methods to enable the comparison of discretionary ESG disclosures with fundamentals-based disclosures.
- The Jump Solution - FiData (UK) - A solution using algorithms and web technology to identify and correct wrong or exaggerated impact statements and impact reports for green or sustainable bonds and loans.
- The Globe Trotter - SKFH (Taiwan) - A website to provide investors with the ability to search for companies or Stock Exchange-Traded Fund (ETF) compositions and gain a deeper understanding of their sustainability-related information.
The participants took on one of the 2 problem statements centred around greenwashing in financial services and built a solution in response to these challenges:
- Problem statement 1: How can technology, including AI and Machine Learning, enable regulators and supervisors to verify that ESG-related product claims to retail consumers are accurate and complete?
- Problem statement 2: How can technology help monitor, collate and identify examples of greenwashing from financial services firms’ websites, social media platforms and other documentation or data which can also be shared across jurisdictions?
The judges determined the winners based on the following award categories:
- The Fast Solution - the most practical and fastest solution to develop and implement.
- The Eureka Solution - the most original adaptation or development of a technology.
- The Jump Solution - the most potential to provide the biggest jump forward.
- The Globe Trotter - the most interoperable, showing potential in being deployed globally.
The first of its kind, this was a virtual, global TechSprint and it brought together international regulators, firms, technologists and data providers to address sustainable finance as a collective priority.
The firm Insig.AI was a key contributor in the TechSprint and provided its datasets of machine-readable corporate disclosures and text interrogation tools for use on the Digital Sandbox. The participating firms and regulators will retain their access to the wider community and datasets on the Sandbox to continue iterating and collaborating on their solutions.
This TechSprint formed part of our wider work to improve trust and transparency in the ESG market by improving the sustainability information consumers have access to. Last year we consulted on a package of measures to tackle greenwashing and build confidence, helping consumers navigate the market and make better informed decisions. We’ll publish a Policy Statement later this year.