Trade data and analytics provider Coriolis Technologies has launched the first iteration of its Kosmos environmental, social and governance (ESG) scoring tool in partnership with banks, insurers and professional bodies.

Kosmos, described by Coriolis as a “for the industry by the industry” ESG monitoring and passporting instrument for global trade flows, is aimed at enabling trade financiers and exporters to tackle the longstanding challenge of tracking and proving compliance with sustainability standards.

The tool creates an ESG “passport” for goods trade, giving both components and finished products throughout supply chains an automatic independently derived score that can be verified externally.

It has been developed by the Kosmos Working Group (KWG), which counts over 40 organisations among its members, including the Asian Development Bank, AIG, Boston Consulting Group, Commerzbank, CIMB, Credit Suisse, Demica, Deutsche Bank, Enigio, the International Chamber of Commerce (ICC), the Institute of Export & International Trade, the International Trade Centre, the International Trade and Forfaiting Association (ITFA), Lloyds Bank, MineHub, NatWest, Santander, SMBC and the Trade Advisory Network.

Kris Makuch, chief digital officer at Coriolis, tells GTR that the working group members will now trial Kosmos to test its capability to measure and assess ESG activity without manual input.

“V1.0 will also provide automated regulatory reporting against the EU taxonomy and the UN Sustainable Development Goals,” he adds. “Following this session, the objectives are to test the functionality and integration of the product into working scenarios with partners. From this, we aim to capture further opportunities to add greater country, supply chain and company level granularity with the goal of providing a comprehensive and standardised automated score across the world of trade.”

Unlike other asset classes, such as bonds, there are currently no standards that allow financial institutions to properly assess the entirety of the sustainability performance of trade finance transactions, leaving the industry open to accusations of greenwashing. What’s more, while specific goods may not in themselves be sustainable, they can often be used for purposes such as sustainable infrastructure. The same also applies in reverse when it comes to the trade of sustainable goods for non-sustainable purposes.

“Whilst ESG standards – that is, what we are measuring – abound, there are very few tools to allow us to measure how those standards are being satisfied accurately and objectively,” Johanna Wissing, head of ESG at ITFA and KWG member told GTR last year at the launch of the working group. “The technology proposed by Kosmos is the best opportunity the market has seen so far to overcome this critical challenge to ESG investment, to avoid greenwashing and to ensure that the efforts and funds of banks and other responsible participants are properly directed and make the biggest contribution to achieving the important objectives that underlie these standards.”

The Kosmos pilot comes as work across the industry to qualify the sustainability profile of trade transactions gathers pace. In one of the most notable recent developments, November last year saw the ICC open a consultation process with over 200 banks and corporates to create a standardised framework and assessment methodology – a framework for which Coriolis says Kosmos can provide the technology and implementation platform.

“When we set out on the journey to create an automated ESG scoring system, our central objective was to create a collaborative and inclusive group through which we were able to address the most significant issues facing global sustainability,” says Rebecca Harding, the company’s CEO. “Today’s announcement is an essential milestone in delivering that vision, with some of the biggest firms in the market joining, testing and implementing our product that is unique to the industry. We have the first iteration of a solution that will have a tangible impact on the marketplace and the world beyond. In the coming months, we will continue expanding, developing, and growing the system to integrate more sustainability metrics and provide an overall accuracy score.”

The KWG will run the Kosmos pilot until November, and plans to add further functionality such as self-reporting and API integrations along the way. Following this, Coriolis says it will release the fully operational automated solution to the wider industry.