ESG Clearing House

Increasing demand drives the global need for standardisation of sustainability metrics. This demand comes from a wide array of market participants, like capital providers, corporations and supervisory bodies.

Increasing consumer and public awareness for sustainability creates business opportunities and a necessity to demonstrate adherence to minimal standards of business conduct. Legal requirements on sustainability disclosure are increasing at an unprecedented pace, especially in Europe, but recently also in the US and even in China. More companies (re)define their corporate purpose and increasingly focus on long term value creation for all stakeholders instead of striving for long term shareholder value as their principal purpose.

These demands of market participants have accumulated in a multitude of standards with varying use and quality of metrics. Today, comparability, compatibility and reliability drive the users’ need for increasing harmonisation and convergence of standards and frameworks. European legislative forces and converging international standards under the umbrella of IFRS are the two major initiatives underway today.

Standardisation on the definitions of metrics alone is not enough. Standardisation of technical format (i.e. XBRL) and a central clearing place is needed to facilitate the wider distribution and usage of (standardised) sustainability metrics. Assurance will further increase the reliability. Indeed, European legislation foresees and pushes for these three important elements: assurance, use of machine-readable language and a single point of access. However, European legislation by its nature has a limited regional reach and scope compared to the global reach, acceptance and usage of internally accepted accounting standards. Also, due process (e.g. legislative process, tendering process) means that a single point of access is unlikely to be operational within two to three years.

Against this backdrop, the undersigned parties seek to start a clearinghouse for sustainability metrics on the basis of the core principles below. This clearinghouse will need to facilitate a multi-to-multi information exchange between preparers and users of sustainability information. The purpose is wider use and distribution of standardised sustainability metrics. Therefore, this initiative aims to speed up the process of standardisation of technical format, exchange of sustainability metrics through an ESG clearinghouse and to facilitate developments in assurance of these metrics. Building knowledge and expertise, sharing lessons learned, connecting to existing initiatives and widening support from market participants will determine the success of this initiative. Ultimately this initiative may converge with or merge into a larger entity after having served its purpose.

The ESG Clearing House will enable corporations to submit their sustainability data in a standardized XBRL format and will allow users to access this corporate sustainability data. The ESG Clearing House intends to support multiple sustainability standards, including GRI and SASB from the outset. The ESG Clearing House is open to include any additional sustainability standards which will support the further disclosure and distribution of standardized sustainability data, subject to availability of a suitable XBRL taxonomy and a substantial demand from preparers and users (ie. combined volume of a minimum of 100 interested prepares and users).

The ESG Clearing House is governed through a ESG Clearing House Board with the core objective to provide common access to qualified sustainability data and to apply standard-neutrality to facilitate adaptation of multiple standards.

The ESG Clearing House offers a solution to address the common and urgent need for global standardised sustainability data exchange. Given its non-profit nature, the ESG Clearing House will be offering the most effective and efficient solution at a fair price for the market as a whole and for each individual user of the ESG Clearing House. A non-profit status will substantially increase market acceptance for this initiative. The ESG Clearing House is a non-profit organisation and is overseen by an ESG Clearing House Board.