Fintech SAF for ESG reporting in line with cost-benefit and HR commitment requirements:
• "The proper identification, collection and treatment of internal loss data are essential prerequisites to capital calculation under the standardized approach".
Collecting and reporting ESG data is not a compliant process since it does not include the management accounting requirement of "General criteria on loss data identification, collection and treatment" (Revisions to operational risk framework, January 1, 2023: BCBS calendar). Likewise, collecting and reporting ESG data does not integrate the SEC requirements and laws recalled below.
Anticipating the holistic requirement schematized below, the title of the patent held by LELE-HCM ACCOUNTING INDUSTRY INC which was filed in 2003 following the SOX Act in the USA (2002) and the internal control laws of other countries focuses on the concern to mitigate operational risk losses generating economic benefit taking into account the added value of the total paid workforce as a driving force:
• “System and method of costs saving procedure automation and result optimization in looping industrial environment” (Lele US application Patent).
Internal financial performance accounts linked to FinTech recommended by the FSB as well as the SEC directive and the applicable laws which is recalled below to mobilize the TOTAL WORKFORCE PAID as a driving force of internal financial performance, ARE STILL MISSING in ESG reports provided to investors by banks and Counterparties Credit Risk (CCRs). These accounts must highlight by gap analysis given the risk appetite threshold, the economic impact of the mitigation of operational risk losses on Free Cash Flow, adjusted operational EBITDA, Cash from Operations, etc. The prescription of the required FinTech tool is as follows:
• “All businesses are subject to operational risk, which can arise from information systems, human error, management failures and external influences (...). Some operational risks could be reduced with FinTech developments, as legacy systems are modernized and processes are streamlined " (FSB, June 27, 2017).
The missing accounts for required gap analysis are the linked accounts of governance metrics:
- Employee Engagement (EE) Accounts,
- Potentially Recoverable Losses (PRL) Accounts and
- Incentivized Pay Leverage Effect (IPLE) Accounts.
These accounts of related ESG Reporting metrics have a considerable impact on the relevance and credibility of Environmental Sustainability programs across all business sectors.
The environmental sustainability plan of banks and CCRs is embedded in the way of doing business. Everyone is committed to making the world a better place. The main vehicle of action is the engagement of employees who are committed to ensuring that sustainability is built into - not bolted - into their day-to-day work.
The Linked ESG Reporting Metrics measure profit and cash flow without additional cost or loss for the investor or shareholder; they condition the reality and the application of the environmental program (E):
- Emissions (E1),
- Emissions Intensity (E2),
- Energy Usage (E3),
- Energy Intensity (E4),
- Energy Mix (E5),
- Water Usage (E6),
- Environmental Operations (E7),
- Climate Oversight / Board (E8),
- Climate Oversight / Management (E9) and
- Climate Risk Mitigation (E10).
Fintech SAF therefore complements the many ESG reporting software on the market, which until now has been limited to collecting and reporting ESG data. The accounts of the linked governance metrics to be provided are a prerequisite for the ability of investors to make informed decisions.