Demand for green finance to boost demand for STACS’ ESG data registry and digitalisation platform

FINTECH firm Hashstacs Pte Ltd (STACS) may not have foreseen the snowballing of demand for ESG data from institutions when it was founded. But managing director Benjamin Soh was keenly aware of the urgency of the climate crisis.

STACS was established in 2019 to address the need for digitalisation of the architecture undergirding the financial sector. But by 2020 it quickly expanded to focus at the same time on becoming a one-stop shop for ESG data for corporates and institutions. Its expansion has come none too soon. Both areas of business are synergistic.

In the financial services sector, data fragmentation creates inefficiencies, which is evident in the time lag to complete transactions, for instance. But for institutions’ ESG ambitions in particular, the fragmentation creates myriad challenges as well, including the difficulty in obtaining ongoing data - not just their own but also data on their clients and partners, including participants in the industries the institutions may cater for.

Enter STACS, which has rolled out Vetta, a digitalised smart-contract platform for financial services and ESGpedia, which aggregates ESG data for users. Soh says STACS aims to become a so-called Bloomberg for ESG data, the go-to source not only for ESG data itself, but also ongoing monitoring and messaging – all in a digital blockchain-enabled format.

ESGpedia was launched earlier this year, “as the name suggests to be a Wikipedia for ESG data’’, says Soh. To date more than 27 institutions have become partners, including financial institutions and corporates. The platform has grown steadily; it now hosts more than 174,000 certificates, covering 67,734 companies and nearly 113,000 assets.

Financial institutions which have joined as partners include Citi, DBS and UBS. Corporates and non-financial institutions include the CDP, the global environmental disclosure platform; PwC; Surbana Jurong; and Evercomm Singapore, a sustainability tech ‘firm for the industrial, commercial and hospitality sectors.

Earlier this year, ESGpedia was chosen to power Greenprint ESG Registry, one of the four digital utility platforms housed under Project Greenprint, which the Monetary Authority of Singapore (MAS) is developing in partnership with the industry.

It also expects to further service the asset management industry. The MAS recently announced that from 2023, retail funds with the ESG label will be required to disclose investment strategies, metrics and criteria. This is expected to combat greenwashing and help individuals to better understand ESG funds. STACS is understood to be working with some asset managers on a pilot basis.

STACS gathers 3 types of data on ESGpedia: Data based on self-disclosures such as the CDP scores; green certifications such as those for assets and buildings; and data points collected by asset owners such as energy and carbon intensity of buildings.

Soh said: “ESG data today is largely based on self-disclosures, which are usually done once a year. It’s a historical snapshot and there is a lack of independent monitoring of the data. From a financial institution’s perspective, they are unable to assess risk on an ongoing basis. Further to that, much of the data belongs to larger companies, which means there is an information gap between supply chains. That’s why we wanted to really solve this underlying fundamental issue, which is to get enough data in place.

“We’re collecting data from more sources every week. And we want to help institutions, now that they have more holistic, ongoing data, to monitor their key performance indicators (KPIs) using our tools.’’

ESGpedia’s value proposition lies in its ability to digitally aggregate data from various sources, and the data is structured to be interoperable across industries.

STACS has developed sector-specific “playbooks’’ to help businesses and financial services companies to navigate the ESG profiles. These sectors are agriculture; building and construction; transport and carbon credits. The playbook for the building and construction industry, for instance, seeks to address the lack of data in the construction phase, all the way to certification and ongoing monitoring. STACS has integrated with global registries and data platform providers such as those by Envision Digital and Surbana Jurong.

Insurers who need to work across these industries are expected to gain better insights on ESG-related risks, which should enhance their ability to price products.

In terms of access, publicly available data is free for users, who tend to be organisations and businesses. Access to proprietary data such as buildings’ carbon and energy intensity will be subject to corporates’ and asset owners’ consent to share information.

ESGpedia is at the moment in the ‘beta’ phase, and free to all organisations, users and partners. Next year STACS aims to charge a fee for data users.

“The volume of green finance is only increasing, so users of our platform will need more tools and data. All the banks are talking about doubling or tripling their loan book. That means they have a lot of monitoring to do, because green finance involves more than just issuing a loan. You also need to make sure that for compliance purposes, issuers continue to do what they claim to do.’’

STACS’ other business, Vetta, provides an end-to-end smart contract platform for the financial sector, covering ESG finance, asset and wealth management and digital securities. “Digitalisation is important to ensure banks can manage the increasing transaction volume. Vetta is synergistic to the ESG data we provide, so that institutions can digitalise not just green bonds, but any bond, funds, carbon credits and renewable energy certification. Digitalisation creates better efficiencies…’’ Vetta is envisioned as a software-as-a-service (SAAS).

Vetta is expected to enable savings in cost and time for users; it will also enable the end-to-end digitisation of asset, processes and documents. Recently in June, the Philippine Dealing System Holdings Corp became the first Asian national market infrastructure to launch a fully digitally native bond, issued on a distributed ledger technology powered by STACS. The digital bond was issued by the Union Bank of the Philippines (‘UnionBank’) for 11 billion Philippine peso (S$271.5 million), for a tenor of 1.5 years.