The Role of the LEI in Advancing Sustainability Goals

By Alexandre Kech, GLEIF CEO

Achieving sustainable and responsible economic growth is a global endeavor requiring cooperation across countries. Yet diverse—and at times conflicting—regulatory frameworks and data management practices pose a persistent challenge, inhibiting initiatives such as sustainability reporting and Environmental, Social, and Governance (ESG) frameworks that underpin a more sustainable future.

Consequently, the development of a “common language” has become a critical prerequisite for addressing international challenges more effectively.

Enter the Legal Entity Identifier (LEI). Emerging from the turbulent aftermath of the 2008 financial crisis, it introduced a unified and global framework for the unique and unambiguous identification of participants in financial transactions. Its rapid adoption in derivative reporting and the identification of counterparties in over-the-counter (OTC) derivatives transactions significantly enhanced transparency and reduced systemic risk in international financial markets.

More than a decade since its inception, the LEI’s industry-agnostic nature has now facilitated its expansion beyond derivative markets, including cross-border payments, global value chains (GVCs), and, more recently, sustainability reporting and ESG frameworks. As a globally recognized digital public good, the LEI is uniquely positioned to address key challenges and facilitate the implementation of sustainability goals.

Better Data for a More Sustainable Future

The accurate assessment of climate-related data is often hampered by fragmentation and the lack of interoperability across different information ecosystems. As highlighted by the Network for Greening the Financial System (NGFS), the integration of financial and non-financial information—typically reported separately—is essential to ensuring the quality, consistency, and comparability of such data. Given its standardized structure and widespread adoption within the financial sector and beyond, the LEI addresses this need by serving as a global data linchpin, effectively linking disparate data sources across industries.

Moreover, the LEI facilitates interoperability across jurisdictions, enabling regulators, global data users, and investors to address the persistent challenge of data fragmentation. It helps bridge siloed information ecosystems, which are often confined within national boundaries, and streamlines the collection of data on sustainable finance. A recent manifestation of this potential is the European Single Access Point (ESAP)—the forthcoming EU-wide platform for the collection of financial and sustainability-related data from companies. The ESAP is closely aligned with well-established reporting frameworks such as EMIR and MiFIR and leverages the LEI to validate metadata provided by reporting entities. This integration significantly reduces costs and administrative burdens for both data submitters and data collection bodies.

Enhancing Transparency in Global Value Chains

Supply chain transparency and traceability are another central pillar for the accurate assessment of climate-related risks and corporate sustainability practices. Often conceptualized as a “global passport” for legal entities, the LEI delivers significant benefits by not only enabling the unambiguous identification of organizations, but also revealing the business relationships between them within increasingly complex and digitalized GVCs.

Influential organizations including the International Chamber of Commerce (ICC) recommend using the LEI to identify key roles within the supply chain, such as the sender, logistics provider, and receiver. This enables businesses to streamline counterparty management, reconcile invoices more efficiently, enhance onboarding processes, and accelerate trade digitalization. The LEI also helps to improve risk assessment capabilities, reinforcing supply chain and operational resilience. This is evidenced by its recent incorporation into the Financial Stability Board’s Format for Incident Reporting Exchange (FIRE) and the EU’s Digital Operational Resilience Act (DORA).

These benefits are further amplified by the LEI’s Level 2 data, which provide insights into ownership hierarchies by answering the question “who owns whom.” This enables the identification of both the direct and ultimate parent entities of suppliers and service providers—often located across multiple jurisdictions. Such data granularity is essential for analyzing metrics such as Scope 3 emissions, which encompass indirect greenhouse gas (GHG) emissions occurring throughout a company’s value chain, including upstream (e.g., purchased goods and services) and downstream (e.g., product use and disposal) activities.

A Sustainable Digital Future

Along with the continuous development of our global digital economy, initiatives such as Voluntary Carbon Markets (VCMs) are poised to play a critical role in advancing sustainability. The LEI, together with its cryptographically verifiable counterpart, the vLEI, forms a robust identification system that supports the development of forward-thinking, digital-first solutions.

In the context of VCMs, the LEI and vLEI offer unparalleled potential to address existing challenges related to the integrity and accountability of projects in both traditional and tokenized markets. As highlighted in a recent report by Global Digital Finance (GDF), the LEI and vLEI can significantly enhance transparency and credibility by enabling the reliable identification of carbon credit issuers, registries, traders, and buyers. Adoption also helps mitigate the risks of double-counting and greenwashing, reinforcing trust and integrity across the ecosystem.

Fueling Innovation to Power Tomorrow’s Solutions

As the global community continues to pursue sustainable development and financial transparency, the importance of reliable, interoperable, and verifiable entity identification cannot be overstated. The LEI and the vLEI are uniquely positioned to serve as foundational tools in advancing data integrity, improving risk management, and fostering innovation across sectors. By embedding the LEI into sustainability reporting, supply chain management, regulatory frameworks, and digital market infrastructures, stakeholders can unlock the full potential of trusted data to drive meaningful, systemic change.

About the Global Legal Entity Identifier Foundation (GLEIF)

Established by the Financial Stability Board in June 2014, the Global Legal Entity Identifier Foundation (GLEIF) is a not-for-profit organization created to support the implementation and use of the Legal Entity Identifier (LEI) and its digital counterpart the verifiable LEI (vLEI). GLEIF is headquartered in Basel, Switzerland.

GLEIF’s mission is to manage a network of global partners to provide trusted services and open, reliable data for unique legal entity identification worldwide. GLEIF makes available the technical infrastructure to provide, via an open data license, online access to the full global LEI database free of charge to users. GLEIF is overseen by the Regulatory Oversight Committee, which is made up of representatives of public authorities from across the globe.

Diversity and inclusion underpin GLEIF’s values. This is reflected in its workforce of approximately 60 staff from over 20 nations, its operational excellence, and its commitment to open, global participation in the Global LEI System.

For more information, visit the GLEIF website at https://www.gleif.org/en.