Datafying sustainable finance: Efficiency and impact by design

Abstract The ongoing implementation of the EU's Sustainable Finance Strategy has led to a significant development of EU law to finance and facilitate the transition of the real economy towards sustainability. We argue first that this strategy, at its core, is a data strategy, requiring the datafication of the entire European financial, production and services sectors. The ongoing process of datafication will extend to data concerning externalities previously not incorporated into quantitative financial models and analysis. Second, we look at other datafication processes in finance to identify regulatory lessons for the EU's Sustainable Finance Framework in light of the European Commission's Simplification and Burden Reduction agenda in finance. We recommend the implementation of digital reporting standards developed in tandem by industry and regulators; the utilisation of Green RegTech and SupTech, centralised and enabled via digital reporting infrastructure; and the facilitation of the use of official estimates to both ensure proportionality and reduce the regulatory burden of reporting entities, with a focus on small and medium enterprises.