ESG analytics and data science platform Clarity AI announced today a new partnership with financial markets data and infrastructure provider and LSEG company Refinitiv to develop a new tool to help LSEG customers comply with SFDR reporting requirements.
The EU Sustainable Finance Disclosure Regulation (SFDR) establishes harmonized rules for financial market participants 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.
In the upcoming phase of the regulation, set to come into effect in 2023, reporting obligations will include disclosures on the manner in which sustainability risks are integrated into investment decisions, and assessments of the likely impacts of sustainability risks on the returns of financial products, measurement and tracking of KPIs, principal adverse impacts (PAIs) and EU Taxonomy alignment.
The regulation also includes classification levels for sustainability-focused investment funds, including ‘Article 8’ funds that “promote environmental or social characteristics or a combination of those characteristics,” and the more stringent ‘Article 9’ funds, “which have sustainable investment as their objective.” According to Refinitiv Lipper data, funds representing over $5 trillion and $478 million are subject to Article 8 and Article 9 SFDR reporting obligations, respectively.
Cornelia Andersson, Group Leader, Sustainable Finance and Investment at LSEG, said:
“SFDR is placing additional reporting requirements on those marketing sustainable investment products and many are requiring comprehensive reporting tools to help them comply. As a provider of some of the most comprehensive sustainability data and indexes available, we are committed to developing leading edge capabilities working with leading specialist sustainability players.”
Clarity AI is a pure-play impact evaluation and assessment technology platform, designed to enable investors to manage the impact of their portfolios. The new solution, SFDR Reporting Professional, will combine Clarity AI’s modelled and controversies data covering more than 50,000 companies, with LSEG’s reported data on ESG, fundamentals, funds and sovereigns.
The tool enable reporting for over 20 indicators mapped, including 16 mandatory indicators, and will include the ability to aggregate at the portfolio level, or to view at the individual security level.
Rebeca Minguela, Founder and CEO of Clarity AI, said:
“We are excited to partner with the team at LSEG to bring our market-leading SFDR data coverage and reporting capabilities to an even broader base of clients. LSEG serves thousands of asset managers who will have to report on SFDR, and accuracy will be key – especially in the environment of high regulatory scrutiny surrounding ESG and sustainability.”