The EU Sustainable Finance Action Plan is arguably the most comprehensive and detailed set of regulations affecting the field of ESG investing. To comply with the various regulatory deadlines, investors not only need a comprehensive suite of high-quality ESG research and data products and services, but also a trusted partner. Our knowledgeable team can show you how our robust data coverage and award-winning research can help.
Contact us today to begin your EU Action Plan compliance journey.
Sustainalytics and Morningstar are helping investors at every step of their compliance journey. We are continuously enhancing our solutions as regulatory requirements are finalized, providing clients with a full solution at both the company and portfolio level well ahead of regulatory deadlines.
EU Taxonomy Solution
The Taxonomy is a classification framework designed to determine whether an economic activity is environmentally sustainable. There are three main criteria that activities will be screened on to determine alignment with Taxonomy objectives:
1. Substantial Contribution
2. Do No Significant Harm
3. Minimum Safeguards
Our solution enables you to incorporate EU Taxonomy criteria in your investment decisions and report on your progress toward addressing climate change. Ultimately covering more than 12,500 companies this year, it is underpinned by comprehensive estimation and proxy approaches to supplement reported data, providing investors with a more holistic picture of their portfolios’ alignment.
Sustainable Finance Disclosure Regulation
The EU’s Sustainable Finance Disclosure Regulation (SFDR) introduces new rules for how investment managers need to incorporate and disclose sustainability risks and factors with an emphasis on the so-called “Principal Adverse Impact” (PAI) indicators.
To fully comply with all of the SFDR requirements will require a comprehensive set of ESG research solutions that enable investors to identify and manage both ESG risks and potential adverse sustainability impacts. Sustainalytics’ client advisory teams can advise you on finding a suitable mix of research solutions to meet your organization’s needs.
New SFDR Research Solutions
The following company and fund level data solutions were created specifically to support SFDR compliance requirements:
Sustainalytics’ PAI Data Solution is an ESG dataset with rich corporate- and sovereign-level research that can help investors to identify and understand the adverse sustainability impacts of their investments to fulfill the SFDR disclosure requirements. The PAI Data Solution complements and builds on Sustainalytics’ established, high-quality ESG research that already aligns very well to the remainder of the SFDR requirements.
Morningstar will collect and disseminate EU ESG Fund Type information, i.e., Article 8 & 9 flags, as well as key data points from updated SFDR-compliant prospectuses. In addition, its market leading “Full Holdings” database will enable users of third-party funds, like advisors and fund-of-funds, to access underlying securities’ PAI assessments, looking through funds to their underlying exposures. This is a huge benefit for these users as the regulation requires entity level disclosures to be calculated using security level data.
EU Benchmarks Regulation
The EU Sustainable Finance Action Plan includes two amendments to regulation affecting sustainability benchmarks:
1. Climate Benchmarks: The regulation defines new minimum standards for two types of carbon benchmarks: the EU Climate Transition Benchmarks (EU CTB) and EU Paris-aligned Benchmarks (EU PAB).
2. Disclosure Requirements: New ESG disclosure requirements were defined Solution Sustainalytics offers three data packages for corporate, sovereign and climate benchmarks, which consist of approximately 130 data points from 12 of our research products.
Our solution can help index providers and benchmark administrators to meet mandatory reporting and disclosure obligations and enable them to screen companies on their eligibility for inclusion in EU Climate Benchmarks. Fund managers may also leverage this data to create passive products, such as climate-aligned ETFs. In addition, Morningstar provides fully ESG indexes that leverage Sustainalytics’ research.
Key Features And Benefits
High-Quality ESG Research Solutions
Our established, award-winning ESG research aligns well to regulatory criteria, creating a solid foundation to working towards full coverage
Built on 25+ years of ESG expertise, Sustainalytics’ client advisory team have unparalleled expertise in guiding clients to find ESG solutions tailored to their organization’s needs.
A coherent and consistent approach to ESG
Together with Morningstar, we can provide end-to-end solutions from raw data to managed portfolio and reporting solutions at company and fund level to suit your intended use case.
Strong commitment demonstrated by robust investment in capacity
With over 300 ESG analysts, Sustainalytics has one of the largest research teams in the industry. We have significantly expanded our capacity with more than 30 new analysts to focus on supplementing our established research by focusing on new research areas directly rated to the EU Action Plan.
Combined Regulatory and Product Knowledge
Sustainalytics is collaborating closely with Morningstar’s regulatory and product experts to bring a comprehensive solution to market.
A Single Market Standard
Consistent approach to ESG assessments across the investment spectrum.
Award-Winning Research and Data
Firm recognized as Best ESG Research and Data Provider by Environmental Finance and Investment Week.
End-to-End ESG Solutions
ESG products and services that serve the entire investment value chain.
25+ Years ESG Expertise
350+ ESG research analysts across our global offices.
Largest Second-Party Opinion Provider
As recognized by Environmental Finance and the Climate Bonds Initiative.
Related Insights and Resources
EU Taxonomy Developments and the EU’s Renewed Sustainable Finance Strategy
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.
Sustainalytics Weighs in on EU Taxonomy’s State of Flux
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.
New Draft Disclosure Rules Change Timelines and Scope of EU Taxonomy
In recent months, a lot has been said and written about the EU Taxonomy, the green classification system of economic activities that aims to drive capital flows to sustainable investments supporting the EU’s policy goals on climate and the environment. Political, corporate, and civil society lobbying reached its peak when the EU published draft rules last December, which deviated substantially from expert recommendations. However, the latest draft delegated act with rules on Taxonomy reporting published by the European Commission on May 7th has received far less attention even though some of the proposed changes affect the practical implementation timelines as well as the scope and ambition of the regulation.