Resource Center

In this blog, we look at the delay of the level 2 regulation, some aspects of the Q&A, and the ongoing confusion and divergence around SFDR. We pay special attention to the potential impact of the Principle Adverse Impact indicators, an element of SFDR.

As mass vaccination against the coronavirus started, a key challenge has been to keep millions of doses of vaccines at the right temperature. An increase in temperature inside a truck or aircraft, by half a degree, for half an hour, would reportedly result in a 'defrosted' vaccine which has then to be discarded.

On July 6th, the European Commission published its Strategy for Financing the Transition to a Sustainable Economy, the successor of the EU’s Sustainable Finance Action Plan, which launched in 2018. The strategy focuses on transforming the financial system and financing transition plans, building on the 2018 Action Plan, which centered on developing the EU Taxonomy, putting in place disclosure regimes, and developing tools for the market to develop sustainable investment solutions and prevent greenwashing.

For investors looking to enhance ESG risk management and the long-term impact of sustainability efforts, a systemic approach can help identify interventions that will most effectively mitigate the risk of negative outcomes or divert the chain of events towards a more sustainable trajectory. Typically, this involves moving from single-issue or company-specific tactics to progressively integrate system-level considerations in ESG strategies. Targeting systemic change through active ownership is one way to acknowledge and start unravelling the dynamic web of global challenges.

On May 7th, the European Commission published draft rules on how corporates and financial institutions should report on their alignment with the EU Taxonomy. The draft rules are laid out in a very technical document and not an easy read. This might explain why certain changes with significant impact on timelines and scope of the EU Taxonomy Regulation have flown under the radar of media and investors. Some of the impacts even escaped the attention of financial market participants responding to the consultation on the rules.

Une marée de réglementations liées à l’ESG s’abat sur les investisseurs institutionnels. Avec l’introduction de SFDR et les obligations de publication mises en place par l’AMF, se pose la question d’une possible obsolescence des labels ISR dans la lutte contre le greenwashing. Un phénomène qui inquiète de plus en plus les investisseurs et les régulateurs au vue de la croissance constante du marché des fond ISR. Pendant de nombreuses années, l’industrie s’est auto-régulée en s’accordant sur une définition générale de l’investissement responsable et/ou en se tournant vers les opérateurs de labels pour créer des standards de marché.

Response to EC 7th May 2021 Draft Delegated Regulation, Taxonomy From Morningstar Inc. and Sustainalytics, a Morningstar Company Submitted via the European Commission portal for feedback

Quand les nouvelles réglementations sur les investissements durables et responsables (ISR) furent annoncées avec le « EU Action Plan », les institutionnels français n'ont pas cillé. Depuis l'accord de Paris en 2015, de nombreuses nouvelles obligations réglementaires liées à la publication d’information et à l’analyse ESG ont influencé les stratégies d’investissements responsables des institutionnels français. Le règlement SFDR qui est entré en vigueur le 10 mars dernier vient s’ajouter au cadre réglementaire local en matière de reporting.

With a growing awareness around sustainability issues and accelerating regulatory developments in Europe, sustainable finance is one of the most significant talking points of our time. But what does sustainability investing mean for stakeholders and what are the resulting challenges? What’s more, what kind of impact does this have on a company’s mid to long-term strategy as well as its short-term profitability? By bringing together representatives from the regulatory side, the financial industry, the non-financial industry and an independent advisory firm, we aim to take a closer look at the consequences for the corporate world and answer a key question - is there a price to be paid for investing in ESG companies?

Material Risk Engagement helps investors promote and protect their long-term value by engaging with high-risk companies on their financially material ESG issues. This inaugural Material Risk Engagement annual report covers ten months since its launch in March 2020. Read the report to learn more about:

This year’s instalment of our 10 for series – 10 for 2019: Systemic Risks Loom Large – explores 10 environmental, social and governance (ESG) themes that could affect global investment portfolios in 2019.

While child labor remains a serious problem across industries and countries, it is only one part of the overall issues pertaining to children’s rights; companies and investors should recognize the scope and relevance of this topic.

In Sustainalytics’ paper, Combining ESG Risk and Economic Moat,[i] we examined the effect of combining the two metrics, showcasing the benefits of higher returns and lower downside risk. More specifically, investing in companies with negligible/low ESG risk and wide economic moats was advantageous for creating alpha over the past four years.

As part of the EU Sustainable Finance Action Plan, the Sustainable Finance Disclosure Regulation (SDFR) supplements the current rulebooks governing manufacturers of financial products.

Hear from Sustainalytics' Methodology and Portfolio Research specialist, Liam Zerter, as he talks us through the key findings from Sustainalytics' recent Combining ESG Risk and Economic Moat report, which shows that economic moat and ESG risk can be combined to create investment strategies that generate value both in terms of returns and portfolio risks.

We launched our new Impact Metrics product to support investors’ growing need for more robust data that can be used to demonstrate how ESG-focused strategies can deliver real-world social and environmental outcomes. Since the launch, I have connected with many enthusiastic institutional investors eager to make sense of the rapidly evolving world of impact, excited to dive into impact data, and cautiously optimistic about supporting their clients’ Sustainable Development Goal (SDG) and impact needs.

Listen in as the Sustainalytics 10 for 2021 research team walks you through the report, highlighting the key subindustries, from agrochemicals, agriculture and aquaculture to packaged food, food retail and restaurants,

Update - 3 March, 2021: To help investors comply with the new requirements of the SFDR, Sustainalytics launched the PAI Data Solution that maps our research to the 60 indicators defined by the regulator. This new dataset will enable investors to consider the PAIs in their investment decisions as well as supporting disclosure requirements. Visit our website to learn how we can help with you SFDR compliance journey.

This report aims to support investors interested in gauging environmental, social and governance (ESG) risks and opportunities in the global food value chain. We survey key subindustries – from agrochemicals, agriculture and aquaculture to packaged food, food retail and restaurants – in search of solutions that may support the principles of the circular economy (CE). These principles include minimizing waste and pollution, extending the use-phase of products and ecosystem regeneration. Some of the key insights found in the report are:

When Sustainalytics (GES[1]) initiated the Emerging Markets (EM) Engagement program as a pilot project in 2009, the scale, scope and impact were undetermined factors. Based on the successful execution of the program methodology in the African and Middle Eastern regions during the pilot stage, the full program launched in 2010 to cover all major emerging markets. After the project close in July 2020, the program accounts for 926 meetings with companies in emerging markets.