The Potential of RegTech in Improving the Effectiveness of Environmental Regulation

By Dr Inna Amesheva

Associate, ESG Research and Advisory, Arabesque S-Ray

Regulatory technology (RegTech) is not confined to just revolutionizing the financial services, or FinTech, industry. Instead, it has the potential to spur numerous breakthroughs in diverse areas such as consumer protection and environmental sustainability, among others. This chapter explores the impact of RegTech on ensuring the effectiveness of environmental regulatory measures such as greenhouse gas reduction schemes aimed at tackling climate change. RegTech developments are particularly apt to tackle information and reporting asymmetries inherent in environmental compliance. Indeed, recent technological advancements have the potential to streamline and even revolutionize a number of areas such as the monitoring of energy consumption and the facilitation of renewable energy projects financing, as well as designing more effective emissions trading schemes. This can be done through the adoption of ‘smart meters’ in the premises of polluting enterprises, which measure and report real-time data of a company’s emissions. Compliance can also be facilitated by blockchain-enabled ‘smart contracts’, which can be self-executing and make sure that the parties to a contract automatically comply with their reporting and monitoring obligations. As this chapter demonstrates, correctly tracing, reviewing, and taking account of the ...

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