Sustainability technology platform Clarity AI announcd today the launch of a new methodology, aimed at helping index and Etf providers to build and market products aligned with the EU’s Sustainable Finance Disclosure Regulation (SFDR).
The EU SFDR forms part of the EU’s Action Plan on financing sustainable growth. The regulation aims to establish harmonized 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.
Clarity AI uses machine learning and big data to deliver environmental and social insights to investors, organizations, consumers, and governments. As of September 2023, Clarity AI’s platform analyzes 70,000 companies, 430,000 funds, 201 countries, and 199 local governments.
The Sustainable Index and EFT methodology enables index and ETF providers to build, define and/or market products that fall within the European Union’s definition of Sustainable Investment, outlined in Article 2(17) of the SFDR. According to Clarity AI, financial market participants can utilize the methodology to determine how companies pass the sustainable investment assessment, including setting thresholds on UN Sustainable Development Goals (SDGs) and EU Taxonomy contribution, and SFDR Principle Adverse Impact indicators (PAIs), among other criteria, all within the ranges of what is accepted by the regulation.
Ani Widham, Senior Product Manager at Clarity AI said:
“We know that investors seek clarity and transparency when evaluating their portfolios, so providing them with this efficient methodology, aligned with the SFDR regulation, will enable them to make better sustainable investment decisions to benefit their companies and the wider sustainable investment industry.”