FCA Digital Sandbox

Jul 20th '21

The Financial Conduct Authority (FCA) are 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.


Earlier this year, 28 organisations took part in the first Digital Sandbox pilot, with participating teams presenting the solutions they had developed at a series of demonstration days.


The FCA published an evaluation report setting out the findings of the pilot, including how it accelerated the development of innovative products and solutions within financial services, as well as key lessons learned from the pilot phase.


Sustainability cohort – ESG Data and Disclosure

Building on the lessons learned from the pilot, the FCA will 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 sustainability cohort is to accelerate innovation and to address the specific market challenges set out below:


  • 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? (eg open source and eco-friendly decentralised ledgers, 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? (eg Internet of things, decentralised ledgers, centralised platforms, satellite imaging, artificial intelligence)
  • How can technology help consumers understand the ESG characteristics of the products and providers they engage with, as well as provide visibility around alternatives aligned with their needs and preferences?


How to get involved

The FCA is looking for innovative firms who would benefit from access to the Digital Sandbox to develop and demonstrate the value of their solutions.


They will be opening the application window for the sustainability cohort in September, with a view to opening the Sandbox to successful participants in November and access to the testing environment from January 2022.


They will publish the application criteria and more details on how to apply in the coming weeks.


Industry engagement and involvement will be key to the success of this initiative. The FCA is seeking input from organisations with an interest in the topic of ESG data and disclosures to form part of the Digital Sandbox eco-system 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.


They are also seeking guidance from data experts in identifying useful real data or creating synthetic data sets for the participants to test and train their models.


If you’re interested in finding out more, please contact digital.sandbox@fca.org.uk.


Expert Advisory Panel 

The FCA will jointly assess applications for the sustainability cohort with The City of London Corporation, with input provided by an Expert Advisory Panel consisting of:


  • Centre for Greening Finance and Investment
  • Innovate Finance
  • Investment Association
  • Tech Nation
  • UK Finance
  • UK Sustainable Investment and Finance Association


Digital Sandbox pilot features

The following features are the foundations of the Digital Sandbox pilots:


  • Access to synthetic and publicly available data assets to enable testing, training and validation of prototype technology solutions.
  • An application programming interface (API) market-place where digital service providers list and provide access to services via APIs.
  • An integrated development environment, in which applicants can develop and test their solution.
  • A collaboration platform, to facilitate an ecosystem of key organisations that will provide support and input to digital sandbox participants, such as incumbents, academia, government bodies, venture capital, and charities.
  • An observation deck, to enable regulators and other interested parties to observe in-flight testing at a technical level, to inform policy thinking in a safeguarded environment.


Source: FCA


First published: 03/05/2020 Last updated: 20/07/2021

  • 20/07/2021: Information added Second phase of the Digital Sandbox.
  • 27/04/2021: Information added Evaluation report


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