Institutional Shareholder Services’ (ISS) responsible investment arm, ISS ESG, announced today the launch of a new EU Taxonomy Alignment Solution. The new solution aims to enables investors to identify the level of alignment of their investments and financial products with defined EU Taxonomy activities, and to quantify respective revenues in order to comply with upcoming disclosure obligations.
The EU Taxonomy is part of the EU Action Plan on Sustainable Finance, established by the EU Technical Expert Group on Sustainable Finance’s (EU TEG). The taxonomy is a classification system enabling the categorization of economic activities that play key roles in contributing to at least one of six defined environmental objectives, and no significant harm done to the other objectives. The six objectives include climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; waste prevention and recycling; pollution prevention and control; and protection of healthy ecosystems.
Financial market participants with relevant products marketed in the EU will be required to report alignment, starting with the first two taxonomy objectives, climate change mitigation and climate change adaptation, by January of next year.
According to ISS ESG, the EU Taxonomy Alignment Solution utilizes over 400 taxonomy-specific screening factors, assessing Taxonomy relevant activities through a rigorous five-step screening process, consisting of identifying relevant economic activities, quantifying respective revenues, checking for substantial contribution, checking for significant harm and checking for social safeguards.
Marija Kramer, Managing Director, Head of ISS ESG said:
“Preparing for the upcoming disclosure requirements will present a key challenge for investors in 2021 and beyond. ISS ESG has pioneered an innovative, dedicated EU Taxonomy Alignment Solution, which is the most comprehensive in the market. The solution provides full transparency with granular data and allows users to follow the assessment step-by-step and to customize the model according to their needs.”