ESG-focused financial technology company Arabesque announced today the launch of the SFDR Data Solution, a new digital toolkit aimed at enabling investors to meet the disclosure requirements of the EU’s Sustainable Finance Disclosure Regulation (SFDR).

The EU SFDR, part of the EU’s Action Plan on financing sustainable growth, establishes harmonised rules for financial market participants including investors and advisers on transparency regarding the integration of sustainability risks and the consideration of adverse sustainability impacts in their processes and the provision of sustainability‐related information with respect to financial products. Among the new rules are requirements for financial market participants to disclose the principal adverse impacts (PAI) that investment decisions have on sustainability factors, based on a list of indicators encompassing climate and environment, as well as social and employee matters, respect for human rights, anti-corruption and anti-bribery aspects.

esg playbook

Data collection and analysis are expected to form some of the key challenges of the new regulation for investors. Arabesque’s solution comes as asset managers prepare for the June 2022 deadline for mandatory SFDR disclosure.

Daniel Klier, President of Arabesque, said: 

“ESG measurement is now at the forefront of investors’ agendas, and the arrival of the SFDR has shaken up how the asset management industry considers and integrates sustainability into the investment process. However, mandatory disclosure of ESG data is in its infancy, and we know that with this comes a significant challenge for investors, regulators, and other stakeholders in accessing useful, comparable, and consistent information.”

According to Arabesque, the new solution utilizes proprietary raw data metrics from the company’s AI-based sustainability data and insights platform Arabesque S-Ray, mapping the data across the 47 corporate-level Principal Adverse Impact indicators required by the SFDR. The toolkit generates data indicators that can be delivered at an individual entity and portfolio-wide level, providing the necessary information for complete SFDR reporting.

Klier added:

“Sustainability is increasingly becoming a license to operate. Arabesque’s SFDR Data Solution provides asset managers with robust, accessible, and actionable datasets to address upcoming regulation.”