FCA Digital Sandbox second phase

Aug 24, 2021 12:00:00 AM

What has happened?

In August 2021 it was announced that the FCA is running a second phase of the Digital Sandbox with the City of London Corporation, to support the testing and development of new products and services in the area of environmental, social, and governance (ESG) data and disclosure.

What do you need to do?

Earlier this year, 28 organisations took part in the first FCA Digital Sandbox pilot, with participating teams presenting the solutions they had developed at a series of demonstration days. The FCA will now run a second phase of the initiative focused on providing support to innovators looking to develop and validate solutions in the area of ESG data and disclosure.

The purpose of this second phase is to accelerate innovation and to address the following specific market challenges:

How can technology enable transparency in disclosure and reporting on sustainability, especially on the characteristics of corporate assets and the profile of their supply chains? (e.g., open source and eco-friendly decentralised ledgers and centralised platforms)
How can technology be used to automate the assurance of a listed issuer’s ESG data and validation of its ESG-labelled corporate bond issuance? (e.g. the Internet of Things, decentralised ledgers, centralised platforms, satellite imaging and artificial intelligence)
How can technology help consumers understand the ESG characteristics of the products and providers they engage with, as well as providing visibility around alternatives aligned with their needs and preferences?

The FCA will open the application window for this phase on 6 September, with a view to opening the Sandbox to successful participants in November and then providing access to the testing environment from January 2022.

Applications will be assessed on the following eligibility criteria:

Genuine innovation: Whether the solution/product is sufficiently different from what already exists in the market.
In scope: Whether the solution would benefit UK consumers or financial services firms by solving one of the ESG data and disclosure use cases.
Need for a Digital Sandbox: Whether the solution requires Digital Sandbox features to be developed or improved.
Credible testing plan: Whether the application has proposed a well-designed testing plan, detailing success criteria and future steps.

Applications must be submitted through the online application form, available here. The form will go live on 6 September.

The FCA is also seeking input from organisations with an interest in the topic of ESG data and disclosures to form part of the FCA Digital Sandbox ecosystem during this second phase. This includes:

established market players,
potential end consumers of the products being developed,
sustainability experts,
investors, and
others who may be able to provide mentorship, guidance and expertise to the participating firms

For more information, firms can email digital.sandbox@fca.org.uk.

How can we help you?

If you’d like to know more about how we can help you with your application for the FCA Digital Sandbox, or with any other regulatory compliance issues, our expert team is here to help.

Blog