The first LEI-embedded Financial Green Digital Base that supports cross-border applications of green finance and ESG
REGTEK (Beijing) Technologies Co., Ltd Press Release
Achieving the goal of “Carbon Neutrality & Carbon Peaking (Dual Carbon)” and developing the digital economy are the two major trends of China’s future development, where finance will continue to play an important “blood supply” role. The new information infrastructure - Financial Green Digital Base, which adheres to the system concept, adheres to the systematic development path, pays attention to top-level design, and has the characteristics of cross-disciplinary and cross-professional deep integration, will become an important cornerstone to support new development. In July 2022, REGTEK (Beijing) Technologies Co., Ltd took the lead in releasing the “Financial Green Digital Base”. The base provides functions and services such as policy digitalisation, compiling standards, accounting of carbon statistics and disclosure of environmental information, stress testing of Dual Carbon development, regulatory data reporting, and carbon factor upgrading for various commercial banking business systems. Faced by the three-layer format of regulation, finance and industry, and the complex business scenarios of the multi-dimensional industrial chain, the Base uses a Lego-style product combination to build a comprehensive system to integrate policy information, financial information, Dual Carbon information, and business information. This system supports green development and digital transformation in an efficient and flexible manner. It is particularly worth mentioning that the digital Base is embedded with a global Legal Entity Identifier (LEI), where the LEI is used to identify enterprises and facilitate business procedures.
One of the most significant difficulties in the coordinated development process of enabling Dual Carbon development with digitalisation and driving the digital economy with Dual Carbon development is the inability to verify the validity of the identity of cross-border entities, justifying the reason to introduce LEI. This inability leads to problems such as difficult mutual recognition of cross-border green industry projects and ESG data disclosure, false green marketing or improper asset allocation. The effective application of LEI in cross-border green finance and ESG will help to break this deadlock. The real-time update of the organisational structure through the LEI will make it easier for all participants to reveal risks, identify entities participating in cross-border green finance, promote the establishment of cross-border green joint database, and promote the mutual recognition and investment & financing activities of cross-border green projects. The implementation of LEI will empower green finance, strengthen the resilience of the industrial chain and supply chain internally, promote the deep integration of digitalisation, greening and industrialisation externally, provide all-round support for the realisation of the Dual Carbon goal, and make important contributions to the development of the global digital economy.
The LEI-based Financial Green Digital Base can rapidly expand its functions to realise the digitisation of cross-border green policies, promote cross-border green investment and financing, establish a cross-border green joint database, pre-store the carbon footprint of cross-border enterprises, and uniformly certify the transparency and efficiency of cross-border ESG rating and ESG data disclosure. For example, through LEI information interaction between suppliers and customers of an enterprise, the activities on the supply chain can be traced by above data, making it possible to estimate the carbon emissions of the entire chain. LEI will help to monitor the use of returns from green bond, make the green label more reliable, thereby reducing the reputational risk of “Greenwashing” in the cross-border green bond market.
LEI can clearly and uniquely identify the legal entities involved in financial transactions and answer the questions of “who is who” and “who owns whom”. The Financial Green Digital Base embeds an enterprise’s LEI as part of ESG raw data and LEI is used to identify entities and correlate different data sources. This Base can solve the problem of cross-border data unification and optimise the interoperability network. Through this Base, users such as cross-border green financial investors or financial institutions can easily correlate other data sources to conduct more in-depth research on the objectives, strategies, tangible and intangible assets and values of an entity, and verify the identity of the legal entity and its subsidiaries in a seamless manner to realise the disclosure of ESG data.
It is predicable that LEI will greatly promote the development of cross-border green finance in the digital economy era. The Financial Green Digital Base will respond to the national call, actively expand the flexible application of LEI in various fields and realise the linkage between LEI’s empowerment of green transformation and the development of digital industry. For example, the current green finance standards in the Guangdong-Hong Kong-Macao Greater Bay Area have not been unified, and the certification of Green Projects needs to be implemented urgently, so that the certified green projects can enjoy favourable policies in the Greater Bay Area unimpeded, thereby promoting cross-border green financing and cross-border transfer of green financial assets. The LEI-embedded Financial Green Digital Base platform aims to play an important role in the mutual recognition and mutual learning of green finance standards such as environmental information disclosure, green financial product standards, green enterprise project identification standards, green credit rating assessment, and green bond principles (GBP) in Guangdong, Hong Kong and Macao.