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. We offer coverage on more than 9,500 companies and align our list of activities with the Climate Delegated Act. Sustainalytics’ EU Taxonomy Solution is underpinned by comprehensive estimation and proxy approaches to supplement reported data, providing investors with a more holistic picture of their portfolios’ alignment to the EU Taxonomy.
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:
- PAI Data Solution: Data packages with all of the mandatory corporate and sovereign PAIs, and a growing number of voluntary PAIs.
- Compliance with SFDR: Supported with our research such as Impact Metrics, Sustainable Products, Global Standards Screening, Controversies Research, ESG Risk Rating.
- Morningstar will collect and disseminate EU ESG Fund Type information, such as Article 8 & 9 flags, and key data points from SFDR compliant ESG prospectuses.
- Users of third-party funds, such as advisors and fund-of-funds, can utilise Morningstar’s market leading ‘Full Holdings’ database to look through funds to their underlying exposures. This gives the user PAI assessments on the underlying securities, thereby aligning with the regulation’s requirements for entity level disclosures to be calculated using security level data.
Identify ‘sustainable investments’ using our SFDR ‘Sustainable Investments’ solution. Our approach to serving financial market participants seeking an SFDR/MiFID II ‘sustainable investments’ solution is to provide support in combining the relevant inputs that can be used to screen for ‘sustainable investments’. From our SFDR ‘Sustainable Investments’ Mapping file, investors can select their own inputs and thresholds for Contribution, Do No Significant Harm and Good Governance to ensure their views and interpretations of these components can be integrated.
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 the EU Paris-aligned Benchmarks (EU PAB).
2. Disclosure Requirements: Sustainalytics offers three data packages for corporate, sovereign and climate benchmarks, consisting of around130 data points from 12 of our research products.
Sustainalytics’ dataset covers approximately 12,500 companies and 172 countries.
Our dataset and reports can support investors in meeting the regulatory requirements of the EU Climate Transition Benchmarks, EU Paris-Aligned Benchmarks and sustainability-related disclosure requirements for benchmarks with ESG factors.
Sustainalytics can help index providers and benchmark administrators meet mandatory reporting and disclosure obligations while enabling them to screen companies on their eligibility for inclusion in EU Climate Benchmarks. In addition, Morningstar Indexes offers a range of sustainable investing index solutions that are compliant with EU benchmark regulation.
Portfolio Reporting Solutions
Key legislative proposals stemming from the EU Action Plan, including the EU Taxonomy and the Sustainable Finance Disclosure Regulation (SFDR), require reporting at the financial product and financial entity levels.
Our high-quality EU Action Plan reporting capabilities enable investors to upload portfolios and run reports on demand at both fund and entity level using a set of portfolio aggregation tools for both the EU Taxonomy and PAI datasets.
Leveraging our portfolio reporting solutions investors can: incorporate EU Taxonomy criteria into both investment decisions and reporting; identify and manage both ESG risks and potential principal adverse impacts (PAIs) and enable Sustainable Finance Disclosure Regulation’s PAIs disclosures. And support minimum requirements of the EU Climate Transition Benchmarks, EU Paris-Aligned Benchmarks and sustainability-related disclosure requirements for benchmarks with ESG factors.
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.
30 Years of ESG Expertise
800+ ESG research analysts across our global offices.
A Leading SPO Provider
As recognized by Environmental Finance and the Climate Bonds Initiative.
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